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Defendant Pleads Guilty to Charge of Criminal Theft of Trade Secrets, 18 U.S.C. § 1832, and Faces, Inter Alia, up to 10 Years in Prison and Deportation

In Criminal Theft of Trade Secrets on November 16, 2010 at 9:33 am
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The U.S. Attorney’s office announced that a defendant entered a guilty plea to a charge of theft of trade secrets from Bristol-Myers Squibb, in violation of Title 18, United States Code 1832.  According the U.S. Attorney, the defendant Shalin Jhaveri holds a Ph.D. from Cornell University and was employed at the time of his arrest in February of 2010 as a Technical Operations Associate in Bristol-Myers’ management training program.  The U.S. accused defendant of stealing trade secrets during his employment with Bristol-Myers and devising a plan to convert them to his own use.  At the time of his arrest, Jhaveri was allegedly meeting in a Syracuse hotel room with an individual he believed was an investor willing to finance a business venture Jhaveri planned to start in his native India.  According to the U.S. Attorney, Jhaveri transferred Bristol-Myers trade secrets to this investor, an individual he knew was not employed by or associated with Bristol-Myers in any capacity.

Jhaveri admitted the following as part of his plea: (1) while employed by Bristol-Myers in its management training program at its Syracuse facility, he devised a plan to steal trade secrets of Bristol-Myers and convert them to his own use; (2) he did steal trade secrets from Bristol-Myers, and in doing so used methods to disguise his actions and evade detection by the Company; (3) he communicated, using a specially created email account and password he set up expressly for that purpose, with an individual he knew was not employed by or affiliated with Bristol-Myers, who he believed to be an investor willing to finance a business venture Jhaveri planned to start in his native India; (4) Jhaveri discussed with and transferred to that individual trade secrets he had stolen from Bristol-Myers; and (5) when asked by this investor whether the information he had taken from Bristol-Myers was everything he needed, responded that it was.

Jhaveri also consented to the entry of an order of removal/deportation from the United States by an Immigration Judge, to take place upon completion of any jail term imposed, and to not seek relief or take an appeal from such order.  Jhaveri faces up to 10 years in prison, a $250,000 fine, up to three years of supervised release, and deportation.

Attorneys

Stephen C. Green was the Assistant United States Attorney prosecuting the case.

Chemist Pleads Guilty to Theft of Trade Secrets After Allegedly Downloading Technical Materials Before Leaving to Work for an Overseas Competitor

In Breaking News, Criminal Theft of Trade Secrets on September 3, 2010 at 8:32 am
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The Sun-Times Media Wire reports that a former chemist and technical director for Valspar Corporation’s architectural coatings group pleaded guilty on Wednesday for stealing formulas and other trade secrets worth up to $20 million as he prepared to go to work for Nippon Paint, an overseas competitor.  The defendant was charged with five counts of theft of trade secrets in violation of the federal Economic Espionage Act in an indictment returned by a federal grand jury. Read the rest of this entry »

Kaedar Electronics’ Parent Company Suspends a Manager Accused of Paying Kickbacks to Apple Employee in Misappropriation of Trade Secrets Case

In Criminal Theft of Trade Secrets, Fun with Trade Secrets, International on August 18, 2010 at 5:17 am
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Ting-I Tsai of The Wall Street Journal reports that Pegatron Corp., the parent company of Kaedar Electronics Co., said it had suspended a manager who has been accused of paying kickbacks to Paul Devine, an Apple employee.  Pegatron says it is now investigating whether the manager violated the company’s code of conduct.  The company is reportedly working on an iPhone for a second mobile standard for Apple.

Neither Pegatron Corp. nor Kaedar Electronics Co. were named as defendants in the civil suit filed by Apple Inc. on Friday.

If Apple truly believed that confidential information and trade secrets were misappropriated by Devine and Kaedar Electronics, one would expect that Kaedar would be brought in as a party.   Read the rest of this entry »

Kaedar Electronics Acknowledges Paying Brokerage Commission in Apple Trade Secret Theft Case

In Breaking News, Criminal Theft of Trade Secrets, Fun with Trade Secrets on August 17, 2010 at 3:21 am
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Ting-I Tsai of the Wall Street Journal reports that the parent of Kaedar Electronics Co. “acknowledged Monday that Kaedar did pay brokerage commission to an intermediate trading company for its business with Apple between 2005 and 2008. But it said it is not sure if the arrested Apple employee is behind the intermediate trading company.”

Apple’s Complaint alleges that “[f]rom at least March 2008 through the filing of this Complaint, Devine demanded and received illicit payments, kickbacks, bribes and other things of value from Kaedar and, in exchange, Devine provided Kaedar with Apple’s Confidential Information.”  Complaint ¶ 51.  “With Apple’s Confidential Information, Kaedar was able to construct offers to Apple on terms more favorable to Kaedar, and less favorable to Apple.”  Id. ¶ 58.

UPDATE:  Kaedar Electronics Suspends Manager

By CHARLES H. JUNG

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Breaking News: Apple Sues Its Own Global Supply Manager for Misappropriation of Trade Secrets

In Breaking News, Criminal Theft of Trade Secrets, Fun with Trade Secrets, Trade Secrets News on August 16, 2010 at 8:45 pm
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Apple Inc. filed suit on Friday against one of its Global Supply Managers alleging that he had “abused his position, violated Apple policies, and broken the law by stealing Apple’s proprietary, trade secret and other confidential information and converting it to his own benefit.”   Complaint ¶ 1.  The case is Apple Inc. v. Devine, et al., CV10-03563 PVT (N.D. Cal. Aug. 13, 2010).  Defendants are Paul S. Devine and CPK Engineering, Inc.  Apple alleges that it paid Devine over $614,000 in salary and $51,076 in bonus compensation and issued him 4,500 Apple stock options and 900 shares of Apple restricted stock.

Shannon Henson at Law360 reports that Apple served Devine on the day he appeared in court on charges of wire fraud, conspiracy, money laundering and engaging in monetary transactions with criminally derived property.

Apple claims that it investigated Devine since April 2010, and during the course of that investigation, discovered an “Entourage database and cache of e-mail from Devine’s personal Hotmail and Gmail e-mail accounts stored on Devine’s Apple-supplied laptop hard drive.”  Id. ¶ 16.  “These e-mails also confirmed that Devine had demanded and received over a million dollars in illicit payments, kickbacks, bribes, and other things of value (which Devine sometimes refers to in e-mail correspondence as ‘samples’) from numerous suppliers, and had concealed his scheme from Apply over the course of several years.”

Apple alleges 12 separate causes of action (the complaint was carefully pled, but several of the causes of action are likely susceptible to dismissal on a 12(b)(6) motion).

UPDATE: Kaedar Electronics Acknowledges Paying Brokerage Commission

UPDATE: Kaedar Electronics Suspends Employee

Judge and Attorneys

The case has been assigned to Magistrate Judge Patricia V. Trumbull of the Northern District of California.

Attorneys for plaintiff Apple Inc. are George A. Riley, Sharon M. Bunzel, Aaron M. Rofkahr, and Jean B. Niehaus of O’Melveny & Myers in San Francisco.

The criminal case is U.S. v. Devine, case number 10-cr-00603, in the U.S. District Court for the Northern District of California.

The civil suit is Apple Inc. v. Devine et al., case number 10-cv-03563, in the same court.

By CHARLES H. JUNG

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Protecting Trade Secrets in China is Top Priority for Group of In House Intellectual Property Attorneys

In Conferences, Criminal Theft of Trade Secrets, International on August 11, 2010 at 9:03 pm
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Protecting trade secrets when doing business in developing countries has long been a concern of intellectual property attorneys.  Protecting American trade secrets in China was identified as a top priority amount a group of in-house intellectual property attorneys at a the American Bar Association‘s annual conference which was held at the Moscone Center in San Francisco this morning.

Amy Miller of Legal Pad reported on some perspectives shared at the conference:

Gary Loeb, vice president of intellectual property at Genenetech, Inc., said that during litigation he fights aggressively to keep his company’s secret information confidential. “It’s a battle we take very seriously,” he said. “It’s something that makes our cases very expensive.”

Scott Piering, senior IP lawyer at Cargill, Incorporated, said . . . . [that] Cargill has had less success keeping their trade secrets secret when doing business in China. Dealing with corporate espionage is just the price of doing business there, he said. So his company doesn’t take its best trade secrets to China, but Cargill has taken some calculated risks in the country, and said it’s expected that trade secrets will be stolen. “It keeps me up at night constantly,” he said.

Robert Lindefjeld, general counsel and chief IP counsel for Nantero, Inc., said he hasn’t figured out how to deal with corporate spying in China either. His strategy is to just maintain a strong patent portfolio in China. “I used to file every single patent overseas,” he said. “Now I only file key patents because it’s so expensive.”

You can read the article here.

By CHARLES H. JUNG

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For All the Tea in China: How England Stole the World’s Favorite Drink and Changed History

In Criminal Theft of Trade Secrets, Other Cases of Interest on August 9, 2010 at 4:13 pm
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Sarah Rose recently published a well-received book on one of the Western world’s greatest trade secret thefts called For All the Tea in China: How England Stole the World’s Favorite Drink and Changed History.  Ms. Rose discusses how the British government plotted to and then did steal tea plants from China, successfully transplanting them in India, making the British Empire less reliant on trade with China.

You can read an interview here.  And you can purchase the book on Amazon.

By CHARLES H. JUNG

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Former General Motors Employee Indicted for Conspiring to Steal Hybrid Technology Secrets

In Criminal Theft of Trade Secrets, Trade Secrets News on July 28, 2010 at 11:14 pm
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On Thursday, a former employee at General Motors and her husband were indicted in federal court in Detroit for allegedly conspiring to steal secrets from G.M. relating to hybrid technology.  Read the article here.  A press release by the U.S. Attorney’s Office in the Eastern District of Michigan states that Shannon Du and her husband, Yu Qin conspired to “possess trade secret information of General Motors Company relating to hybrid vehicles, knowing that the information had been stolen, converted, or obtained without authorization.”  “The indictment alleges that DU, while employed with GM, provided GM trade secret information relating to hybrid vehicles to her husband, QIN, for his benefit and for the benefit of a company, Millennium Technology International Inc. (MTI), that the defendants owned and operated.”

By CHARLES H. JUNG

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