Chinese National Indicted for Economic Espionage and Trade-Secret Theft

On November 21, a federal grand jury in the Eastern District of Missouri indicted Haitao Xiang, a former Missouri resident, on one count of conspiracy to commit economic espionage, three counts of economic espionage, one count of conspiracy to commit theft of trade secrets and three counts of theft of trade secrets.  Xiang, a Chinese national, had worked for Monsanto and its subsidiary, The Climate Corporation, from 2008 to 2017, as an imaging scientist.

According to the indictment, Monsanto and The Climate Corporation

developed a digital, on-line farming software platform that was used by farmers to collect, store, and visualize critical agricultural field data and increase and improve agricultural productivity for farmers.  A critical component to the platform was a proprietary predictive algorithm referred to as the Nutrient Optimizer.  Monsanto and The Climate Corporation considered the Nutrient Optimizer a valuable trade secret and their intellectual property.

Assistant Attorney General for National Security John C. Demers stated that Xiang “promoted himself to the Chinese government based on his experience at Monsanto,” but did not specify when that contact with Chinese authorities occurred.  Ultimately, in June 2017, the day after he left his employment with Monsanto and The Climate Corporation, Xiang allegedly “bought a one-way plane ticket to China.  Before he could board his flight, Xiang was intercepted at the airport by federal officials who seized copies of the Nutrient Optimizer.”

N.B.: Xiang’s indictment is the latest case under the Justice Department’s China Initiative, which is targeting economic espionage and trade secret theft conducted for the benefit of the Chinese government and Chinese economic interests.  Since the start of 2018, as a Justice Department summary indicates, China Initiative cases have pursued individuals conducting espionage against companies such as General Electric, as well as multiple U.S. aviation and aerospace companies, a semiconductor company, and an unnamed global engineering firm.

The Initiative, launched in November 2018, has ten strategic goals, including (1) identifying ”priority trade secret theft cases, ensure that investigations are adequately resourced, and work to bring them to fruition in a timely manner”; (2) identifying “Foreign Corrupt Practices Act (FCPA) cases involving Chinese companies that compete with American businesses”; and (3) applying “the Foreign Agents Registration Act to unregistered agents seeking to advance China’s political agenda, bringing enforcement actions when appropriate.”

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