UPDATE 1-Chinese man pleads guilty to US trade secret theft

Tue Oct 18, 2011 6:31pm EDT

* Stole trade secrets from Dow Chemical, Cargill

* Sent information to China-backed university, Germany

By Jeremy Pelofsky

WASHINGTON, Oct 18 (Reuters) - A Chinese-born scientist pleaded guilty on Tuesday to stealing valuable trade secrets about pesticides and food products from two major U.S. companies and sending the information to China and Germany.

Kexue Huang, 46, worked at a Dow Chemical Co subsidiary from 2003 to 2008 in Indiana where he led a team of scientists developing organic insecticides and then later for another agribusiness giant, privately held Cargill Inc.

He pleaded guilty in a federal court in Indiana to one count of stealing trade secrets from Cargill and one count of engaging in economic espionage at Dow, only the eighth case charged involving the U.S. Economic Espionage Act of 1996.

The plea is the latest in a series of cases involving the theft of valuable trade secrets from U.S. corporations that have been either taken or sent to China, where companies are in hot competition with U.S. firms.

Such thefts -- an increasing issue for U.S. companies -- often help foreign companies short-cut spending millions of dollars and potentially years of research and development.

Economic ties between the two countries have been tense lately, particularly over trade practices.

Earlier this year, a Chinese engineer was sentenced to almost six years for stealing trade secrets from Ford Motor Co worth millions of dollars and trying to use them to get a job with Chinese automotive companies.

A Detroit couple was charged last year with conspiring to steal trade secrets about General Motors Co's hybrid vehicles worth more than $40 million to pass on to China's Chery Automobile Co. The couple has pleaded not guilty.

Huang admitted that, despite signing a confidentiality agreement, he passed numerous secrets about Dow's products to others doing research in Germany and China, according to his plea agreement filed in federal court in Indiana.

DOW CAN IDENTIFY STOLEN SECRETS

He also received grant money from the Chinese government to further his own research at a government-backed university, Hunan Normal University, as well as published articles about his work based on information from Dow, the agreement said.

He admitted he was trying to develop and produce the pesticides in China to compete against his former employer Dow, including identifying manufacturing facilities, according to the plea agreement filed in federal court.

The Dow unit, Dow AgroSciences, said it can identify products that have the proprietary technology stolen by Huang and that the company was taking steps to monitor international markets to try to ensure counterfeit products never make it.

"Should any such product ever be found, we are prepared to exhaust all legal means at our disposal to ensure that our intellectual property rights are protected," the firm said in a statement.

After leaving Dow to work for Cargill, Huang also admitted he stole details about a key enzyme used to make a new food product at that company, prosecutors said.

He sent that sensitive information to a student at the Chinese government-backed university, they said. A Cargill representative was not immediately available for comment.

"Today's plea underscores the continuing threat posed by the theft of business secrets for the benefit of China and other nations," said Lisa Monaco, Assistant Attorney General for the Justice Department's National Security Division.

Huang was born in China and had legal permanent resident status in the United States. He faces up to 15 years in prison for the economic espionage charge and 10 years for theft of trade secrets. He could also be deported.

Prosecutors estimated the total losses from Huang's conduct ranged between $7 million and $20 million, according to prosecutors.

The case is USA v. Kexue Huang, No. 11-cr-163, in U.S. District Court for the Southern District of Indiana.

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