Earlier this year, the United States Department of Justice (“DOJ”) announced that it was launching the Disruptive Technology Strike Force (“Strike Force”) in an effort “to target illicit actors, strengthen supply chains and protect critical technological assets from being acquired or used by nation-state adversaries.” The DOJ’s initial announcement can be found here. The Strike Force is co-led by the DOJ and Commerce Department with the goal of countering efforts by hostile nation-states seeking to illegally acquire sensitive United States technology. On May 16, 2023, the DOJ announced criminal charges in five cases from five different U.S. Attorney’s Offices in connection with the Strike Force’s efforts. Two of the cases involve allegations of trade secret theft from U.S. technology companies with the intent to market the technology in foreign countries.
In one case brought in the Central District of California, a senior software engineer was arrested on May 5, 2023, and charged with theft of trade secrets. The individual is alleged to have stolen source code for metrology software that is used in “smart” automotive manufacturing equipment with the intent to use the technology to launch his own competing business in the People’s Republic of China. According to court documents, the company’s security located a folder on the defendant’s work-issued computer labeled “ChinaGovernment” that contained several documents showing the defendant’s efforts to provide services and technology to China business and government entities.
In another case, brought in the Northern District of California, a citizen of China and former engineer for Apple, Inc., is accused of allegedly stealing thousands of documents containing source code for software and hardware relating to Apple’s autonomous vehicle technology. According to the indictment, the defendant allegedly accessed large amounts of confidential and proprietary information in the days leading up to his departure from Apple with the intent to provide the information to a company headquartered in China.
Although the other three Strike Force-related cases do not involve allegations of trade secret theft, they all involve the DOJ’s efforts to protect the illegal transfer of U.S. technologies to foreign nations. Two of the cases allege the disruption of procurement networks created to help the Russian military and intelligence services obtain sensitive technology, and the other one alleges a Chinese procurement network established to provide Iran with materials used in ballistic missiles and weapons of mass destruction.
The launch of the Strike Force and announcement of the criminal charges demonstrate the DOJ’s commitment to protecting intellectual property and other sensitive technologies from being stolen and transferred to foreign adversaries. The DOJ announcement should serve as a reminder to companies to maintain diligence in protecting intellectual property.
Companies should remember that the implementation of a data loss prevention tool is not enough, and active monitoring of such tools is necessary to detect any misappropriation of intellectual property and other sensitive technologies. Companies should consider working with counsel to conduct an audit of their trade secrets to ensure that sufficient measures are in place for the protection of the trade secrets and detection of any theft or improper transfer. In the event a company believes its technology or intellectual property has been compromised, it should immediately reach out to counsel to discuss all available options aimed at preventing further disclosure of its information.
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