The U.S. Justice Department indicted a man for allegedly conspiring to steal proprietary data from General Electric (“GE”) and produce and sell it in China.
According to the indictment filed in the Northern District of New York, businessman Chi Lung Winsman Ng allegedly conspired with an unnamed former GE engineer (referred to as “Co-conspirator #1”) to steal GE trade secrets worth tens of millions of dollars. The trade secrets concerned the development and manufacture of electronic component called a MOSFET, which are electronic switches that regulate the flow of electricity through devices such as wind turbines, solar inverters, medical imaging systems, and aviation equipment. MOSFETs are a complex part, and require roughly 200 steps to manufacture correctly.
The indictment alleged that between March 2017 and January 2018, Mr. Ng, who previously worked as the vice president of sales for a Chinese semiconductor company that sold materials used to build MOSFETS, and Co-conspirator #1 schemed to develop a business that would manufacture and sell silicon carbide MOSFETs using trade secrets that Co-conspirator #1 had stolen from GE. In efforts to secure funding for their new business, Mr. Ng allegedly told prospective investors that a start-up company he formed with Co-conspirator # 1 possessed assets (such as intellectual property) worth no less than $100 million. As part of the scheme, the conspirators allegedly sought about $30 million in funding in exchange for an ownership stake in their start-up company.
A press release issued from the Department of Justice emphasized that it has no evidence that there was an illegal MOSFET technology transfer to any Chinese companies, including the company that Mr. Ng and his co-conspirator were trying to start. Even so, Assistant Attorney General John C. Demers of the Justice Department’s National Security Division stressed that “[t]heft of American intellectual property for the benefit of foreign firms deprives American companies of the fruits of their creativity and American workers of their jobs. The Department will do all it can to disrupt this illegal and economically destructive conduct.” While Ng has not been arrested, if convicted of this offense, he faces up to 10 years in prison and a fine of up to $250,000.
This case serves as a reminder that even conspiracy for attempted trade secret misappropriation can be actionable, when the aggrieved party works with federal law enforcement.