Former Sanofi Chemist Pleads Guilty to Extensive Trade Secret Theft
By Justin Beyer
On January 17, 2012, Yuan Li, a former research scientist with Sanofi Aventis, pled guilty to one count of violating 18 U.S.C. § 1832 (the section of the Economic Espionage Act dealing with commercial economic espionage). Li, a Chinese national, was residing in Somerset, New Jersey at the time of her incarceration.
Sanofi Aventis is a global healthcare company, headquartered in Bridgewater, New Jersey. Sanofi owns and manufactures prescription drugs such as Allegra, Plavix, Copaxone, and Ambien. In addition to these well-known pharmaceutical labels, Sanofi also develops, manufactures, and sells other prescription and over-the-counter pharmaceuticals.
According to the criminal complaint, to protect its trade secrets and prevent competitors from improperly receiving or accessing such information, Sanofi requires its employees to sign confidentiality agreements and invention assignment agreements, repeatedly informs and reminds its employees of the confidential nature of Sanofi’s business, restricts access to its facilities, requires researchers to log in lab notebooks and maintain them under lock and key, maintains an encrypted document management system, and restricts access to its computer systems through advanced computer security measures.
To those ends, in August 2006, when Sanofi hired Li as a medicinal chemist (later promoting her to a research scientist), it required Li to sign a “Conflict of Interest” statement, a certificate acknowledging her receipt of Sanofi’s corporate ethics and code of business conduct, an Inventions Agreement, and a document entitled “Trade Secrets and Confidential Information.” Additionally, Li confirmed to Sanofi that she “never materially participated in any illegal act relating to the development and approval of drug products, including, but not limited to, submitting false data to governmental authorities and falsifying records that are maintained by pharmaceutical and consumer health companies.”
Despite these protections and Li’s promises, according to the government, starting sometime in or about October 2008, Li improperly accessed Sanofi’s internal database and began downloading Sanofi’s proprietary chemical structures. During that same time frame, Li was a 50 percent partner of Abby Pharmatech, LLC, a Delaware limited liability corporation, which purportedly served as a United States subsidiary to Chinese chemical producer, Xiamon KAK Science & Technology Co. Ltd.
Over a nearly three-year period, according to the government, Li engaged in an elaborate scheme in which she improperly accessed, downloaded, transferred the downloaded information to her personal home computer by either emailing the information to her personal e-mail address or by using a USB thumb drive, and attempted to pass off Sanofi’s proprietary chemical compounds as those of Abby Pharmatech. According to the criminal complaint, Sanofi became aware in May 2011 that, on Abby Pharmatech’s website, Abby Pharmatech was advertising chemical compounds that belonged to Sanofi, including a number which Sanofi had not yet publically disclosed.
During the course of the FBI’s investigation into Li’s illegal activities, Sanofi representatives verified that Abby Pharmatech registered over 6000 Sanofi proprietary chemical structures as Abby Pharmatech property. Moreover, in forensically examining the laptop computer Sanofi issued to Li, it was discovered that Li possessed copies of Abby Pharmatech’s 2010 tax return. Most incriminating, however, Li possessed on her laptop a document entitled “AbbyPharmatech,” which contained a list of 144,000 compounds, including compounds that were categorized with Sanofi internal control numbers. Those internal control numbers could not have been discovered but for unauthorized access to Sanofi’s internal databases.
As a condition of her guilty plea, the United States Attorney, District of New Jersey, agreed not to prosecute Li for her theft of chemical compounds occurring between January 1, 2010 and July 27, 2011. Despite her plea and the U.S. Attorney’s agreement not to charge and prosecute her for certain thefts, Li still can be sentenced for a maximum of 10 years imprisonment and up to a $250,000 fine. Also, contingent with her plea, Li agreed to pay Sanofi a total of $131,000 in restitution damages. Judge Joel A. Pisano received and accepted the guilty plea. Pursuant to the Sentencing Reform Act, 18 U.S.C. §§3551-3742, Li’s sentence is within the sole discretion of Judge Pisano. Any immigration proceedings and potential removal from the United States will be handled through a separate proceeding.
This case highlights that, even when a company has sophisticated practices in place to protect its trade secrets, it must remain constantly vigilant in its efforts to prohibit misappropriation of those secrets. In instances like this and where a company’s trade secret is essentially its lifeblood, a company should consider using additional preventive means to prohibit employees from stealing trade secrets, such as configuring the operating system to restrict access to external devices, thus, restricting the ability to download information to an external device; blocking a user from uploading information to a web-based site; and/or utilizing software that blocks employees from sending emails to certain domain names.
