On Saturday, May 16, 2015, federal authorities arrested Tianjin University professor Zhang Hao at Los Angeles International Airport on charges of economic espionage: insider theft of technological secrets from Silicon Valley to Tianjin, China. The indictments extend to five others as well: Pang Wei and Jinping Chen (two other Tianjin University professors) and three other Chinese citizens.
According to the Los Angeles Times, the defendants were indicted for theft of FBAR (film bulk acoustic resonator) technology, which is used in mobile phones and other wireless devices. They stole primarily from American companies Avago Technologies and Skyworks Solutions—companies that they worked for—on behalf of the Chinese government.
Emerging email correspondence shows that the six defendants started plans back in 2006 to bring FBAR technology to the state-sponsored university and replicate the chips under the company name ROFS Microsystems. As a result, they were able to obtain business and military contracts, the indictment claims.
The U.S. Justice Department will have to prove that the defendants violated the Economic Espionage Act by stealing trade secrets to benefit the Chinese government. As one would imagine, proving such a case can be difficult. However, if convicted, the defendants could face long prison sentences based on the monetary value of the trade secrets they stole.
By no means is this story a novelty in our world of constant and competitive technological innovation. As reported in the Wall Street Journal, two engineers were convicted of selling trade secrets to China in March 2014. Just two months after that incident, the New York Times broke the story of five men in the Chinese army who hacked into the systems of multiple American tech companies. Numerous other cases exist, with varying degrees of damage, but regardless of their level of sensationalism in the media, what kind of impacts do these cyber-attacks and insider thefts have within and beyond our borders?
For one thing, the economic effects are staggering. U.S. News reports that theft of intellectual property costs U.S. companies approximately $250 billion per year, a figure that exceeds what businesses pay in federal income taxes. Furthermore, according to the Washington Post, economic espionage costs international economies upwards of $445 billion per year, or approximately one percent of income worldwide.
What can we do to stem this illegal tide of profit from trade secrets and intellectual property? There is no easy solution, especially because our technological advancement is constantly rivaled by the development of new hacking techniques. Thus, our laws must continue to evolve and adapt to these increasing complications and, more importantly, so should our enforcement of such promulgations.
Additionally, this story comes at a fragile point in U.S.-China political relations. As reported by the New York Times, the Obama administration is contemplating how to respond to China’s occupation of disputed islands in the South China Sea, the escalation of its nuclear weapons program, and continued online hacking. If this particular story is any indicator, economic espionage is moving increasingly to the forefront of U.S.-China diplomacy. Unfortunately, the Obama administration has had limited success in its attempts to prevent related incidents.
As future technological espionage cases emerge, inevitably questions of personal, as well as corporate, privacy, and protection will arise. Indeed, we will only have more at stake, not less, as our lives and machines continue to develop. The issues that accompany them remain constant struggles that will undoubtedly pose more questions than answers in the coming years.