Protecting Michigan's Technology - September 2012

On September 25, the U.S. Attorney’s Office brought together leaders from government, industry and academia to discuss ways to protect Michigan’s technology.   Our goals were (1) to raise awareness about how businesses can protect themselves from intellectual property predators, and (2) to deter competitors from stealing intellectual property by highlighting our aggressive prosecution in this area.

The conference, held at Schoolcraft College in Livonia, focused on three areas: theft of trade secrets, computer intrusions and counterfeit auto and military parts.  U.S. Deputy Attorney General James Cole, who chairs the Justice Department’s Task Force on Intellectual Property, delivered the keynote address, noting Michigan’s role at the forefront of design, engineering and manufacturing.  Now, more than ever, technology innovations are key to our prosperity in Michigan.  And at the U.S. Department of Justice, we are doing all we can to support and protect American businesses that are creating these innovations.

But some competitors seek to bypass the investment of time and money to develop their own technology, instead stealing intellectual property from American manufacturers.  Technology itself has made it easier than ever to steal proprietary designs, systems, processes, and formulas with the press of a button. 
Not only are we seeing the theft of trade secrets, we are also seeing an increase in counterfeit auto and military parts.  A recent Senate report found the problem of counterfeit military parts to be widespread.  Counterfeit parts endanger consumers, service members and our national security. They erode profits for American manufacturers of original equipment, and they can cost Americans their jobs.  The cost to fix helicopters or planes that contain counterfeit parts has cost American taxpayers millions of dollars.

While civil suit is one option for victims of theft of trade secrets, federal prosecution brings with it certain advantages.  In addition to penalties that can include prison sentences, we have the authority to use grand jury subpoenas to obtain evidence and the authority to compel witnesses.  We have the authority to use Mutual Legal Assistance Treaties to obtain evidence in foreign countries.  And, as in civil suits, we have the ability to obtain protective orders, so that when we litigate cases in court, we can ensure that trade secrets don’t get into the very hands that were trying to steal them. 

Here in Michigan, the U.S. Attorney’s Office has had a number of successes in prosecuting intellectual property and computer crimes.  In one case, a former employee was convicted of stealing trade secrets for the Ford Motor Company.  Before leaving his job at Ford to work for a Chinese competitor, the defendant copied more than 4,000 documents onto an external hard drive, including sensitive design documents pertaining to electrical systems, which he took with him to China.  The defendant was sentenced to almost six years in prison.

In another case, employees of Metaldyne Corporation, headquartered in Plymouth, were convicted and sentenced to prison for conspiracy to steal proprietary information to assist a Chinese competitor.  The proprietary information involved the manufacturing process for powdered metal parts.

In a third case, owners of an auto parts supplier in Chesterfield Township were convicted of a wire fraud scheme in which they substituted substandard materials and submitted false testing reports relating to its manufacturing of plastic components of seat belt assemblies.

These are just a few of examples of the kind of work the U.S. Attorney’s Office and the Department of Justice are doing to protect our nation’s intellectual property.  But there is more work to be done.  As technology makes it easier for criminals to intrude into our computers, copy our designs, and steal our intellectual property, we are committed to doing all we can to stay one step ahead to protect American innovation and Michigan’s economy.

Barbara L. McQuade
United States Attorney
Eastern District of Michigan