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Chemist Dr. You convicted of Intellectual Property Crime, Aided by China

In a Friday news dump, the US Attorney’s Office In the Eastern District of Tennessee announced the sentence of Chinese national, Chemist Dr. Xiaorong You for conspiracy to steal trade secrets, economic espionage, theft of trade secrets, and wire fraud. You was sentenced to 168 months in prison. Following her imprisonment, You was also ordered to serve three years of supervised release and pay a $200,000 fine.
In April 2021, following a thirteen-day trial, a federal jury convicted You of conspiracy to commit trade secret theft, conspiracy to commit economic espionage, possession of stolen trade secrets, economic espionage, and wire fraud in a classic case of an insider Job. A day earlier, the US Attorney’s Office announced the conviction of Chinese national and scientist, Gongda Xue, of charges related to his participation in a conspiracy to steal trade secrets from GlaxoSmithKline (GSK) pertaining to biopharmaceutical products under development from January 2010 to January 2016. Her sister and her associates pleaded guilty to IP theft. Gongda Xue worked as a scientist at the Friedrich Miescher Institute for Biomedical Research (“FMI”) in Switzerland, while his sister, Yu Xue, worked as a scientist at GSK in Pennsylvania. Both conducted cancer research as part of their employment at these companies. While working for their respective entities, the Xus shared confidential information for their own personal benefit

Traditional Chinese Crafts

According to court documents, You stole valuable trade secrets related to formulations for bisphenol-A-free (BPA-free) coatings for the inside of beverage cans.  You was granted access to the trade secrets while working at The Coca-Cola Company in Atlanta, Georgia, and Eastman Chemical Company in Kingsport, Tennessee.  This is a classic example of the Insider Threat.  The stolen trade secrets belonged to major chemical and coating companies, including Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, Sherwin Williams, and Eastman Chemical Company, and cost nearly $120,000,000 to develop.

You stole the trade secrets to set up a new BPA-free coating company in China.  You and her Chinese corporate partner, Weihai Jinhong Group received millions of dollars in Chinese government grants to support the new company.  Documents and other evidence presented at trial, showed You’s intent to benefit not only Weihai Jinhong Group, but also the governments of China, the Chinese province of Shandong, and the Chinese city of Weihai, as well as her intent to benefit the Chinese Communist Party.

Until recently, BPA was used universally 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 BPA’s potential health risks, companies began searching for BPA-free alternatives.  As witnesses from the chemical and coating companies testified at trial, developing these BPA-free alternatives was a very complex, expensive and time-consuming process.

Evidence presented at trial showed that from December 2012 through Aug. 31, 2017, You was employed as Principal Engineer for Global Research at Coca-Cola, which had agreements with numerous companies to conduct research and development, testing, analysis, and review of various BPA-free technologies.  Because of You’s extensive education and experience with BPA and BPA-free coating technologies, she was one of a limited number of Coca-Cola employees with access to BPA-free trade secrets belonging to Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, and Sherwin Williams.  From approximately September 2017 through June 2018, You was employed as a packaging application development manager for Eastman Chemical Company in Kingsport, Tennessee, where she was one of a limited number of employees with access to trade secrets belonging to Eastman.

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