Friday, February 19, 2016

Business Espionage: GSK Plugs Trade Secret Leaks

The United States Attorney’s Office for the Eastern District of Pennsylvania announced the indictment of five people, including two research scientists at GlaxoSmithKline (“GSK”), on charges of stealing trade secrets from the company, wire fraud in connection with the theft of confidential information, money laundering and conspiracy. While the majority of the charges in the 43-count indictment focus on the role of Yu Xue, described in the indictment as “one of the top protein biochemists in the world, the indictment describes an elaborate scheme to sell the stolen information through companies in China, and to launder the proceeds.

The indictment charges Yu Xue and, to a lesser extent, Lucy Xi, with emailing trade secret and confidential information, including information about biopharmaceutical products under development, GSK research data, and GSK processes regarding the research, development, and manufacturing of biopharmaceutical products, and a business plan for a quality control unit, to their co-conspirators, Tao Li and Yan Mei, who is Lucy Xi’s husband. Yu Xue, Tao Li, and Yan Mei allegedly formed three corporations: Renopharma, Inc., which was incorporated in Delaware; and Nanjing Renopharma, Ltd, and Shanghai Renopharma, Ltd., which were established offshore and operated in China (collectively “Renopharma”), to market and sell the stolen trade secrets and confidential information. According to the indictment, Renopharma advertised that it operated as “a drug research and development company in China with limited U.S. affiliation,” and promoted itself as “‘a leading new drug research and development company, [which] specialized in providing products and services to support drug discovery programs at pharmaceutical and biotech companies.’” As the indictment also noted, the stolen documents contained information which would be especially useful for a start-up biopharmaceutical company such as Renopharma represented itself to be. more