Chinese professor found guilty in US of economic espionage

SAN FRANCISCO (BLOOMBERG) – A Chinese professor was found guilty by a judge of trade-secret theft and and an even more serious and rarer charge of economic espionage, marking the latest conviction in the Trump administration’s pursuit of Chinese scientists and engineers.

At an unusual in-person courtroom hearing on Friday (June 26) during the coronavirus pandemic, a federal judge in San Jose, California, announced the verdict against Hao Zhang. Arrested in 2015 when he flew to Los Angeles for a conference, Zhang was accused of conspiring with a colleague from the University of Southern California to steal and sell American secrets to the Chinese government and military through a shell company in the Cayman Islands.

The verdict comes amid worsening ties between the world's two biggest economies.
The verdict comes amid worsening ties between the world’s two biggest economies.PHOTO: AFP

Zhang was charged during an aggressive US crackdown on Chinese theft of intellectual property that began under former President Barack Obama and has continued under the Trump administration, which has applied heavy scrutiny to Chinese scientists doing research in the US. He faces up to 15 years in prison for economic espionage and 10 years for theft of trade secrets, according to a court filing.

Friday’s verdict comes amid worsening ties between the world’s two biggest economies. Despite meetings that US Secretary of State Mike Pompeo held with his Chinese counterpart in Hawaii last week, relations remain soured over issues from China’s handling of the coronavirus to its move to enact legislation restricting Hong Kong and its treatment of ethnic minorities in Xinjiang province.

The Pentagon this week published a list of 20 Chinese companies it said were owned or controlled by China’s military, potentially exposing them to further sanctions in the US. On Thursday, the US won an arrest warrant for the former president of China’s state-owned chipmaker as part of the Trump administration’s “China Initiative” targeting trade-secret theft, hacking and economic espionage.

Zhang’s lawyers argued that his work at one of China’s most prestigious technical universities to develop radio-filtering technology used in mobile phones was about advancing scientific knowledge – and not for the benefit of the Chinese state. Zhang and his lawyers chose to make his case before US District Judge Edward Davila instead of a jury in what legal experts called a “damage control” defence.

His lawyers conceded evidence including emails that prosecutors said contained trade-secret data and admissions he made while being questioned by the FBI. In closing arguments, his lawyers also made a strategic choice to focus on the more serious espionage charges instead of the trade-secret theft allegations.

Prosecutors said the secrets Zhang stole came from a former employer, Skyworks Solutions, based in Woburn, Massachusetts, and San Jose-based Avago Technologies, which acquired Broadcom in 2015. The technology at issue filters out unwanted signals in mobile phones and other devices, which has become more difficult as wireless products have become ubiquitous.

Zhang went to work for Skyworks after earning his doctorate in electrical engineering at the University of Southern California in 2006. At USC he met Wei Pang, who went on to work at Avago and, according to prosecutors, was Zhang’s key co-conspirator. Both men returned to China to teach at Tianjin University, a premier technical school.

At TJU, the professors allegedly used stolen information to refine radio-filter technology, apply for patents in the US and China, and sell it through a company incorporated in the Cayman Islands. Zhang was the first of six defendants to go to trial – and probably the only one because the others are in China.

Davila said during Friday’s hearing that the evidence presented at trial – much of it agreed to by both sides – showed Zhang knew the information at issue was a trade secret. “He filed patent applications using the stolen secrets and listing himself as the inventor,” the judge said.

In support of his finding Zhang guilty of economic espionage, Davila cited evidence that professor’s plan was sponsored by TJU.

Zhang’s lawyer had no immediate comment on the verdict. Sentencing is set for Aug 31.

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