GM tech secrets offered to Chinese by engineer, U.S. says
Jury hears opening arguments in trade secret case
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DETROIT (Bloomberg) -- A former General Motors Co. engineer and her husband stole trade secrets related to hybrid car technology from the automaker to use in developing such vehicles in China, a U.S. prosecutor said at the beginning of trial today.
Shanshan Du, the former GM employee, copied the company's private information on the motor control of hybrids and provided documents to her husband, Yu Qin, the government alleges. Qin used the trade secrets to seek business ventures or employment with GM's competitors, including the Chinese automaker Chery Automobile Co., the U.S. said.
GM contends that the trade secrets at issue are worth more than $40 million, prosecutors said.
"This case is about theft as well as deceit," prosecutor Michael Martin said today in federal court in Detroit in opening statements for the trial. The defendants are "partners in life, partners in business and partners in crime," he said.
Defense arguments
But Qin's attorney Frank Eaman argued there's no evidence his client used, or planned on using, the documents his wife gave him.
He argued that the hybrid technology described in the documents would've been useless to anyone outside of GM. Eaman said you can't take technology from GM and simply plug it into someone else's car because it's unique to the company.
Robert Morgan, Du's attorney, says the case isn't about theft, but whether 18 items out of more than 16,000 were trade secrets.
The defense said the documents Du copied, including some describing hybrid electric drive systems, weren't encrypted as per GM's policy on trade secrets.
Eaman said a company must take "reasonable means" to protect information in order to deem it secret.
"There are no trade secrets in this case," Eaman said.
The case is one of more than a dozen brought in the past three years by the U.S. Justice Department alleging defendants of Chinese ancestry or citizenship sought to take trade secrets from U.S.-based companies for use by the Chinese government or businesses.
In the Detroit case, Du and Qin were indicted in July 2010 on three counts each of trade theft and wire fraud. Qin was also charged with obstruction of justice. Both have pleaded not guilty.
The defendants argued in court papers that the government withheld evidence about the case, hampering their rights to a fair trial.
FBI interview
This evidence included details of an FBI interview with a witness who indicated "several items named in the indictment were not secret" and that "contrary to the allegations in the indictment, several items of software possessed by Du were necessary for her work," defense lawyers said in an Oct. 15 filing.
The U.S. alleges that Du, an electrical engineer who worked at GM from 2000 to March 2005, sought assignment to the company's hybrid work project to gain access to information on the motor control of such vehicles. Du worked on various software engineering projects related to hybrid vehicle technology and was responsible for some code used in motor controller cards.
The U.S. claims that Du began providing GM documents to her husband for use in a company they had started, called Millennium Technology International. Du copied material and Qin developed a plan to sell hybrid vehicle technology through a joint venture in China, the U.S. said.
The process accelerated after GM sought Du's resignation in late January 2005, according to the indictment.
Hard drive
"Approximately five days after GM offered defendant Shanshan Du a severance package, defendant Shanshan Du copied thousands of GM documents, including documents containing GM trade secrets, to an external hard drive used for MTI company business," the U.S. said.
Martin said in his opening statement today that 16,262 GM files were found on Du's computer. "The central issue, was this theft or as Du said, 'a big misunderstanding?'" Martin asked.
Du told GM when confronted with the files, that it was a "big misunderstanding," Martin said. She also told GM that she forgot to delete files from her computer when she left the company, the prosecutor said.
After Du left the company, the couple uploaded GM documents containing secret information onto a computer at their home, the U.S. claimed. In July or August 2005, Qin "communicated with others, by e-mail and in person, about collaboration on a new business venture which would provide hybrid vehicle technology to Chery," the U.S. said.
Electronic documents
GM was informed by Qin's employer, Controlled Power Co., in 2005 that CPC workers discovered a bag with an internal hard drive containing electronic documents that appeared to be the property of GM, according to a federal appeals court decision in July on evidence in the case.
The U.S. alleges in the obstruction-of-justice charge against Qin that he destroyed evidence during the government's initial investigation.
In May 2006, the U.S. said, the defendants "drove to a Dumpster behind a grocery store where defendant Yu Qin discarded plastic bags containing shredded documents responsive to federal grand jury subpoenas."
The trial before U.S. District Judge Marianne O. Battani should last several weeks.
Vince Bond Jr. contributed to this report.
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