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Two Men Indicted for Alleged Theft of GE Trade Secrets for Turbine Technology

Apr.30.2019

On April 18, the U.S. District Court for the Northern District of New York unsealed an indictment accusing Zheng Xiaoqing, a former senior engineer for steam turbine design at GE, and Zhang Zhaoxi, a Chinese national, of conspiring to steal GE’s design data and models, engineering drawings, material specifications, configuration files, and other proprietary trade secret information related to GE’s turbine technology. The indictment provides yet another cautionary tale to companies trying to protect their trade secrets.

The indictment describes, among other things, the complexity of the theft, including the measures that GE took to protect its trade secrets, and the highly sophisticated measures that Zheng and Zhang employed to carry out the theft. For example, GE employed the following security mechanisms:

  • Maintained perimeter security and restricted access to company property.
  • Required visitors to register with security, wear badges, and be escorted by approved personnel.
  • Limited access to company computer systems, and monitored the same.
  • Limited authorization to access systems containing GE proprietary information.
  • Required employees to sign proprietary information agreements.
  • Advised employees that their inventions and innovations created while employed with GE were the property of GE.
  • Required employees to disclose inventions deriving from work at GE.
  • Informed employees of GE’s trade secret and proprietary information requirements through trainings, handbooks, oral warnings, and signs and banners posted in the workplace.
  • Prohibited the use of USB drives.

The indictment also alleges the sophisticated means that Zheng and Zhang employed to bypass GE’s security measures and to hide the theft. For example, from around June through October of 2017, Zheng allegedly:

  • Used a technique called steganography to hide GE’s trade secret information in a seemingly innocuous image of a sunset named “New Year.jpg” and sent that file to his personal Hotmail account.
  • Used steganography to hide encrypted GE design schematics in images of turbine blades.
  • Used his personal Hotmail email account to send encrypted files, using generic zip file names (e.g. “overview-zip.zip” and “test-zip.zip”) that included GE’s trade secret information regarding manufacturing methods, design schematics, and models.
  • Used encrypted text messages and audio messages to discuss the use of GE’s trade secrets with his co-defendant, Zhang.

Zheng was arrested on August 1, 2018, when he was interviewed by the FBI and admitted that he used steganography to take multiple GE files relating to turbine technology.

The current indictment includes 14 counts, including conspiracy, economic espionage, and trade secret theft, and seeks the forfeiture of property and money acquired through the alleged scheme.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Astor Heaven
Counsel – Washington, D.C.
Phone: +1 202.624.2599
Email: aheaven@crowell.com
Robert B. Kornweiss
Associate – New York
Phone: +1 212.803.4045
Email: rkornweiss@crowell.com