Another new indictment alleging misappropriation of U.S. oil and gas trade secrets by a Chinese energy company, its U.S. based affiliate, and an executive officer was recently handed down by the U.S. Department of Justice. It is another example in a recent string of trade secret charges involving Chinese companies and Chinese nationals operating in the United States and the People’s Republic of China.
On October 29, 2020, the U.S. Department of Justice announced that a federal grand jury indicted Jason Energy Technologies Corporation, which is based in Yantai, China, Jason Oil and Gas Equipment LLC USA, which is based in Houston, Texas, and a Chinese national by the name of Lei Gao (a.k.a. Jason Gao) on charges of conspiracy, theft of trade secrets, and attempted theft of trade secret technologies from an unnamed Houston-area oil and gas manufacturer. A former employee of Jason Oil, Robert Erford Jr., had previously pleaded guilty to conspiracy to commit trade secret theft.
In November 2019, according to the indictment, Gao and Erford met at Jason Oil’s offices where Jason Energy’s general manager invited Mr. Erford to travel to China to assist Jason Energy in developing a particular coiled tubing technology. Mr. Erford allegedly agreed to sign a consulting agreement with a confidentiality provision to assist Jason Energy in developing the technology and agreed to be paid $1,000 per day for a 15 day trip to China. Soon thereafter, the indictment asserts, Mr. Erford used an encrypted messaging application to transmit an unnamed American company’s manufacturing information to Jason Energy. The indictment also alleges that Mr. Erford met with both Mr. Gao and other Jason Energy officials at the company’s China offices and facilities, where they discussed coiled tubing technology, including proprietary technology, practices, and procedures belonging to the unnamed American company.
The corporate entities face fines of up to $5 million or three times the value of the stolen trade secrets, whichever is greater. Mr. Gao faces the same potential fine, and a prison sentence of up to 10 years. A warrant remains outstanding for Mr. Gao’s arrest, and he is believed to be in China.