U.S. Prosecutors Suffer Procedural Failure in China Economic Espionage Case

On Monday, U.S. District Judge Jeffrey White in San Francisco dealt a setback to federal prosecutors as he ruled that prosecutors had not properly notified China-based Pangang Group Steel Vnadium & Titanium Co Ltd of a criminal indictment over allegations of conspiracy to steal trade secrets from DuPont. In light of recent circumstances where the United States has identified industrial spying as a growing threat to the prosperity of the nation, the setback suffered by this case would have significant repercussions in the industry. The court gave the government until August 16 to state how they intended to proceed with the case as the accused had not been duly notified.

Earlier this year, a Northern California grand jury had indicted the Pangang Group and others for conspiracy to commit economic espionage and other crimes including conspiracy to steal trade secrets.

The case against Pangang alleged that the company, which is situated in Sichuan, China, had been working with a California businessman and others to obtain several valuable trade secrets from chemical giant DuPont. Prosecutors argued that they had notified Pangang properly through a U.S. company, Pan America that was Pangang’s agent.

However, the court ruled on Monday that there was insufficient evidence to prove that Pangang exercised sufficient control over Pan America for the latter company to qualify as agent of the former. In the same case, California businessman Walter Liew and his wife Christina, also face charges of conspiracy to commit economic espionage. Liew, who is a U.S. citizen, is alleged to have paid former DuPoint engineers for assistance in designing chloride-route titanium dioxide. Currently, DuPont is the world’s largest producer of the white pigment which is used in a variety of products including plastics, paint, and paper. Both Liew and his wife have pleaded not guilty to the charges against them.