September 24, 2018

Answers to Questions Regarding Chinese Economic Espionage

Over the past few weeks I have been interviewed by a number of Chinese media sources which are very concerned about the recent indictments in the U.S. of Chinese nationals. The indictments occurred shortly after the U.S. dropped similar charges against Sherry Chen, a Chinese-American, who worked for the National Weather Service before before being accused of espionage. The media in China has been extremely harsh in its coverage of these events and has claimed that the indictments are politically motivated and are also the result of anti-Chinese bias in the U.S. Below are questions I received from a reporter at China Daily and my answers to his questions.

Hello! I am Yilun Cheng from China Daily. I know that you have great expertise in industrial espionage and has been concerned with Chinese American issues, and I hope you can answer me a few questions on the latest case of six Chinese nationals arrested under the charge of economic espionage last Wednesday. 

Firstly, I am aware that you remain skeptical toward the espionage case against Chinese American Sherry Chen, and suspect that the arrest involved discrimination based on national origins. Do you think this case is of the same nature? Does “red scare” play a part?

It is difficult to say at this stage that this case is of the same nature as the Sherry Chen case, but everything that I’ve read about it suggests that it is not. Unlike, the Chen case, the government alleges that there was direct involvement by a Chinese state entity. This is a very serious allegation and will be very difficult for the government to prove. As a former federal prosecutor, who prosecuted one of the first cases in this area, I know how things work and I do not believe that such a charge would be made without high level approval and, more importantly, would not be brought unless the government believed that it had strong evidence to support the allegation. I do not believe that national origin played a role in bringing these charges. Over the past five years the majority of economic espionage cases involve a “China” connection. I do not believe that bringing these cases involved a “red scare,” rather the pattern of cases suggest that Chinese companies and certain Chinese state entities are targeting the trade secrets and intellectual property of U.S. companies. In many areas Chinese technology is simply less sophisticated than U.S. technology and it is far easier and less expensive for Chinese companies to steal technology than to develop it on their own. To explain most of the cases in terms other than this is being intellectually dishonest. Just because the U.S. government may have acted improperly in one case does not mean that the government is acting improperly in any other case. Again, it is wrong to suggest otherwise.

Also, a lot of Chinese citizens think that even if the charge turns out to be true, it is not espionage but only a matter of intellectual property. Do you agree that the prosecutor is overly exaggerating and politicizing the problem?

 No, I do not agree that this is a trivial problem. The U.S. remains the strongest economy in the world and is still the birthplace of the majority of major scientific and medical advancements. Much of this success is due to the high level of protection we accord intellectual property, including trade secrets. Unlike in China, protecting intellectual property is not a new concept in the U.S. but the protection of patents and copyrights is contained in our constitution which was written over 200 years ago. The U.S. has successfully balanced the public’s right to access new technology and inventions with the right of the inventor to financially profit from his work. If intellectual property is stolen, it is depriving inventors of what is rightfully theirs and creates a disincentive to create new and greater inventions. To suggest that it is only intellectual property fails to understand the importance that IP plays and has played in the success of the economy of the US. Intellectual property may be the most important asset of the U.S. and it is vital for us to continue to protect it. Once it has been stolen, especially by a foreign entity, it is very difficult to recover. Perhaps more Chinese will better appreciate the importance of IP when the shoe is on the other foot, meaning, that when non-Chinese companies are targeting Chinese companies for their IP, Chinese citizens will appreciate the importance of IP to the Chinese economy. Given the rapid strides that China is making, that day is not that far off. But until then, Chinese citizens and companies should understand that the U.S. regards the theft of Intellectual Property to be a very serious matter and should respect our laws to the same extent that Chinese citizens expect from the U.S.

Finally, do you think charges like this will antagonize Chinese Americans or Chinese nationals living in the US? Do you have any legal advice for them?

I would hope that these cases do not antagonize Chinese Americans or Chinese nationals living in the U.S. As I said earlier, I do not believe that this cases are racially motivated. They should have nothing to be concerned about so long as they obey the law. If specific questions arise in their work, they should contact a lawyer who is knowledgeable in this area for advice, such as me. Further, it is vitally important for Chinese companies who want to do business in the US or want to hire employees from the U.S. that they consult with U.S. lawyers about how to do it properly so as not be accused of illegal behavior. It is easy for companies to make mistakes if they don’t understand the law in this area and be accused of wrongdoing, however it is also easy to avoid making mistakes if the company understands the law and truly wants to follow it. It is entirely up to a company or an individual whether they wish to follow the law in this area or ignore the law and accept the consequences if they are caught: “Don’t do the crime if you don’t want to do the time.”

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