While trade talks with China remain off again, on again, the battle over intellectual property theft of agricultural technology continues with the indictment of a former scientist at Monsanto and The Climate Corporation.
Haitao Xiang, 42, was formally indicted Thursday by a grand jury in the U.S. District Court for Eastern Missouri more than two years after he was arrested trying to leave the U.S. for China in June 2017. Xiang was caught boarding a plane with trade-secret technology copied onto a micro SD card.
The grand jury indicted Xiang for three counts of economic espionage and conspiracy to commit economic espionage, three counts of trade secret theft and one count of conspiracy to steal trade secrets. The economic espionage charges can carry up to 15 years in prison for each count, and the trade secret charges can carry up to 10 years in prison.
China’s unwillingness to stop intellectual property theft remains one of the biggest unresolved issues in trade talks with the Trump administration.
The U.S. Senate Permanent Subcommittee on Investigations just this week released a report and held a hearing on China’s strategy of recruiting talent who would steal trade secrets for the country.
The Senate report largely focused on Chinese theft from public U.S. institutions, noting billions of dollars in taxpayer-funded research “has contributed to China’s global rise over the last 20 years. During that time, China openly recruited U.S.-based researchers, scientists and experts in the public and private sector to provide China with knowledge and intellectual capital in exchange for monetary gain and other benefits.” (See here)
Xiang’s case highlights how that recruitment works.
Xiang, 42, worked for nearly a decade as an advanced imaging scientist at The Climate Corporation, focusing on remote sensing work to estimate soil properties using satellite imagery, the indictment states. A permanent U.S. resident with Chinese citizenship, Xiang worked on the “Nutrient Optimizer” product that was part of an online farming software platform.
The indictment notes the Chinese government established a national policy — “talent programs” — to identify and recruit people outside of China who have “expert skills, abilities and knowledge that could aid in transforming China’s economy.”
One of the highest levels of those programs was the “Hundred Talents Program” in top research fields. Recruits to these talent programs were sought out to work for the Chinese government in specific areas of research. That typically required replicating key areas of research and development on intellectual property.
The Climate Corporation and Monsanto have worked for years on platforms to visualize important agronomic field data and collect and store that information. The precision-agriculture tools help farmers with various agronomic decisions such as customizing fertilizer plans and seeding rates. The foundation of the Nutrient Optimizer is a “point-based biogeochemical process model that simulated biological, chemical, hydrological, and thermal processes occurring within an agricultural field.”
The Nutrient Optimizer is an essential part of those digital software services, and Monsanto considers the information about it as confidential, proprietary and a trade secret, the indictment points out. The digital tool is sold both in the U.S. and internationally.
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Monsanto and The Climate Corporation took several steps to protect the technology around the Nutrient Optimizer, which included restricted access to facilities, video security cameras on the premises, log-in passwords for computers, nondisclosure agreements with employees, identification badges and annual training with employees on the protection of trade secrets.
At some point, Xiang began sending information about his work to people in China. From at least June 2015 until June 10, 2017, while working for The Climate Corporation, Xiang began communicating about his work with people within the Chinese government about potential jobs at the Chinese Academy of Sciences Nanjing Institute of Soil Science. Xiang was then recruited by the Hundred Talents Program, the indictment states.
Xiang then allegedly traveled in both the U.S. and China, talking about his knowledge and skills. From March 2014 until June 2017, Xiang also “copied, duplicated, transmitted and downloaded the Nutrient Optimizer from Monsanto systems.”
In February 2016, Xiang had several communications with recruiters from the Chinese talent program and officially submitted an application. In describing his talents and abilities, Xiang stated he could do things that could only happen by duplicating the Nutrient Optimizer and its digital platform, the indictment states.
In what might have been Xiang’s undoing, the indictment also states Xiang conducted some Google searches on a Monsanto computer looking for information on ways to avoid intellectual property theft being used as “evidence.”
Starting in April 2016 and running through at least November that year, Xiang traveled again to China to interview for a position at the Nanjing Institute of Soil Science and was considered a candidate for a job there. Through May of 2017, Xiang went back and forth with people located in China about his possible job, compensation, benefits and research he would conduct.
Xiang told Monsanto and The Climate Corporation on May 24, 2017, he would resign from his job, and he left the position on June 9, 2017. In an exit interview, Xiang said he had shredded all physical documents related to his work and did not keep any electronic storage devices or hard drives containing Monsanto and The Climate Corporation property. He also stated he had not sent any such information to his private email address. Xiang certified to the companies he did not keep any confidential information or trade secrets related to Monsanto and Climate Corp.
During his exit interview, the indictment states, Xiang was confronted about some of his Google searches. Yet, the indictment states, “After completing his interview … Xiang copied and downloaded the Nutrient Optimizer to a Micro SD Card, and drove from St. Louis, Missouri, to Chicago O’Hare airport.” Xiang bought a same-day, one-way ticket to China, but was arrested at the airport.
“Xiang promoted himself to the Chinese government based on his experience at Monsanto. Within a year of being selected as a Talent Plan recruit, he quit his job, bought a one-way ticket to China, and was caught at the airport with a copy of the company’s proprietary algorithm before he could spirit it away,” Assistant Attorney General for National Security John C. Demers, said in a news release.
John Brown, assistant director of the FBI’s Counterintelligence Division, said Monsanto/The Climate Corporation’s technology at the core of the case “represents both the best of American ingenuity and why the Chinese government is so desperate to steal it for themselves.”
Monsanto and its subsidiaries became part of Bayer AG in 2018. A spokesperson for Bayer in St. Louis released a statement to DTN but declined further comment.
“We take the protection of trade secrets very seriously for the sustainability of the company and for the importance that plays in providing excellence for the U.S. farmer. We work closely with law enforcement agencies when we face insider threat or cyberattacks. That said, this a personnel issue and we do not comment on personnel matters,” Bayer stated.
Agriculture has been the victim of a few similar cases in the past several years. A biotech rice research company in Kansas, Ventria Bioscience, had rice stolen from it and sent to China by a rice breeder who worked for the company in 2012. U.S. Customs officials later found the company’s rice seeds in the baggage of members of a Chinese delegation that had come to the U.S. Monsanto and DuPont Pioneer also were targeted by a Chinese businessman who shipped biotech corn seed to China.
A federal magistrate on Friday granted a request by prosecutors to keep Xiang in detention until the trial because he is considered a significant risk to leave the country.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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