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Engineer Indicted on Charges of Trade Secret Theft from Medical Device Companies

The United States Department of Justice has charged an engineer with the theft and possession of trade secrets belonging to two medical device manufacturers.

43-year old Wenfeng Lu of Irvine, California, was indicted on 12 charges by a grand jury on Wednesday this week. Lu is alleged to have stolen proprietary trade secures from EV3 Covidien while employed at the company between January 2009 and October 2011, and from Edwards Lifesciences Corp., where he was employed between November, 2011 and November, 2012.

Lu is alleged to have stolen information and emailed the confidential data to his personal email account. It has also been alleged that Lu took photographs of equipment and copied company reports, presentations, emails, and test results.

Lu visited the People’s Republic of China (PRC) on multiple occasions after obtaining data. It is alleged that Lu was attempting to set up his own company with associates in PRC and planned to use the trade secrets to manufacture medical devices in PRC. Lu was arrested by the FBI in 2012 while preparing to board a plane bound for PRC.

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Lu was first indicted on charges of intellectual property theft from one of the companies in December 2012, although the latest indictment includes charges of intellectual property theft from the second company.

Each company had implemented a number of security controls to ensure that intellectual property was protected, including physical security at locations where data were stored, limiting login privileges to individuals who required access to data to perform work duties, using sign-in sheets and escorts to restricted areas, proving training to staff on data security, and marking trade secrets as confidential. Employees were also required to sign non-disclosure agreements. These protections were circumvented by Lu according to prosecutors.

United States Attorney Eileen M. Decker explained the seriousness of the charges against Lu and the threat that intellectual property theft poses to U.S. businesses and the security of the United States. “Intellectual property theft poses a grave threat to businesses and the employees who depend on those businesses for their livelihoods,” she went on to say, “Moreover, when the stolen material is destined for foreign entities seeking to compete with American businesses, as it was in this case, IP theft also threatens the security of our nation.” Because of these threats the Department of Justice prosecutes individuals for intellectual property theft out of a National Security Division.

Lu is likely to face a lengthy jail term and a substantial fine if found guilty of the charges. Each of the 12 counts carries a maximum prison term of 10 years and a fine of $5 million per count. Lu’s trial has been scheduled for June 21, 2016.

Author: Steve Alder is the editor-in-chief of HIPAA Journal. Steve is responsible for editorial policy regarding the topics covered on HIPAA Journal. He is a specialist on healthcare industry legal and regulatory affairs, and has several years of experience writing about HIPAA and other related legal topics. Steve has developed a deep understanding of regulatory issues surrounding the use of information technology in the healthcare industry and has written hundreds of articles on HIPAA-related topics.