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Following Trade Secrets Litigation

FBI Arrests Chinese Chemist for Theft of Trade Secrets

In yet another employee misappropriation case, the FBI got involved in the alleged theft of trade secret information for intumescent fire-proofing coating (I don’t know what it is either) from a worldwide paint company with a subsidiary in Houston, Texas. Jensen Zeng was arrested on January 29, 2008, and detained pending further criminal proceedings after being indicted on two counts of trade secrets theft and one count of computer fraud. Although the press release from the FBI doesn’t say it, the charges likely stem from violations of the Economic Espionage Act. Furthermore, there is no indication of a civil suit by the company, I am sure we can expect one.

Based on the brief allegations detailed in the FBI press release, we can begin to pciture the strong case the paint company has made for itself because, if the allegations are proven true, they implemented and sustained an effective trade secrets protection plan (something this blog highly recommends doing if you have any trade secret information which provides value to your company). In the following paragraph from the press release I will highlight the items which are directly related to a trade secrets protection plan.

According to the indictment, Zeng allegedly signed a confidentiality agreement with his employer and was aware of his responsibility to keep and maintain the confidentiality of his employer’s proprietary interest in trade secrets. Between Nov. 1, 2005 and Jan. 29, 2008, Zeng is accused of accessing without authorization his employer’s protected computer system and obtaining the trade secret formula for the intumescent fire-proofing product with the intent to defraud his employer. Zeng is accused of downloading the trade secret formula from the company’s database with the intent to convert the trade secret to the benefit of a person other than his employer on or about Nov. 1, 2005, and again on Jan. 29, 2008, and concealing the formula in a box under the insulation in the attic of his residence. The indictment also alleges Zeng formed his own business in October 2007 for the purpose of marketing intumescent fire-proofing coating.

A trade secrets protection plan is critical to any action for trade secrets whether brought in civil court or pursuant to Federal Laws such as the Economic Espionage Act.

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February 25, 2008 Posted by | confidentiality agreement, Intellectual Property, trade secret theft, Trade Secrets | , , , , | Leave a comment