Case Studies On Cyber-Enabled Intellectual Property Theft And Corporate Espionage
Case 1: Sinovel Wind Group Co. vs. American Superconductor Corp. (U.S., 2013–2018)
Facts:
American Superconductor (AMSC), a U.S. firm, developed unique wind-turbine control software. Sinovel, a Chinese wind-turbine company, had licensing agreements with AMSC but later refused to pay and instead conspired with one of AMSC’s European engineers to steal the source code.
The employee illegally copied the code from AMSC’s servers and provided it to Sinovel, which embedded it in thousands of turbines.
Legal Issues:
Theft of trade secrets under the U.S. Economic Espionage Act.
Conspiracy and wire-fraud offences.
Cross-border theft of proprietary technology through insider access and cyber transfer.
Outcome:
Sinovel was convicted in 2018 of conspiracy and trade-secret theft. It was fined and ordered to pay restitution, though the financial harm to AMSC (over half a billion dollars) far exceeded the fine.
Significance:
Illustrates how insider cooperation and cyber transfer amplify risks of IP theft.
Demonstrates that U.S. courts will assert jurisdiction over foreign corporations engaging in cyber-enabled espionage.
A landmark case proving that “cyber-enabled” IP theft can devastate an entire company.
Case 2: DuPont vs. Kolon Industries (U.S., 2009–2015)
Facts:
DuPont developed Kevlar®, a para-aramid fiber used for body armor and high-strength materials. Kolon Industries, a Korean competitor, recruited a former DuPont employee who shared confidential formulas, specifications, and manufacturing processes. Digital communications and internal email exchanges proved the data transfer.
Legal Issues:
Misappropriation of trade secrets.
Destruction of electronic evidence (spoliation).
Civil and criminal liability for corporate espionage.
Outcome:
A U.S. jury awarded nearly $920 million in damages to DuPont. Later, Kolon agreed to pay a $275-million civil settlement and an additional $85-million criminal fine after pleading guilty to conspiracy to steal trade secrets.
Significance:
One of the largest trade-secret judgments in U.S. history.
Demonstrated the dangers of using former employees to extract competitor data.
Showed how digital trails and email evidence can make or break an espionage case.
Case 3: Cadence Design Systems vs. Avant! Corporation (U.S., 1990s–2001)
Facts:
Cadence, a leader in semiconductor design software, accused Avant! of building a competing program using Cadence’s stolen source code. Several former Cadence employees allegedly copied software files before leaving and integrated them into Avant!’s tools.
Legal Issues:
Trade-secret misappropriation and copyright infringement of software code.
Criminal liability for corporate officers.
Outcome:
Avant! paid over $180 million in restitution and $27 million in criminal fines. Several executives faced individual convictions and prison sentences.
Significance:
Early example of digital corporate espionage involving direct code theft.
Showed courts’ willingness to impose both civil and criminal penalties for software misappropriation.
Highlighted that even before mass cyber intrusions, corporate espionage often began with insider copying of digital IP.
Case 4: United States vs. Unit 61398 (People’s Liberation Army of China) (U.S., 2014)
Facts:
Five officers from a Chinese military cyber-unit were indicted by the U.S. Department of Justice for hacking American corporations, including Westinghouse Electric, U.S. Steel, and Alcoa.
They allegedly infiltrated corporate servers, stole proprietary designs, and shared them with Chinese state-owned enterprises to gain economic advantage.
Legal Issues:
Economic espionage under the Economic Espionage Act.
Violations of the Computer Fraud and Abuse Act (CFAA).
Sovereign accountability and state-sponsored hacking.
Outcome:
Indictments were issued in 2014 — the first time state actors were formally charged for commercial cyber-espionage. Though the defendants remained in China and were never extradited, the indictments reshaped global policy on cyber theft.
Significance:
Established that even foreign military hackers can face U.S. criminal charges.
Marked a turning point in how nations treat cyber-enabled IP theft as a matter of national security.
Proved that government-backed economic espionage can be prosecuted, even if symbolic.
Case 5: United States vs. Samarth Agrawal (U.S., 2010–2013)
Facts:
Samarth Agrawal, an employee of Société Générale, printed and carried out the firm’s proprietary high-frequency trading (HFT) source code to share with another financial institution. Though the theft was physical, it originated from unauthorized digital copying of protected algorithms and data.
Legal Issues:
Theft of trade secrets (Economic Espionage Act).
Transporting stolen proprietary code across state lines.
Outcome:
Agrawal was convicted and sentenced to three years in federal prison. The appellate court affirmed his conviction, holding that electronic source code constitutes property under the Espionage Act.
Significance:
Clarified that intangible code and algorithms are protected trade secrets.
Reinforced the seriousness of insider cyber theft within financial markets.
One of the first cases confirming that printed or transferred digital data can trigger felony convictions.
Case 6: U.S. vs. Xiaolang Zhang (Apple Inc. Trade-Secret Theft, 2018)
Facts:
Zhang, an Apple engineer working on the company’s autonomous vehicle project, downloaded proprietary blueprints and circuit designs from Apple’s internal servers before resigning. He was stopped by U.S. authorities at an airport while attempting to board a flight to China to work for a rival company.
Legal Issues:
Theft of trade secrets under the Economic Espionage Act.
Attempted transfer of proprietary data for a foreign corporation’s benefit.
Outcome:
Zhang pleaded guilty in 2022. Sentencing proceedings acknowledged the theft involved gigabytes of sensitive data.
Significance:
Highlights the combination of insider access and cyber exfiltration.
Shows how export-control and national-security laws overlap with IP theft cases.
A modern example of corporate espionage in emerging technology sectors (AI and autonomous systems).
Case 7: United States vs. Hao Zhang (Applied Materials/Avago Technologies, 2015–2020)
Facts:
Hao Zhang, a Chinese academic and former engineer, was accused of stealing trade secrets relating to semiconductor technology from Avago and Skyworks. He transferred confidential source code, manufacturing data, and photonics designs to China to support a start-up.
Legal Issues:
Economic Espionage Act violations.
Transmission of stolen trade secrets to benefit a foreign government.
Outcome:
In 2020, a U.S. court convicted Zhang after years of litigation, finding he had intentionally transferred protected technical data to aid Chinese entities.
Significance:
Shows that cyber-enabled espionage can involve sophisticated data exfiltration over years.
Demonstrates enforcement of IP theft laws against individuals collaborating with foreign institutions.
Reinforces the U.S. position that cyber-theft of R&D data can be prosecuted as espionage.
Case 8: DuPont Titanium Dioxide (China espionage ring, 2011–2015)
Facts:
Former DuPont employees and intermediaries were charged with stealing chemical formulas and process data for titanium dioxide pigment technology. They transferred data to Chinese firms via email and encrypted drives.
Legal Issues:
Conspiracy to steal trade secrets and transmit them abroad.
Unlawful export of proprietary manufacturing data.
Outcome:
The conspirators were convicted and sentenced to prison. The companies involved faced civil penalties.
Significance:
Demonstrates persistent targeting of U.S. industrial IP by foreign competitors.
Highlights electronic evidence and digital forensics as central to prosecution.
Summary of Key Legal and Strategic Lessons
Insider Threat is Central:
Nearly every major case involved employees or contractors who had legitimate access to sensitive systems and then exploited it.
Cyber Tools Amplify Traditional Espionage:
What used to require physical theft is now done via network access, downloads, and encrypted transfers.
International Enforcement Challenges:
When offenders are foreign corporations or state-sponsored actors, enforcement often relies on indictments and sanctions rather than physical custody.
Severe Economic Impact:
Damages range from hundreds of millions to billions of dollars, showing that digital IP theft can destroy entire business sectors.
Courts Recognize Digital IP as “Property”:
Source code, software, chemical formulas, and algorithms are legally recognized as tangible property subject to theft statutes.
Growing Overlap of Criminal, Civil, and National Security Law:
Economic espionage, export control, and cybersecurity statutes now intersect in prosecuting IP theft.
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