By Dave Ongie
A grand jury in Greeneville, Tenn., recently returned an indictment against a Chinese-born scientist formerly employed by Coca-Cola and Eastman for conspiracy to steal trade secrets related to formulations for BPA-free coatings.
According to the U.S. Department of Justice, Xiaorong You, aka Shannon You, 56, of Lansing, Mich., and Liu Xiangchen, 61, of Shandong Province, China, were named in the indictment. You was also indicted on seven counts of theft of trade secrets and one count of wire fraud. The BPA-free trade secrets allegedly stolen belonged to multiple owners and cost around $119,600,000 to develop.
In the indictment, You’s employers were identified as Employer #1 and Employer #2. However, a spokesman for Coca-Cola confirmed to the Wall Street Journal that Coca-Cola was Employer #1 while Eastman’s chief legal officer confirmed to WJHL-TV that Eastman is Employer #2.
According to the indictment, You was employed as a principal engineer for Global Research at Coca-Cola from approximately December 2012 until August 2017. During that time, You was one of a limited number of employees with access to trade secret information owned by six separate entities.
From September 2017 through June of last year, You was employed as a packaging application development manager at Eastman, where the indictment claims she was among a limited number of employees with access to trade secrets belonging to the Kingsport-based company.
Until recently, bisphenol-A (BPA) was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss, and prevent the container from corroding or reacting with the food or beverage contained therein. However, due to the discovered potential harmful effects of BPA, companies began searching for BPA-free alternatives. These alternatives are difficult and expensive to develop.
The indictment alleges that You conspired with Xiangchen, a Chinese national who is believed to be related to You, and a third unnamed conspirator to “steal, appropriate, copy, duplicate, photograph, download, upload, replicate, transmit, deliver, send, communicate, convey, receive and possess TSI (trade secret information) related to a product or service used or intended for use in interstate of foreign commerce” in an effort to benefit an unnamed Chinese company which Xianchen managed.
The Chinese government sponsors a program entitled “The Thousand Talents,” which is designed to induce individuals with advanced technical education, training and experience residing in Western countries to return or move to China and use their expertise to promote China’s economic and technological development. The indictment also alluded to a similar program in the Shandong Province entitled “Yishi-Yiyi,” which paid a monetary award for proposals to bring technology to the province.
The indictment claims You, Xianchen and the unnamed co-conspirator formulated a plan for You to exploit her employment with Coca-Cola and Eastman in order to steal trade secrets belonging to Eastman and six other entities. In exchange for the trade secrets You obtained, she was allegedly promised employment with the Chinese company as well as compensation from The Thousand Talents and Yishi-Yiyi. The three individuals were also alleged to be planning the formation of a second Chinese company in which they would share ownership.
“The conduct alleged in today’s indictment exemplifies the ‘rob, replicate and replace’ approach to technological development,” Assistant Attorney General National Security John C. Demers said in a statement released by the Justice Department. “Xiaorong You is accused of an egregious, premeditated theft and transfer of trade secrets worth more than $100 million for the purpose of setting up a Chinese company that would compete with the American companies from which the trade secrets were stolen.
“Unfortunately, China continues to use its national programs, like the ‘Thousand Talents,’ to solicit and reward the theft of our nation’s trade secrets and intellectual property, but the Justice Department will continue to prioritize investigations like these, to ensure that China understands that this criminal conduct is not an acceptable business or economic development practice.”
The case is being investigated by the FBI’s Knoxville Field Office and will be prosecuted by the Eastern District of Tennessee and the National Security Division’s Counterintelligence and Export Control Section.