Former Cola-Cola Employee Sentenced to 14 Years in Prison for Trade Secret Theft

Former Cola-Cola Employee Sentenced to 14 Years in Prison for Trade Secret Theft

Sally Yoon is an IPilogue Writer, IP Innovation Clinic Fellow, and a 2L JD Candidate at Osgoode Hall Law School.

On May 9th, 2022, Xiaorong You, a former employee of the Coca-Cola Company and Eastman Chemical Company was sentenced to 14 years in prison and made to pay a $200,000 fine for a scheme to steal trade secrets, engaging in economic espionage and committing fraud. Assistant Attorney General Matthew G. Olsen emphasized that the sentence not only reflects the gravity of the offence but also a“commitment to protect [the] nation’s security by investigating and prosecuting those who steal US companies’ intellectual property.”

Between 2012 to 2018, You worked as the Principal Engineer for Global Research at Coca-Cola in Atlanta and the packaging application development manager at Eastman Chemical Company in Kingsport, Tennessee, which granted her explicit access to valuable trade secrets related to the “formulations for bisphenol-A-free (BPA-free) coatings for the inside of beverage cans.” Several other chemical and coating companies also owned the trade secret and its development cost nearly $120 million.

You stole the trade secrets to set up a new BPA-free coating company in China with Weihai Jinhong Group, her Chinese corporate partner, where both parties received millions in grants from the Chinese government to support the new business. In addition to the grant money, You also received the “Thousand Talents Plan Award”, a Chinese government program aimed at attracting scientists and engineers abroad. At trial, You’s application for the program revealed her intentions to not only benefit her corporate partner, but also the governments of China.

According to Coca-Cola Canada, BPA is still used in the linings of the company’s beverage cans, as well as other packaging, to preserve the quality and taste of the drink. The company further maintains that the widespread concern for potential health risks resulting from BPA in the company’s products is not based on “sound science” as there is a clear scientific consensus that the miniscule amounts of BPA in beverage cans poses no risk to the public. Nonetheless, the company has publicly stated that it is undergoing research for BPA-free alternatives in preparation to protect its consumers’ and shareowners’ interests.

Economic espionage has profoundly affected the US economy. In fact, the IP Commission Report estimates that trade secret theft costs the US economy at least $180 billion annually. Despite Canada’s sizeable economic difference from the US, the Canadian Security Intelligence Services (CSIS) maintains that its advanced and competitive economy and close economic partnership with the US makes Canada a continuing target of hostile foreign state activities. Moreover, according to the 2021 Public Report, CSIS observed an increase in the scale and scope of espionage and foreign interference threats. Often, such threats become exponentially more complex and pressing in light of modern espionage tactics, as it can be difficult to establish the nexus between an accused and a foreign government. In addition, foreign states can target members of vulnerable groups, posing a risk not only to the Canadian economy but also the overall safety of Canadians.

Both Canada and the US must continue to diligently investigate and identify the threats of espionage targeting innovation and intellectual property in its various sectors. Moreover, Canada should continue to work with and refer to its domestic and international partners to determine reasonable punishments for similar criminal acts threatening valuable IP in the country.