Industrial Espionage Threatens the U.S. Auto Industry

Most sectors in the United States are on the rise of industrial espionage. In the fiscal year ending September 30, 2011, the U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE HSI) opened 1,212 intellectual property rights cases, which was an increase of 66 percent compared to 2009. With General Motors, Ford, and Toyota being targets of such actions, with former employees stealing and sharing information with foreign rivals, the automotive industry is no exception.

Assistant U.S. attorney Cathleen Corken described a case in which one of Ford’s employees stole thousands of secrets in order to secure a job with another company. Xiang Dong Yu, who goes by the name of Mike Yu, worked from Ford for a whole decade ending in 2007 as a product engineer. While working for Ford, Yu went to China in 2005 and interviewed with several local car companies.

This would not have been considered a crime is Yu hadn’t revealed the Blue Oval’s trade secrets to his potential new employer and lie to Ford by telling them he was going to China to take care of his sick mother. Yu was then hired by JAC Automotive and then returned to Ford after he realized that he was not satisfied with his new job.

He did not intend to stay back with Ford for long. He accepted a job offer by Chinese electronics manufacturer Foxconn in December of 2006, but did not inform Ford until January 2, 2007 so he could make living arrangements to move back to China.

There would’ve been no harm done, but Yu then copied around 4,000 Ford files that included sensitive information about engine and transmission mounting, electric power supplies, and electrical subsystems to an external hard drive before he left for China.

Yu must have never hear the saying “hell has no fury like a woman scorned,” because his ex-girlfriend sent Ford an anonymous e-mail informing the car maker of its former employee’s actions. In October of 2009, Yu, who was then working for Beijing Automotive Group, was arrested in Chicago after returning to the States from China.

After investigating Yu’s company laptop, the FBI found 41 Ford design documents, which at the time Ford estimated a total loss from the incident between $50-100 million. Yu pleaded guilty on the counts of theft of trade secrets and continued to only receive a 70-month (approximately 6 year) sentence with a fine of $12,500.