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12.15.06: Indictments, guilty pleas on Chinese trade secret thefts

The Chinese government wants to get their hands on military technology being developed in Silicon Valley and apparently the Valley is full of spies to help with those aims.

Tom Abate and John Cote write in today's Chronicle that federal prosecutors indicted one Xiangdong Sheldon Meng for stealing night vision training software from defense contractor Quantum3D for sale to Malaysia, Thailand and China.

"The alleged economic espionage and theft and export of trade secrets such as these -- visual simulation training software that has military application, no less -- has real consequences that could jeopardize our country's military advantages in the world," he said in the statement.

He added in an interview: "We own the night. And there are people who want to take it from us."

Meanwhile US citizen Fei Ye and permanent resident Ming Zhong pled guilty in federal court to stealing civilian chip technology from Transmeta and Sun. They intended to use the designs to start a chipmaking firm with financial backing from the Chinese city of Hang- zhou and the provincial government of Zhejiang. These are the first convictions under the Economic Espionage Act.

The 36-count criminal indictment against Meng alleges that he stole night-vision training software and other simulation tools from Quantum3D, a San Jose defense contractor for whom he worked between 2000 and 2003. The indictment alleges violations of several federal statutes, including the Economic Espionage Act and the Arms Export Control Act -- charges that could lead to hefty fines and lengthy jail terms.

Prosecutions under the Economic Espionage Act are rare, said author and consultant Steven Fink because federal prosecutors are afraid to antagonize foreign governments. The result, he says, has been open season on Valley trade secrets:

"It's about time," Fink said. "It's been 10 years. And what happened to all the other cases that slipped through their fingers? There is virtually no deterrent against people and foreign governments that want to steal our trade secrets."