As the administration of US President Donald Trump and China attempt to end their trade dispute, the US is pushing forward on a key front of the conflict: A criminal prosecution of alleged trade-secret theft that has helped to hobble China’s aspirations of mass producing memory chips.
State-owned Fujian Jinhua Integrated Circuit Co (福建晉華) and its Taiwan-based partner United Microelectronics Corp (UMC, 聯電) on Wednesday pleaded not guilty in San Francisco federal court.
The companies’ indictment was the first under the US Department of Justice’s “China Initiative,” announced in November to prioritize trade-theft cases and litigate them as quickly as possible.
Illustration: Yusha
Prosecutors are deploying novel tactics in this latest fight, adding some experimental methods to layered enforcement actions to make sure there is no mistake about the message: If China steals technology, it will not go unpunished.
“We want to use all available tools to make the consequences of this behavior economically untenable,” US Assistant Attorney General John Demers said in an interview in November after the initiative was announced.
Specifically, the department is testing a new rule that makes it easier to serve criminal indictments to foreign companies without a US presence. Previously, similar cases languished or stalled completely.
In some cases, defendants, with the help of their US-based lawyers and the Chinese government, simply feigned ignorance, acting as if the indictments did not exist. Not this time: Jinhua, through its lawyer, agreed to show up at Wednesday’s arraignment. UMC would also be there, according to its lawyer.
Prosecutors are also testing for the first time a provision of the Economic Espionage Act dating back to 1996 to bring a civil suit alleging trade-secret theft on top of the criminal indictment.
Through the civil case, the US government is aiming to block Jinhua’s exports of dynamic random access memory, or DRAM, that it says relies on technology stolen from Boise, Idaho-based Micron Technology Inc.
“One of the things about using a tool like this is, you put that tool on everybody’s radar screen,” Demers said in an interview last month. “So the next set of assistant US attorneys and FBI agents who are investigating similar conduct, they think about this.”
It is a multipronged strategy: On Oct. 30, a few days before the “China Initiative” was announced, the US Department of Commerce blocked sales of US chipmaking gear to Jinhua, grinding to a halt the company’s plans to produce semiconductors.
China, by far the largest market for DRAM, has made its production a national priority so it can end its reliance on US$200 billion of annual imports.
Both Fujian and UMC have denied the US allegations. Three Taiwanese nationals were charged alongside the companies with conspiring to steal trade secrets. They are scheduled to be arraigned next month.
Chad Kolton, an outside spokesman in the US for Jinjiang, China-based Jinhua, did not respond to a request for comment.
“UMC has accepted service of both the summons in the criminal case and the government’s civil complaint, and will appear in court to address both cases,” UMC’s lawyer Leslie Caldwell said in an e-mail.
She declined to comment further.
From the criminal case, prosecutors stand to win an order requiring Jinhua and UMC to forfeit chips and income derived from the allegedly stolen technology, as well as a ban from using Micron’s secrets for up to five years.
“But that only happens after a conviction or as part of a plea,” said Ashok Ramani, an intellectual property lawyer at Davis Polk in Menlo Park, California. “That can take a long time.”
The civil suit allows prosecutors to move quickly with a tailored order blocking the companies, potentially forever, from exporting chips before the criminal case gets under way, “when the harm is ongoing, or could get worse,” Ramani said.
Prosecutors are trying to cover all their bases, Christopher Seaman, a professor at Washington and Lee law school, said of the dual filings.
“The criminal indictment is out there in part to show the US means business on this. If they’re going to get any remedy that’s meaningful in the real world, it’s the civil case,” Seaman said.
The rule change on serving indictments is key. For years, prosecutors tried and failed to serve China’s Pangang Group (鞍鋼集團), a Chengdu-based chemical company, charging the company with stealing trade secrets from DuPont Co.
A US judge ruled that prosecutors failed to comply with the letter of US law and China refused to help, according to court filings.
After a 2016 rule change from the US Supreme Court, an appeals court in 2017 agreed that Pangang Group was properly served an indictment through its long-time lawyers in the US — five years after the case was filed.
Legal experts agree that the change helped the US get its criminal case against Jinhua started.
Meanwhile, experts say prosecutors got a boost in the civil suit against Jinhua from a related Nov. 20 civil ruling by US District Judge Maxine Chesney, who is also handling the Jinhua case in San Francisco.
Micron spent almost a year trying to serve a civil trade-secrets complaint against Jinhua.
A copy sent to the Chinese Ministry of Justice was returned stating, without further elaboration, that “the Chinese translation is not complete.”
Chesney concluded that Micron can simply e-mail the complaint to Jinhua’s US lawyers.
“The ruling amounts to Chesney saying: ‘Listen, we’re not going to let a foreign entity avoid liability by playing games,’” Ramani said.
With assistance from Ian King.
The US Department of Defense recently released this year’s “Report on Military and Security Developments Involving the People’s Republic of China.” This annual report provides a comprehensive overview of China’s military capabilities, strategic objectives and evolving global ambitions. Taiwan features prominently in this year’s report, as capturing the nation remains central to Chinese President Xi Jinping’s (習近平) vision of the “great rejuvenation of the Chinese nation,” a goal he has set for 2049. The report underscores Taiwan’s critical role in China’s long-term strategy, highlighting its significance as a geopolitical flashpoint and a key target in China’s quest to assert dominance
The National Development Council (NDC) on Wednesday last week launched a six-month “digital nomad visitor visa” program, the Central News Agency (CNA) reported on Monday. The new visa is for foreign nationals from Taiwan’s list of visa-exempt countries who meet financial eligibility criteria and provide proof of work contracts, but it is not clear how it differs from other visitor visas for nationals of those countries, CNA wrote. The NDC last year said that it hoped to attract 100,000 “digital nomads,” according to the report. Interest in working remotely from abroad has significantly increased in recent years following improvements in
Chinese Nationalist Party (KMT) caucus whip Fu Kun-chi (傅?萁) has caused havoc with his attempts to overturn the democratic and constitutional order in the legislature. If we look at this devolution from the context of a transition to democracy from authoritarianism in a culturally Chinese sense — that of zhonghua (中華) — then we are playing witness to a servile spirit from a millennia-old form of totalitarianism that is intent on damaging the nation’s hard-won democracy. This servile spirit is ingrained in Chinese culture. About a century ago, Chinese satirist and author Lu Xun (魯迅) saw through the servile nature of
Monday was the 37th anniversary of former president Chiang Ching-kuo’s (蔣經國) death. Chiang — a son of former president Chiang Kai-shek (蔣介石), who had implemented party-state rule and martial law in Taiwan — has a complicated legacy. Whether one looks at his time in power in a positive or negative light depends very much on who they are, and what their relationship with the Chinese Nationalist Party (KMT) is. Although toward the end of his life Chiang Ching-kuo lifted martial law and steered Taiwan onto the path of democratization, these changes were forced upon him by internal and external pressures,
RSS