By Vince Bond Jr., Crain News Service
DETROIT (May 2, 2013) — A Michigan couple found guilty of stealing General Motors Co. trade secrets related to hybrid-car technology was sentenced to jail in U.S. District Court in Detroit.
Former GM engineer Shanshan Du and her husband Yu Qin stole GM hybrid technology for a business venture to provide hybrid electric vehicle technology to Chery Automobile Co., a Chinese auto manufacturer and GM competitor.
In November, Ms. Du was convicted of conspiracy to possess trade secrets without authorization and two counts of unauthorized possession of trade secrets. She was acquitted of three counts of wire fraud.
On May 1 U.S. District Judge Marianne Battani sentenced Ms. Du to 12 months and one day total on all three counts, served concurrently. She also will have one year of supervised release and was fined $100 for each count and fined another $12,500.
Mr. Qin was found guilty of conspiracy to possess trade secrets without authorization, two counts of unauthorized possession of trade secrets, three counts of wire fraud and one count of obstruction of justice.
He was sentenced to 36 months total on all seven counts, also served concurrently. Mr. Qin will pay $100 for each count, plus another fine of $25,000.
Addressing the court
Both Ms. Du and Mr. Qin cried as they addressed the court, with Ms. Du shaking intensely at times. Her health issues include anxiety, depression and a bout with cancer in 2009, according to her attorney, Robert Morgan.
"This is all my fault," Mr. Qin said just before the sentencing. "I want to take full responsibility for it."
Ms. Du, who was hired in 2000 as an engineer for GM's Advanced Technology Vehicles Group in suburban Detroit, copied onto a thumb drive 16,262 documents covering hybrid vehicles in February 2005, about five days after being offered a severance agreement. Of the more than 16,000 documents she copied, nearly 20 contained trade secrets.
Although trade secret theft isn't a violent crime, Judge Battani said Ms. Du and Mr. Qin still committed a serious offense because of its economic implications.
Judge Battani called Mr. Qin "brilliant" but said he took a shortcut because he didn't have the time to develop the technology himself. Mr. Qin knew that he wasn't supposed to have GM's proprietary information, the judge said.
"It's a crime in which our whole community, our whole economic structure, is a victim," Judge Battani said. "The court has to protect the integrity of the economic structure."
Prosecutor Michael Martin said April 30 that Ms. Du had a duty to protect GM's information, but she ended up betraying the auto maker's trust.
GM said intellectual property that it relies on as the foundation of future designs is the company's "life blood."
The auto maker asked for the maximum allowable sentence, which was 10 years under the sentencing guidelines.
"GM developed the stolen trade secrets over many years, using highly specialized engineers, equipment and facilities," John Calabrese, GM's vice president of global vehicle engineering, wrote in an April 22 letter to Judge Battani.
"Defendant's plans to provide the technology to a Chinese competitor would have saved that Chinese company considerable expenditures and time and boosted its competitive status at the expense of GM."
Trade secret value
Both sides grappled with the value of documents in court April 30.
While the prosecution placed their value at $46 million in line with GM estimates, Mr. Qin's attorney, Frank Eaman of Detroit, said they were only worth $875,000.
Mr. Eaman said GM didn't suffer any "out of pocket" losses and that the documents provided no economic benefit to the defendants.
The prosecution argued that half of the GM information Ms. Du stole was included in GM licensing agreements with the former DaimlerChrysler and BMW A.G.
In 2004, GM licensed its hybrid vehicle technology to DaimlerChrysler for $55 million. A year later, GM licensed for $21 million the technology to BMW in a similar deal, according to a court document.
To get the fair market value of the stolen information, the prosecution cut those figures in half to get $27.5 million from the DaimlerChrysler deal and $10.5 million from BMW. The prosecution also added $8 million to account for the manpower it took to create the technology.
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This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.