United States v. Meng, No. CR 04-20216 JF (U.S.D.C. N.D. Calif.).

Judge Jeremy Fogel of the U.S. District Court for the Northern District of California in San Jose today imposed a 24-month prison sentence on Xiaodong Sheldon Meng, who pleaded guilty to possessing night vision software for pilots belonging to Quantum3D, his former employer, and using that information in a sales demonstration to Chinese naval officials.

According to the indictment, Meng was employed by Quantum3D in various systems engineering and analysis positions, and later as a consultant to Quantum3D. In that capacity, he had access to various trade secrets belonging to Quantum3D, a producer of hardware and software components for simulation systems for commercial and military customers. Among the products to which Meng had access were “Mantis,” a product used to visually simulate motions and three-dimensional scenes for training and other purposes, and “viXsen,” a visual simulation software program using for training military fighter pilots using thermal imaging (night vision) equipment. As part of his employment, Meng signed an “Employee Proprietary Information Agreement” acknowledging his obligation to return Quantum3D’s information, documents and other property to the company at the end of his employment.

Upon ending both his employment and consulting relationship with Quantum3D, Meng took a position with Orad, a direct competitor of Quantum3D in China. The government charged that Meng then traveled to China and made a presentation and demonstration to various foreign governments and officials, including the Royal Thai Air Force, the Royal Malaysian Air Force, and government entities and military contractors of the People’s Republic of China, using Quantum3D’s products, modified to seem like they belonged to Orad.

The United States government charged Meng with misappropriating Quantum3D’s trade secrets without authorization and attempting to export them from the United States to China in violation of various federal laws including, among others, the Economic Espionage Act (18 U.S.C. § 1831), the Trade Secrets Act (18 U.S.C. § 1832), and the Arms Export Control Act (22 U.S.C. § 2778). Although the statutory maximum for the economic espionage count to which he pleaded guilty is 15 years in prison, Meng’s plea agreement with the government, in which he pleaded guilty to 2 of the 36 counts of the indictment, recommended a maximum sentence of 24 months’ imprisonment.

At the sentencing hearing, Judge Fogel imposed the 24-month maximum under the plea deal, emphasizing the need to deter others who would consider stealing and selling American technology and jeopardizing national security. In doing so, Judge Fogel became the first judge in the country to sentence a defendant convicted under the rarely-used Economic Espionage Act.