On May 9th, 2022, a federal judge in Greeneville, Tennessee, sentenced a Michigan woman, known as Xiarong You, to 168 months in prison, the equivalent of 14 years, for trade secret theft, economic espionage and fraud. The defendant was also ordered to serve three years of supervised release and pay a $200,000 fine.
According to court documents and evidence presented at trial, Xiarong You allegedly stole valuable trade secrets related to formulations for bisphenol-A (BPA)-free coatings, a substance generally applied inside beverage cans and food containers to minimise flavour loss and prevent the container from corroding or reacting with the food or beverage contained therein. However, many corporations have begun experimenting with alternatives to the above substance due to proven health risks for humans.
The trial focused not only on the conduct of the former employee, but also on the security measures put in place by Coca-Cola and Eastman Chemical Company, respectively, in order to protect their confidential information.
In particular, from December 2012 to August 2017, Xiarong You was employed as Principal Engineer for Global Research at Coca-Cola, the latter having entered into agreements with several companies for the purpose of research and development, testing, analysis and review of multiple "BPA-free" technologies.
Due to her considerable education and experience within the field, Xiarong You was one of the few Coca-Cola employees with access to trade secrets relating to the development of BPA-free products belonging to major chemical and coating companies including Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem and Sherwin Williams.
Subsequently, at the turn of 2017 and 2018, Xiarong You served as Packaging Application Development Manager at Eastman Chemical Company in Kingsport, Tennessee, where she was one of a limited number of employees with access to trade secrets belonging to Eastman.
The indictment states that the development of such secrets cost the companies an estimated $120 million, and Xiarong You stole the confidential information using two methods: by uploading files to her personal Google Drive account and by taking screenshots of the sensitive data displayed on her PC screen. The stolen information was then stored on an external storage drive.
Xiarong You's conviction is not an isolated case as espionage by former employees is on the increase. In order to cope with such phenomena, companies engaged in the R&D of large trade secrets portfolios are called to implement appropriate security measures aimed at preventing unlawful misappropriation and unauthorised disclosure of the confidential information in their possession.
In the case at hand, Coca-Cola and Eastman Chemical Company had restricted access to trade secret formulas for BPA-free products to a small number of employees. Nevertheless, Xiarong You was able to access such information indiscriminately, being one of the few individuals being authorised to do so.
Hence, corporations should only allow access to their sensitive data exclusively by means of company devices. Furthermore, it is considered as good practice to prevent, for instance, the installation of additional software and/or applications, as well as monitoring access to certain addresses through the adoption of specific whitelists.
Conclusively, companies shall preserve their investments through the development and subsequent implementation of appropriate security and preventive measures aimed at safeguarding, as far as possible, trade secrets, confidential information, and sensitive data, together with spreading a corporate culture that allows employees to quickly provide effective measures that counteract potential violations of such fundamental corporate assets.
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