Chinese Engineer Found Guilty of Stealing Tech from US LED Company, Ordered to Pay $66 Million

A visitor looks at LED TVs at the 2014 IFA home electronics and appliances trade fair in Berlin on Sept. 5, 2014. Sean Gallup/Getty Images

A Chinese engineer has been ordered by a U.S. court in California to pay $66 million in damages to his former employer, Lumileds, for stealing technology from the maker of LEDs and other lighting products.

Chen Gangyi was found guilty by a Santa Clara Superior Court jury in San Jose of stealing trade secrets and transferring them to his new employer in China, a manufacturer of home appliances and LED products called Elec-Tech International (ETI), the Mercury News reported.

From January 2005 to June 2012, Chen worked at Lumileds as a research engineer. In the days before he left his position, Chen smuggled out thousands of files with company trade secrets, and delivered them to ETI to help it develop LED technology, according to the lawsuit filed by Lumileds.

Prior to leaving his Lumileds position and moving back to China, Chen had signed an employment contract with ETI, the suit alleged. At ETI, a publicly traded company on the Shenzhen Stock Exchange, Chen was promoted to vice president, soon earning more than 621,000 yuan (about $90,000) a year.

Chen’s recruitment at ETI was part of a larger campaign to poach employees and intellectual property from Lumileds. “Several employees [at ETI] recruited from Lumileds were fired or resigned within months of joining, after they refused to share trade secrets of Lumileds,” according to the suit.

The jury awarded “the amount of research and development costs that the jury concluded ETI saved by using Lumileds trade secrets, rather than engaging in its own development,” according to a press release by Lumileds.

One of Lumileds' developed LED products. Courtesy of Lumileds

Chen and ETI plan to appeal the decision.

“As we asserted during the trial, Elec-Tech independently developed its own process for LEDs and never took, nor used any of Lumileds’ technology,” ETI’s law firm Jeffer Mangels Butler & Mitchell said in a statement.

In 2014, Lumileds had tried to file a federal lawsuit, but a judge found the company’s case, which was brought under the Computer Fraud and Abuse Act, wasn’t covered by the law, according to Mercury News.

Chen is a Chinese national who graduated from China’s prestigious Tsinghua University. He later came to the United States to pursue a master’s degree at Yale University and a doctoral degree in chemical engineering at University of California–Los Angeles, according to information on the Sina financial news portal on senior officials at ETI.

One fact not widely reported is that soon after Chen began at the Chinese firm, his salary rose quickly between the years 2013 and 2014, reaching more than 1.2 million yuan (about $173,000), according to salary information on Sina’s financial news portal. By 2017, however, his salary had declined to 168,000 yuan (about $24,000). On the Chinese internet, netizens speculated that ETI stopped compensating him handsomely after the firm had obtained all the key technology it needed from Chen.

China’s Intellectual Property Theft

In recent months, a string of court cases and federal indictments has revealed how Chinese firms have aggressively recruited Chinese nationals working or studying in the United States to steal technology for redeployment in China.

Much of that technology is related to industries that the Chinese regime wishes to develop in order to catch up with global competitors.

Beijing outlined in its “Made in China 2025” economic plan how the regime plans to acquire key technologies through foreign investments and pressuring foreign firms in China to transfer their technology.

Recruiting talent from top tech firms overseas is also critical. For example, in recent years, many employees at Taiwan’s top chipmakers have been lured by big salaries to work for Chinese semiconductor firms instead. China has long wanted to reduce its reliance on foreign-manufactured chips, used in nearly every electronic device.

The Chinese regime also runs a recruitment program specifically designed to hire those who have worked in the technology and science fields abroad, called the Thousand Talents program.