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Lucent scientists sold secrets to China

The FBI has charged two Chinese nationals working at Lucent Technologies and a third man with stealing source code and software and giving trade secrets to a Chinese state-owned company in an effort to develop the "Cisco of China".

The pair and the third man, a Chinese-American, sought to use the stolen technology to create a leading data networking company as big as Cisco Systems, according to a statement.

Federal agents arrested Hai Lin, 30, and Kai Xu, 33 who both worked as scientists at Lucent. The third man is Yong Qing Cheng, 37.

The investigation had started in February, according to a source close to the investigation. Lin and Xu had worked as product development engineers in Lucent's switching business for less than five years, the source said.

Lucent spokeswoman Mary Lou Ambrus declined to say what had been stolen or how much the intellectual property was worth. The company has a comprehensive system to protect its intellectual property and that system worked, she said. The company contacted authorities when it learned that the employees were, allegedly, stealing the technology.

An affidavit with the criminal complaint filed on Thursday disclosed that the men were experts in the source code, software and the entire design of Lucent's PathStar system. Pathstar is a system that is capable of sending voice and data services over the Internet and it generated approximately $100m (£69.5m) in revenue for Lucent last year. Federal authorities allege that the three worked together to steal and smuggle the technology out of the US.

Lin, Xu and Cheng allegedly founded ComTriad Technologies in January 2000. Cheng travelled to Beijing last July and began negotiations for a joint venture between ComTriad and Datang Telecom Technology of Beijing, a company that is majority-owned by the Chinese government.

Negotiations continued for the joint venture and, ultimately, Lucent's Pathstar source code and software was stored on a password-protected Web site by ComTriad. Federal authorities allege that earlier this year the three men transferred the Pathstar data to Datang for the use in developing a ComTriad system. The system, known as the CLX 1000, was virtually identical to Lucent's Pathstar system, according to the complaint.

The Datang-ComTriad venture was financed by $1.2m from Datang and was approved by Datang's board of directors in October, according to federal authorities.

Lin, Xu and Cheng are each charged with conspiracy to commit wire fraud and face a maximum penalty of five years in prison and a $250,000 fine.

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