TRADE SECRETS: Rare Economic Espionage and Trade Secret Trial Underway

An American citizen and a Chinese national are facing more than 60 years in prison for economic espionage and theft of trade secrets. The defendants, Lan Lee and Yuefei Ge, are charged with violating the Economic Espionage Act of 1996 by allegedly stealing confidential computer chip information from former employer NetLogic Microsystems, Inc. and another company, Taiwan Semiconductor Manufacturing Company. NetLogic Microsystems, Inc. is a computer chip design and development company in Mountain View, California. Taiwan Semi-Conductor Manufacturing Company is a computer chip manufacturing company with offices in San Jose, Washington, Singapore and Taiwan. Trial is currently underway in the matter.

The San Jose federal court case, U.S. vs. Lan Lee and Yuefei Ge (Case No. C 06-0424 JW), alleges that the pair illegally downloaded secret technical descriptions of an unreleased computer chip. Lee and Ge then started a company called SICO Microsystems, Inc. and solicited venture capital funding from China under its “863 Program” and its General Armaments Department to fund the company and commercially exploit the stolen information, in competition with their former employer. The FBI was apparently tipped off though e-mails sent by Ge's wife. The pair were originally arrested in 2006 and indicted in September, 2007.

The Economic Espionage Act of 1996 was enacted to prevent illegal technology transfer to foreign governments. The case is one of only a handful brought under the Act and only the second to be decided by jury trial. Prior cases under the Act were decided almost exclusively by judges and most involved domestic espionage.

China's “863 Program,” also known as the “National High Technology Research and Development Program of China” and the “State High-Tech Development Plan,” was created to stimulate the development of advanced technologies and eliminate China's dependence on foreign technologies. The program focuses on developing communications and laser technology for military applications.

Electronic court filings and further procedural and docket information on the case are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl. Court calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.