Two charged with conspiracy to commit economic espionage

By Colleen Taylor, Contributing Editor -- Electronic News, 9/27/2007

Two former employees of NetLogic Micosystems were indicted Wednesday by a federal grand jury in San Jose, Calif., on charges of conspiracy to commit economic espionage and to steal trade secrets, two substantive counts of economic espionage, and two substantive counts of theft of trade secrets. Officials said that Lan Lee, 42, of Palo Alto, Calif., and Yuefei Ge, 34, of San Jose, conspired to steal trade secrets from NetLogics and from Taiwan Semiconductor Manufacturing Corp., where they had not been employed.

The indictment alleges that the defendants created a company, SICO Microsystems Inc., for the purpose of developing and marketing products derived from and using the stolen trade secrets. According to the charges, the trade secrets involved related to computer chip design and development. The defendants sought to obtain venture capital funding for their company from the government of China, in particular the 863 Program and the General Armaments Department.

"The vigorous enforcement of intellectual property statutes increases the economic vitality of this region, and adds to the security of our nation as a whole," United States Attorney Scott N. Schools said in a statement released yesterday. "This office is committed to the prosecution of individuals who seek to benefit foreign governments or instrumentalities with stolen trade secrets."

Lee, an American Citizen, and Ge, a Chinese national, had been released on the original indictment on $300,000 bonds. Their next scheduled appearance on the superseding indictment is on October 29.

The maximum statutory penalty for each count of conspiracy to commit economic espionage and theft of trade secrets and the substantive counts of economic espionage is 15 years and a fine of $500,000, plus restitution, if appropriate. The maximum statutory penalty for each substantive count of theft of trade secrets is 10 years and a fine of $250,000, plus restitution, if appropriate.

This is not the only trade secret related trouble in which TSMC has been entangled in recent weeks. A California district court in San Francisco ruled against TSMC on Tuesday, declaring that the company pay $30.5 million in damages to UniRAM Technology Inc. for the alleged misuse of UniRAM's trade secrets. Earlier this month, TSMC separately said it expects to soon see a favorable ruling in its lawsuit against China-based foundry Semiconductor Manufacturing International Corp. (SMIC) that dates back to 2004, when TSMC filed court papers alleging that SMIC engaged in corporate espionage to obtain TSMC's trade secrets.


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