Unlike traditional industrial espionage economic espionage means that someone acted to benefit a foreign government and is a more serious crime. Only a few economic espionage cases have been resulted in convictions, mostlybecause it’s difficult to prove a person was acting to benefit a foreign nation. The case against Ye and Zhong began seven years ago, when they were arrested at San Francisco International Airport while attempting to board a flight to China. Their luggage was allegedly full of sensitive documents on chip designs taken illegally from four Silicon Valley tech firms who had employed the engineers. The companies include NEC Electronics Corp., Sun Microsystems Inc., Transmeta Corp. and Trident Microsystems Inc. Both had worked at Transmeta and Trident, while Ye had also worked at Sun and NEC. Other documents seized by authorities allegedly demonstrate the engineers were attempting to solicit money from Chinese government agencies to fund a startup firm.

Prosecutors say the documents showed that Ye and Zhong were promoting the startup as something that would elevate China’s chip-making capabilities, however, the documents do not confirm the Chinese government was aware that the chip designs were stolen.

Californians are the most frequent victims of Internet crime and
complaints according to a new Federal Trade Commission report that
stems from data provided by the attorney general’s office.

California
collected 8,622 individual complaints on Internet-related fraud in
2007, according to a story first reported by the San Jose Mercury News.
The amount of complaints far exceeds all other states, including
runner-up New York that had slightly more than half the number of
complaints as California.

According to data from the California
attorney general’s office, complaints were filed over a diverse number
of reasons including identity theft, spam, disputes with service
providers and e-mail scams designed to discover personal information.

In
2007, the FTC report said nearly a quarter of a million complaints were
lodged nationwide, the Center for Democracy and Technology said.

Most
states have neglected to bring significant cases as a result of these
complaints, the press release states, with most of the cases brought by
attorneys general focused on sexual enticement of minors and child
pornography.

“These numbers are startling, but they may even
understate the problem,” said Reece Rushing, director of regulatory and
information policy at the Center for American Progress. “Consumers are
often unaware, and thus may not report, when they are victimized by
online threats such as spyware or phishing. We must take action against
these threats to protect consumers and preserve confidence in Internet
commerce.”

Beijing residents Zhi Yong Guo, 49, and Tah Wei Chao, 52, were named in a criminal complaint alleging they knowingly exported or attempted to export restricted items without a license, the U.S. attorney’s office said.

Prosecutors said both men were a flight risk and asked that they be held without bail. Both were scheduled to be arraigned on April 28. Chao’s attorney Richard Goldman said he did not yet know how his client planned to plead. “I believe in the presumption of innocence,” Goldman said..

Guo and Chao each face up to 20 years in federal prison if convicted. The men were arrested Saturday at Los Angeles International Airport after they tried to board a plane to China with 10 thermal imaging cameras in their luggage without the proper export licenses, the government said.

The cameras, which are primarily used by law enforcement, fire departments and the military, are carefully controlled for national security reasons, and are treated as munitions under the International Trafficking in Arms Regulations. They produce heat-based images invisible to the naked eye.

Federal authorities had been investigating the men since last August, when an Oregon-based company informed them of an order for three of the cameras from a new customer — Printing Plus Graphics of San Gabriel, Calif., according to an affidavit from Special Agent Steve Huerta of the Department of Commerce. The company, Flir Systems of Wilsonville, Oregon, repeatedly warned the customers that they could not export the cameras without a license, and shared Chao’s e-mail address and other documents with authorities.

An El Dorado Hills technology worker accused of stealing trade secrets with military applications and offering them to foreign buyers for six figures in cash entered a guilty plea in Sacramento Friday, prosecutors said. Allen Cotten, 53, pleaded guilty to theft of trade secrets in U.S. District Court and admitted to a two-year scheme to steal and sell microwave technology, the local U.S. Attorney’s office said in a news release. He faces up to 10 years in prison and a $250,000 fine.

Assistant U.S. Attorney Anne Pings said Cotten worked for Genesis Microwave Inc. in El Dorado Hills, and admitted that beginning in February 2004 he began to steal plans, designs, parts and specifications for components known as logarithmic video amplifiers. The technology has military applications for radar jamming, guidance, countermeasures and locating enemy signals during combat.

Cotten sold trade secrets and offered them for sale to foreign governments and foreign military contractors through February 2006, prosecutors said; evidence and Cotten’s statements indicated he sold or was seeking to sell parts and information for a total amount of $250,000. The case was the product of an investigation by the FBI and the U.S. Department of Commerce’s Bureau of Industry and Security.

Advanced Micro-Fabrication Equipment (AMEC), of Shanghai, was sued in California by Applied Materials, which claims the company misappropriated its trade secrets. But lawyers for the Chinese company asked the judge to dismiss the suit, arguing the U.S. court has no jurisdiction over AMEC’s activities. AMEC’s motion for dismissal will be heard by Judge James Ware of the U.S. District Court for the Northern District of California, on Feb. 11.

Applied’s lawsuit, filed in October and amended last month, claims AMEC used its trade secrets to develop etch and CVD (Chemical Vapor Deposit) tools that are used to make chips. AMEC’s tools will compete against similar products from Applied, which cost millions of dollars each. Applied is seeking an injunction from the court to prevent the misappropriation of its trade secrets and wants punitive damages as well as a declaration that it owns patent applications recently filed by AMEC….

In response, AMEC’s motion to dismiss argues that the U.S. court has no jurisdiction over the Chinese company. “In this case, there is no jurisdiction over AMEC Inc., because the allegations of the (amended complaint) relate exclusively to actions that took place in China. None of Applied’s claims arises out of allegations concerning contact with California,” the motion said, adding any legal action by Applied against AMEC should be heard in a Chinese court instead.