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COMPOSITION OF A TRADE SECRETS THEFT ENTERPRISE – CASE STUDY – Part 3 of 5

Last month the U.S. Attorney for the Eastern District of Pennsylvania announced the second guilty plea from one of five individuals charged with conspiracy to steal trade secrets from GlaxoSmithKline (GSK) a U.S. pharmaceutical company. According to the press release the theft occurred in order to benefit a Chinese company backed by the Chinese government.

This post is Part 3 of 5 in which we continue to examine the details of this trade secrets theft enterprise. Please see the following links to read the previous two Parts: Part 1Part 2

MANNER AND MEANS

The following is essentially the “Manner and Means” the five defendants used to carry out their crimes as described in the indictment:

The two GSK employees stole GSK trade secrets and would typically do the following:

  • Defendant #1 (GSK employee) would e-mail the trade secrets from her work e-mail account to her personal e-mail account
  • Defendant #1 then emailed the trade secrets from her personal e-mail account to the personal e-mail accounts of defendants #2, 3, and 4
  • Defendant #5 (GSK employee) emailed the stolen information to her husband Defendant #2

And the cycle would repeat itself, over and over again.

In one of many telling email exchanges Defendant #1 (a/k/a “Joyce”) had with her co-conspirator twin sister, the twin sister asked, “…is ok you sent this plan from your company email?” And “Joyce” assured her, “it is ok.”

STOLEN TRADE SECRETS SAMPLES

  • GSK powerpoint presentation
  • Research paper with GSK letterhead on each page
  • The document clearly identified as being GSK information and clearly marked, “CONFIDENTIAL”
  • GSK documents with the email instruction from one of the GSK employees, “Please do not spread.”
  • GSK powerpoint presentation and training lecture

DEFENDANTS CRIMINAL BUSINESS STRUCTURE

The following is the business structure of the trade secrets theft enterprise as described in the indictment:

Three of the five defendants formed three corporations (one in Delaware–the other two were off-shore entities) to market, sell, and ultimately profit from the stolen GSK information.

HOW WOULD THE DEFENDANTS PROFIT?

The defendants planned to profit in multiple ways:

  • They planned to sell the GSK trade secrets as their own research
  • They intended to use GSK trade secrets to secure lucrative consulting contracts
  • They intended to do additional research to finalize and perfect GSK products still in development
  • They intended to patent some GSK products
  • They intended to use GSK products to bolster their personal business entities reputation

MONEY LAUNDERING

To hide the profits, Defendant #1 titled her interest in her personal business entity and the proceeds of the crime in the names of family members and other associates.

Here’s a quote from the criminal complaint, “YU XUE (Defendant #1, a/k/a “Joyce”) instructed two of the other defendants to hide the proceeds of the fraud scheme in the name of her twin sister in an attempt to prevent the criminal conduct from being traced back to “Joyce.”

IP PROTECTION OBSERVATION

There were a number of opportunities for a vigorous internal-integrity-monitoring program to pick up on this criminal conspiracy beyond emails traveling from a GSK computer to a personal computer, as we noted in Part 1, but, through the utilization of background screenings.

If annual background screenings were conducted of employees, (especially scientists with access to complex R & D information) an updated background screening would have uncovered the business entity GSK scientist-defendant “Joyce” registered in Delaware to facilitate the criminal enterprise.

IN THE NEXT POST…Part 4…

…we will explore what triggered the FBI investigation and the steps they took to investigate the allegations.

 

Disclaimer: IPPIBlog.com is offered as a service to the professional IP community. While every effort has been made to check information in this blog, we provide no guarantees or warranties, express or implied, with regard to content provided in IPPIBlog.com. We disclaim any and all liability and responsibility for the qualification or accuracy of representations made by the contributors or for any disputes that may arise. It is the responsibility of the readers to independently investigate and verify the credentials of such person and the accuracy and validity of the information provided by them. This blog is provided for general information purposes only and is not intended to provide legal or other professional advice.

 

 

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Ron Alvarez is an IP Protection and Investigations specialist at XG Consultants Group, Inc., in New York City. He is a former NYPD lieutenant where he investigated robbery, narcotics, internal affairs, and fine art theft cases. Ron is a graduate of the FBI National Academy and earned a B.A. in Government and Public Administration from John Jay College of Criminal Justice in Manhattan. He has published a number of articles on various topics for PI Magazine. Ron is licensed in New York State.

1 comment on “COMPOSITION OF A TRADE SECRETS THEFT ENTERPRISE – CASE STUDY – Part 3 of 5

  1. Pingback: COMPOSITION OF A TRADE SECRETS THEFT ENTERPRISE – CASE STUDY – Part 4 of 5 – IP PI BLOG

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