Former Coca-Cola Employee Convicted of Stealing $120 Million Worth of Trade Secrets to Sell in China

CamelBak brand water bottles hang on display at an outdoor supply store in Arcadia, Calif., on April 16, 2008. (David McNew/Getty Images)
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BY CATHY HE

A Chinese-born American chemist was found guilty on April 22 for her role in a scheme to steal trade secrets worth an estimated $120 million from American companies for the purpose of setting up a Chinese company that would manufacture the product for the global market.

After a 12-day trial, 59-year-old You Xiaorong—also known as Shannon You—of Lansing, Michigan, was convicted of conspiracy to commit trade secret theft, conspiracy to commit economic espionage, possession of stolen trade secrets, economic espionage, and wire fraud, according to the Justice Department.

While working at two U.S. companies—Coca-Cola in Atlanta, Georgia, and Eastman Chemical Company in Kingsport, Tennessee—she stole trade secrets related to BPA-free (bisphenol-A) coating technology, which lines the insides of cans and other food and beverage containers to prevent flavor loss, corrosion, and reactions to the food or beverage content. In recent years, companies have turned to developing BPA-free coatings because of the potential health risks of BPA.

The trade secrets cost nearly $120 million to develop, and were stolen from major chemical and coating companies including Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, Sherwin Williams, and Eastman Chemical Company, prosecutors said. You’s role as a principal engineer for global research for Coca-Cola from December 2012 to August 2017 and later as a manager at Eastman Chemical Company from September 2017 to June 2018 allowed her access to these coating companies’ BPA-free technology.

You stole the trade secrets to help establish a new BPA-free coating company in China, prosecutors said.  She had two co-conspirators, Liu Xiangchen, a 63-year-old man from eastern China’s Shandong Province, and an unnamed relative of Liu, according to the department. Liu, who was indicted at the same time as You in February 2019, formed the plan to bring You’s stolen technology to China, where Liu would set up and manage a firm that would develop BPA-free packaging. In return, Liu promised You an ownership share in the new company, prosecutors said.

You also found a Chinese corporate partner in Weihai Jinhong Group, which in 2017 agreed to invest 180 million yuan ($26.58 million) for the company’s production line manufacturing BPA-non-intent coating, according to a 2018 Chinese media report.

The report also said that Weihai Jinhong Group sponsored You in her application to join the “Thousand Talents Plan” in 2018, through which she was to be rewarded 3 million yuan ($443,000) from the central government, Shandong provincial government, and Weihai City government for bringing her stolen BPA-free technology to China. At the same time, the production line also received 50 million yuan ($7.4 million) in funding from those governments, the report said.

The “Thousand Talents Plan” is a Chinese-state-sponsored recruitment program designed to entice foreign experts to work in the country. This program, and other similar Chinese plans, have drawn intense scrutiny from the U.S. government over its role in facilitating the transfer of intellectual property to China.

Prosecutors said evidence, including You’s Thousand Talents application documents, presented at the trial showed You’s intention to benefit not only Weihai Jinhong Group, but also the Chinese Communist Party (CCP).

This case is the latest in a raft of prosecutions targeting Chinese state-sanctioned theft of American intellectual property in recent years.

Earlier this week, a hospital researcher was sentenced to 33 months in prison for conspiring to steal trade secrets from an Ohio children’s hospital to sell in China. A university math professor was also indicted on charges in relation to failing to disclose support he was receiving from the CCP and a Chinese state-run university.

You is due to be sentenced on Nov. 1.

Follow Cathy on Twitter: @CathyHe_ET

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