U.S. Indicts Chinese Military Officials for Online Theft of Trade Secrets

May 26, 2014

China PiracyThe United States Department of Justice recently announced that a grand jury had indicted five Chinese military officials for allegedly engaging in computer hacking resulting in theft of commercial trade secrets from five U.S. companies and organizations.  This case is apparently the first to target Chinese government officials.  It is likely to expand the ongoing international controversy associated with computer security and information privacy.

U.S. authorities allege that the indicted Chinese officials accessed computers and communications in the United States without authorization.  The indictment claims that the officials captured commercial trade secrets of the following five organizations: Alcoa, Westinghouse, U.S. Steel, Allegheny Technologies, SolarWorld, and the United Steelworkers Union.

The U.S. government has long complained that Chinese authorities supported widespread electronic probing of both commercial and government computer systems and communications, in the United States and elsewhere.  This indictment represents the first formal effort by U.S. authorities to take legal action based on those allegations.

In this case, U.S. law enforcement authorities allege that the Chinese officials accessed computers, computer systems, and communications without permission.  They claim that the materials accessed by the Chinese officials included commercial trade secrets.

The indictment is likely to complicate the negotiations between the U.S. and Chinese governments aimed at developing common rules for computer security.  Those discussions have been underway for some time, and were recently made more complex by the Edward Snowden disclosures regarding extensive electronic surveillance by the U.S. National Security Agency.

Chinese officials have denied the allegations contained in the indictment.  They contend that the charges raised by the United States are false and without merit.

It seems that this case is part of an effort by the U.S. government to draw a distinction between electronic surveillance conducted for national security purposes and actions directed toward economic espionage.  The U.S. government has repeatedly taken the position that broad electronic data collection and surveillance are essential and legitimate elements of national security.  With this indictment, U.S. authorities seem to be arguing that government surveillance aimed at deriving commercial advantages should not be considered part of a government’s legitimate national security activities.

It may be difficult for the U.S. government to persuade other national governments that economic espionage does not fall within the scope of necessary national security actions.  Those other governments are likely to find it difficult to believe that commercial trade secrets are not included in the massive volume of information and communications that have apparently been harvested by the NSA over a period of years.

Given the disclosures regarding extensive U.S. electronic surveillance activities, economic espionage cases such as this one are likely to draw criticism from other national governments.  Those governments may fail to recognize a distinction between electronic surveillance for national security and commercial purposes.  They are also likely to assume that contained within the massive volume of information and communications gathered by the U.S. government over time are significant commercial trade secrets and other economically valuable materials which remain accessible to U.S, authorities.