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Details of the FBI's Complaint before the Court against a former Apple Employee for Stealing Project Titan Trade Secrets Revealed

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Last week Patently Apple posted a report titled "A Second Chinese National Working on Project Titan has been Arrested by the FBI for Stealing Company Secrets." Apple began investigating Jizhong Chen, who worked as a hardware engineer and optics on Project Titan, when another project employee reported seeing the engineer taking photographs in a sensitive work space.

 

The formal complaint filed by the FBI with the court on January 22, 2019 reveals full details of the basic case against Chen. The FBI lays out exactly what "Theft of Trade Secrets" means by law and confirmed that Chen's activities rose to the level needed to charge him with theft of Apple Inc. trade secrets relating to the development of an autonomous vehicle.  

 

The complaint goes into detail about Apple's trade secret program to inform employees about the dangers of revealing trade secrets and provides thousands of specific engineers wiith detailed activities not allowed by Apple.

 

Apple's In-Depth Confidentiality Program for Project Titan

 

To maintain confidentiality, the court document reveals that "Apple limits the number of employees with knowledge about the Project. Specifically, Apple grants employees 'disclosure' for the Project. Disclosure status allows an employee to receive information for the Project and is solely granted on a strict "need to know" basis.  Only around 5,000 of Apple's over 140,000 full time employees are disclosed on the Project. Of those 5,000, approximately 1,200 are "core" employees, described as the employees that are directly working on the development of the Project.

 

In addition, Apple limits access to the building where the Project is developed (the "Building"). Access to the Building is limited to core Project employees. As a result, about 1,200 Apple employees have access to the Building. Physical access to the Building is limited by badge access. Further, even within Apple's operations, the Project's development in the Building is not listed; accordingly, only disclosed employees know about the Project's development in the Building.

 

Apple also goes to great lengths to communicate the importance of confidentiality in all aspects of Apple's business as it relates to its employees. Before starting at Apple, employees must sign an Intellectual Property Agreement ("IPA"). The IPA specifies that an employee may not use Apple's intellectual property except as authorized by Apple, including a prohibition against transfer and transmission of intellectual property without Apple's consent. Chen signed an IPA in 2018.

 

Employees disclosed on the Project must also attend an in-person secrecy training for the Project. Chen attended the secrecy training on June 13, 2018. The training covered the importance of keeping the nature and the details of the Project secret and avoiding intentional or unintentional information leaks.

 

During the investigation, Apple's review of Chen's personally-owned hard-drive showed that Chen conducted a backup of his entire work computer onto a personally-owned  hard-drive, in violation of Apple policy, since Chen's Apple work computer had Apple's confidential and proprietary materials.

 

In addition, Chen's personally-owned  computer had over two thousand files containing confidential and proprietary Apple material, including manuals, schematics, and diagrams.

 

Chen's Reasoning for the Theft of Trade Secrets

 

When asked by Apple, Chen stated that he downloaded the work computer onto his personally-owned  hard-drive as an "insurance policy" to support his job applications after being placed on a PIP (A performance improvement plan). Chen told Apple that he was applying for jobs within Apple. However, Apple subsequently learned that Chen had applied for two external jobs, including one at a China-based autonomous vehicle company - a direct competitor of the Project.

 

Chen Attempted to Flee the Country

 

The complaint goes on to say that Chen was trying to find a way out of the country after Apple told Chen to not leave the U.S. Chen used the excuse that his dad was sick and had to leave. More than likely at this time Chen knew that Apple had enough to charge him with trade secret violations and wanted out of the US as soon as possible. Once Chen informed Apple he was leaving for China on January 23, 2019, the FBI arrested Chen knowing he was attempting to flee the country.

 

Various documents related to the FBI's complaint are under seal. For more on this interesting case, see the formal complaint in full here.

 

In light of the DOJ dropping the hammer on Huawei recently for conspiracy, the topic of Chinese nationals spying on top US companies has been a hot topic. It just so happens that the U.S. is demanding that China stop their strategic behavior regarding IP theft of US companies in their trade negotiations. The current US administration is the only administration that has ever taken this stance firmly against the Chinese.

 

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