Confidentiality Conviction in the Southern District

On January 18, an S.D.N.Y. judge sentenced software engineer Xu Jiaqiang to five years in prison. The crime? Stealing source code from IBM, his former employer. The Department of Justice successfully argued that as an employee, Xu had taken advantage of his unique access to IBM’s valuable source code. The company had taken significant measures to safeguard the code, including storing it behind a firewall and limiting access to specific employees, all of whom were made to sign confidentiality agreements. In spite of these precautions, Xu took the source code when he left the company in 2014 “for his own profit and intending to benefit the People’s Republic of China.” Xu attempted to sell software that was created with the code to undercover FBI agents.

This case demonstrates the need for a company to take precautions to prevent trade secret theft. Even though these measures may not ultimately be successful, they are necessary in order for the company to have full access to legal remedies (both civil and criminal) when the theft does occur.

To learn about how Castaybert PLLC can assist with trade secret matters, please click here.