(Updates with Motorola comment in final paragraph.)
Nov. 7 (Bloomberg) -- An ex-Motorola Inc. software engineer, stopped by U.S. customs agents at a Chicago airport while allegedly carrying 1,000 company documents, $30,000 and a one-way ticket to China, committed economic espionage for her native country, a federal prosecutor told a trial judge.
Hanjuan Jin, 41, a Chinese-born naturalized U.S. citizen, is accused of stealing mobile telecommunications technology for a Beijing business, Kai Sun News (Beijing) Technology Co., also known as SunKaisens, and for China’s military.
“The defendant has a job waiting for her, a job in China with a company that provides cellular technology to the Chinese military,” prosecutor Christopher Stetler said today in his opening statement, recounting Jin being stopped on Feb. 28, 2007, as she boarded a flight at O’Hare International Airport.
Jin waived her right to a jury and is being tried by U.S. District Judge Ruben Castillo in Chicago. If convicted on any of the three Chinese-military-related charges, she faces as long as 15 years in prison. The top penalty for each of the remaining three counts is 10 years.
Defense lawyer Beth Westman Gaus told Castillo that while Jin may have been a bad employee, none of the documents on which the U.S. case relies, describing a “push-to-talk” mobile phone technology, contain secrets valuable to Motorola.
“It was a developmental dead-end,” Gaus said of the company’s integrated digital enhanced network or iDEN technology. “It was obsolete.”
Industrial Spying Report
Jin’s trial started four days after the U.S. Office of the National Counterintelligence Executive issued a report on industrial spying by foreign countries.
“Chinese actors are the world’s most active and persistent perpetrators of economic espionage,” according to the 31-page Nov. 3 report.
Of seven federal U.S. Economic Espionage Act cases last year, six involved links to China, the report said.
It spotlighted the case of David Yen Lee, a former Valspar Corp. chemist who pleaded guilty to stealing trade secrets with plans to take them to a new employer in China.
U.S. District Judge Robert Gettleman in Chicago sentenced Lee to 15 months in prison and ordered him to pay $30,975 in restitution. The paint formulas he downloaded from the Minneapolis-based company were worth as much as $20 million, according to the report.
Huang Secrets Case
An ex-Dow AgroSciences LLC researcher, Kexue Huang, last month admitted stealing secrets from that company for the benefit of China’s Hunan Normal University. He also admitted in federal court in Indianapolis that he took trade secrets from the Minneapolis grain distributor Cargill Inc.
Financial losses from his conduct exceeded $7 million, according to the U.S. Justice Department. No sentencing date has been set.
When she was stopped at O’Hare, Hanjuan Jin had classified Chinese military papers in her possession, Stetler said today.
Wang Baodong, a spokesman for the Chinese embassy in Washington, didn’t reply to e-mailed requests for comment on the allegations.
Since that February 2007 incident, Jin’s former employer has become two companies.
Motorola Mobility Inc., a Libertyville, Illinois-based mobile-phone maker, spun off in January and is being acquired by Google Inc. for $12.5 billion if the Justice Department grants antitrust clearance.
Two-way radio and wireless network builder Motorola Solutions Inc. remains in Schaumburg, Illinois.
“Motorola Solutions has cooperated with the government throughout its investigation and prosecution of this case and continues to fully cooperate with the Department of Justice,” Nicholas Sweers, a company spokesman, said in an e-mailed statement.
Jin also is being sued by Motorola Solutions over claims she was working for another Schaumburg-based telecommunications company, Lemko Corp., while she was working at Motorola.
Closely held Lemko’s chief executive officer, Nicholas Labun, and Chief Operating Officer Bohdan Pyskir are former Motorola executives who are co-defendants with Lin.
Stetler said the nine-year Motorola employee was leading a double life.
While still working for Motorola in February 2006, Jin took a one-year medical leave of absence during which she accepted employment at SunKaisens, he said.
On Feb. 24, 2007, she bought a ticket to China for four days later, according to the December 2008 revised indictment, then returned to work at Motorola.
By then, she was in SunKaisens’ employee directory and an e-mail account there had been established for her, Stetler said.
On Feb. 26, 2007, she allegedly began downloading technical and confidential documents from Motorola computers and did so again the next day before and after telling her manager she was resigning.
Customs Agent Nicolas Zamora, the first U.S. witness to testify, told Castillo today that Jin was subjected to a random stop on the jetway as she boarded her plane.
A search of her bags revealed more than $30,000 in cash and documents from Motorola, SunKaisens and the Chinese military, Zamora said.
Disputing the value of Motorola’s data, Gaus compared it to still-patented methods for recording music on a cassette tapes in a world that now relies primarily on digital storage.
“Technology is not static,” she said. “It changes over time.” The data her client had was without economic value, one of the legal criteria for defining a trade secret.
Her former employer, in its civil case filing, disagreed.
“If the Motorola proprietary trade secrets and confidential information found in defendant Jin’s possession were replicated by a competitor, Motorola would suffer many millions of dollars in harm,” according to its complaint.
Lemko denies receiving any purloined information from Jin, according to an e-mailed statement by spokesman Raymond Minkus.
“We believe Motorola initiated this suit to cover up its mishandling of the Jin employment matter,” Minkus said, “including its overreaction to the volume and the value of the reputed trade secrets -- if the information was secret at all.”
Lemko today sued Motorola Solutions in an Illinois court three blocks north of where Jin stands trial, accusing its larger competitor of attempting to destroy it through abuse of process and interference with business relations.
“Motorola is aware of the lawsuit filed by Lemko Corporation today,” Sweers, the company spokesman, said in an e-mailed statement. “It considers the allegations frivolous and intends to vigorously defend the case.”
The criminal case is U.S. v. Jin, 08-cr-192, U.S. District Court, Northern District of Illinois (Chicago). The civil case is Motorola Inc. v. Lemko Corp., 08-cv-5427, U.S. District Court, Northern District of Illinois (Chicago).
The state court case is Lemko Corp. v. Motorola Solutions, 2011L11566, Cook County, Illinois, Circuit Court, Law Division (Chicago).
--With assistance from Eric Engleman in Washington. Editors: Peter Blumberg, Michael Hytha
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