Second Apple Engineer Caught Stealing Trade Secrets for Chinese Companies

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A second Apple engineer has been caught stealing trade secrets with the intent of selling them to a Chinese-based company. This is the second time Apple has caught one of its employees stealing information to sell to a Chinese company since July.

Jizhong Chen was caught taking photos with a wide angle lens inside a secure work space, according to Bloomberg. When caught, Chen admitted he’d both taken photos and backed up some 2,000 files to his own laptop. Said files included manuals and schematics for Apple’s self-driving vehicle technology, and Chen had already applied for a job with a self-driving vehicle company without Apple’s permission or knowledge.

The Trump Administration has ratcheted up efforts to pursue Chinese companies for IP theft and corporate espionage, while also pressuring the Chinese government about the terms and conditions it requires from American companies wishing to operate in China. For years, China has required companies operating within the country to agree to forced joint ventures and technology transfers. In a 2015 paper, the Federal Reserve Bank of Minneapolis wrote:

With few exceptions, businesses that use advanced technology (and the auto industry is certainly one of them) can gain access to the Chinese market only if they transfer some of that technology to a local partner. In other words, technology is quid pro quo for the access.

This technology transfer often is accomplished through forced joint ventures… In more recent years, requirements have become more implicit and informal, because explicit quid pro quo runs afoul of trade agreements signed by China. Nevertheless, it is common knowledge that if a foreign firm has advanced technology that China wants, whether it be in aerospace, electric cars or some other prized technology, that firm can gain access to the Chinese market only if it shares that technology.

As of 2015, the Fed estimated that more than half (emphasis original) of the technology obtained by Chinese firms was obtained through these mandatory partnerships and technology-sharing agreements.

Jinhua-Image

Fujian Jinhua Integrated Circuit C

IP theft via corporate espionage and forced technology transfers are not the same thing, but the Trump Administration is pushing back on both. Last November, the US indicted Fujian Jinhua Integrated Circuit Co and United Microelectronics Corp (UMC, a pure-play foundry) for the theft of an estimated $8.75B in intellectual property from Micron. There are multiple investigations and cases pending before the WTO (World Trade Organization) over these issues, and the organization has indicated it will investigate both the United States’ IP theft complaint and the question of whether the Trump Administration’s tariffs are permissible under WTO rules. Separately from these cases, the US has brought charges against Genentech (a drug manufacturer) and Huawei (alleged to have stolen trade secrets from T-Mobile).

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