Trade Secrets to China

On Jan. 25, 2013, Ji Li Huang, a Chinese business owner and his employee, Xiao Guang Qi, pleaded guilty and were sentenced in the Western District of Missouri for conspiring to steal trade secrets from Pittsburgh Corning Corporation, that produces FOAMGLAS® insulation. Huang is the CEO of Ningbo Oriental Crafts Ltd., which employs 200 factory workers to manufacture promotional products for export to the United States and Europe. Qi was his employee. Huang was sentenced to 18 months in prison and ordered to pay a fine of $250,000. Qi was sentenced to time served and ordered to pay a fine of $20,000. Pittsburgh Corning, headquartered in Pittsburgh, Penn., manufactures various grades or densities of cellular glass insulation sold under the trade name FOAMGLAS®. That material is used to insulate buildings, industrial piping systems and liquefied natural gas storage tank bases. Pittsburgh Corning considers the product formula and manufacturing process for FOAMGLAS® proprietary and trade secrets. By pleading guilty, Huang and Qi admitted that they attempted to illegally purchase trade secrets of Pittsburgh Corning for the purpose of opening a plant in China to compete with Pittsburgh Corning. The court ruled that the intended loss to Pittsburgh Corning exceeded $7 million, based on the company’s investment of time and resources to research, develop and protect the proprietary information the defendants attempted to steal. Huang and Qi were arrested when they met with an individual they believed to be an employee of Pittsburgh Corning who had stolen documents that contained trade secret information and was willing to sell it to them for $100,000. That employee, however, was cooperating with law enforcement and the meetings in Kansas City were a sting operation that led to their arrests on Sep. 2, 2012. The case was investigated by the FBI.