What do SIM cards, robots, and chemical technologies all have in common? All three have been involved in Chinese espionage cases, and the U.S. is falling victim.
Americans continue to be susceptible to intellectual property theft thanks to a growing crime spree in China – with former employees sharing trade secrets or facing betrayal from once loyal partners. The Commission on the Theft of American Intellectual Property reported that the total theft of US trade secrets accounts between $180 billion to $540 billion per year, with China committing most of that theft.
Take Skyroam for example, a maker of virtual SIM cards. In 2008, the company developed and patented a virtual SIM card that revolutionized how people access the internet when they travel. But in 2018, Skyroam went to trial against a Chinese company, uCloudlink, for selling a competitive product in the United States, its GlocalMe global Wi-Fi device.
During the discovery phase of the case, it was revealed that uCloudlink CEO Gao Wen worked with a former Skyroam employee, Wang Bin, to steal Skyroam’s proprietary technology. The case ended in consequences for the Hong Kong-based company, who had to fork over millions for the patent infringement in June 2018.
Similar to the case with Skyroam, T-Mobile also faced a similar issue with their robot, “Tappy.” The company patented a robot that could detect problems with cellphones – an especially lucrative tool based on the demand for cellular technology. But in 2013, an engineer responsible for testing the technology stole an arm from one of the robots to pioneer his own project in China.
According to the civil lawsuit case over the Tappy incident, T-Mobile was awarded $4.8 million in damages in 2017 – and the company who supported the engineer in its efforts to steal the IP, Huawei, now faces 10 counts in federal court.
Aside from leveraging these inside sources, Chinese companies have also found ways to steal trade secrets independently, as was the case for American company DuPont Co. in 2017. After DuPont suspected and sued its onetime Chinese partner for stealing chemical technology secrets, investigators from China’s antitrust authority showed up at DuPont’s Shanghai offices demanding passwords, printing documents, and seizing computers, according to people briefed on the raid.
Those investigators also threatened DuPont to drop their original lawsuit, according to people briefed on the raid. DuPont refused to drop the case, but the example shows how China is willing to gain information in any means necessary.
These cases of intellectual property theft against U.S. companies are perfect representations of how our legal system can be used to defend trade secrets in America – but the next barrier of protection goes beyond the courtroom. According to a CNBC poll, more than 20% of US companies have been a victim of theft by Chinese companies within the last year – and yet, the Trump administration continues to discuss trade negotiations, putting our IP further at risk. More needs to be done in order to ensure we’re protected, and harsher punishment needs to be enforced against IP violators. Now, it’s up to our government to take a stand.