Verdict is in for California DuPont economic espionage case

Most California intellectual property cases do not involve criminal charges. The cases are worked out through settlements or civil court judgments. One party may walk away from a ruling poorer or richer, but penalties are financial ones.

You probably don’t give much thought to why the middle of Oreo cookies look so white, but DuPont Co. does. DuPont uses a special process to make titanium dioxide, an unappetizing-sounding chemical used to whiten Oreo centers and other worldwide products. U.S. prosecutors said when China’s offer to buy the valuable chemical was rejected by DuPont, the only other option was to steal it.

Five people, some with strong Chinese government connections and others with inside DuPont information, were charged with collaborating to steal the trade secret and sell it overseas. The buyer, Chinese government-controlled Pangang Group Co. Ltd., allegedly funneled over $20 million to a husband-and-wife owned California business, to fund the pursuit of the intellectual recipe. Three defendants have been convicted of economic espionage; DuPont also initiated a civil suit.

The 56-year-old company owner and a 78-year-old, former DuPont scientist were convicted recently by a jury. A scientist who pleaded guilty in 2012 is awaiting sentencing; another accused ex-DuPont employee committed suicide. The businessman’s wife faces trial this year.

Prosecutors said the California couple purposely recruited former DuPont employees to secure the chemical trade secret. During the six-week trial, jurors learned Chinese leaders placed a high priority on obtaining Dupont’s manufacturing process. The Pangang Group factory apparently now employs DuPont’s method, which defendants argued was pieced together through “public” sources.

The FBI investigates intellectual property theft on a global level, with trade secrets violations among its highest priorities. The federal government is interested in protecting the revenues of some very important taxpayers — U.S. businesses. It’s not often you hear about cases of economic espionage but, when you do, the plaintiffs are often recognizable.

Source: ABC13,com, “Men sold Oreo trade secret to China” Associated Press, Mar. 07, 2014