US charges Chinese software engineer for theft of trade secrets

William Yao could face up to ten years in prison if convicted - if he returns from China

A US court has charged a Chinese software engineer for allegedly stealing trade secrets from his former employer, and taking it to his next company in China.

Fifty-seven-year-old Xudong Yao - a naturalised American also known as William Yao - was indicted for nine counts of theft. Officials believe that he fled to China and is now residing there.

According to the court documents, Yao started working for a Chicago-based manufacturer in August 2014, downloading more than 3,000 electronic files within his first two weeks of employment.

This included proprietary source code and trade secrets about the company's locomotive control system, as well as other technical documents. Yao was fired by the company in February 2015 for reasons unrelated to the alleged theft of documents.

Yao subsequently moved to China in July 2015 to begin working for an unnamed Chinese company. "On 18 November 2015, Yao traveled from China to O'Hare International Airport in Chicago, according to the indictment," officials claimed.

They continued: "At the time, he had in his possession the stolen trade secret information, including nine complete copies of the suburban Chicago company's control system source code and the systems specifications that explained how the code worked," the indictment states.

Regardless of how well his employment at his new company goes, Yao is unlikely to return to the US: Theft of trade secrets is punishable by a maximum sentence of ten years in prison.

The Yao indictment is just one of a number of cases of alleged theft of trade secrets from the US, Europe, Taiwan and elsewhere, often by members of staff who subsequently move to China to take up new roles at Chinese companies.

In December 2018, ten Chinese nationals were indicted by the US Department of Justice over the alleged theft of US turbofan technology.

The group cracked the IT systems of an unnamed French company that was working with a US counterpart, and pilfered the intellectual property of a turbofan jet engine for use in large commercial aircraft.

In January this year, communications hardware giant Huawei was accused of intellectual property theft. In March, it was charged with ten counts of fraud and intellectual property theft in a Seattle court.

Indeed, Huawei has been accused of running "a pattern of dubious tactics" to steal intellectual property from rivals - targeting Apple and Apple's suppliers in particular.

Allegations of intellectual property theft emanating from China are not new. In 2013, a pressure group claimed that it was costing US companies as much as $300 billion per year.