Federal Judge Sentences Chinese National to Prison for Stealing Employer’s Trade Secret

A federal judge in the Southern District of New York sentenced a software engineer, Xu Jiaqiang, to five years in prison for stealing source code from his former employer, IBM. Xu previously had pled guilty to three counts of economic espionage and three counts of theft of trade secrets. According to the Department of Justice, IBM took significant precautions to protect the valuable source code that Xu stole, to which he had access given his particular role. Among other things, IBM stored the code behind a firewall and limited access to a limited number of employees, each of whom was required to agree in writing (both at the outset and conclusion of their employment) that they would maintain the confidentiality of IBM’s proprietary information. Despite these precautions, when he resigned from IBM in 2014, Xu took the valuable source code “for his own profit and intending to benefit the People’s Republic of China.” Xu used the stolen source code to make software to sell to customers, and attempted to sell it to undercover FBI agents.

TIP: While taking precautions to prevent theft of trade secrets may not ultimately prevent all theft by employees, such precautions are necessary to ensure that a company has legal remedies—civil or criminal—when theft occurs.