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Three Convicted of Conspiracy to Sell Trade Secrets to Chinese Companies

Friday, March 07, 2014
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that a federal jury in San Francisco has found two individuals and one company guilty of economic espionage, theft of trade secrets, bankruptcy fraud, tax evasion and obstruction of justice for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of companies controlled by the government of China. A DOJ press release states that this case marks the first federal jury conviction on charges brought under the Economic Espionage Act of 1996. Sentencing is scheduled for June 10.

The jury found that the defendants conspired to steal trade secrets from a major U.S. chemical company regarding its chloride-route titanium dioxide (TiO2) production technology and sold those secrets for more than $20 million to state-owned enterprises in China. The DOJ notes that TiO2 is a commercially valuable white pigment with numerous uses, including coloring paint, plastics and paper, but that the production technology at issue also produces titanium tetrachloride, a material with military and aerospace uses. The DOJ states that the purpose of the conspiracy was to help Chinese SOEs develop large-scale chloride-route TiO2 production capability, which is cleaner, more efficient and produces a higher-quality product than the sulfate-route process prevalent in China.

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