Tech Industry

Pair indicted in trade-secret theft

A federal grand jury indicts two men on criminal charges of stealing trade secrets from Sun Microsystems, Transmeta and other computer technology companies.

SAN JOSE, Calif.--A federal grand jury on Wednesday indicted two men on criminal charges of stealing trade secrets from Sun Microsystems, Transmeta and other companies in order to make and sell processors based on the technology in China.

Fei Ye and Ming Zhong face 10 counts of trade-secret theft and economic espionage related to possessing stolen internal company documents from Sun, Transmeta, NEC Electronics and Trident Microsystems, according to an indictment filed here. The pair was arrested while trying to board a plane at San Francisco International Airport in November 2001.

They could face up to 95 years in prison and nearly $3 million in fines. Both men are free on bail, according to court documents.

According to the indictment, the men established a company called Supervision, or the Zhongtian Microsystems Company, and conspired to recruit others to work for them. They also allegedly applied for funding from the Chinese city of Hangzhou and the National High Technology Research and Development Program of China.

According to the indictment, Zhong had secret documents belonging to Trident in his Transmeta office. Fei Ye allegedly possessed a charter for the new company at his Silicon Valley home that said the project would boost China's ability to develop high-end processors and help it better compete in the market.

The men also allegedly possessed documents praising the Zhongtian project because it would enable China to autonomously develop an embedded processor and basic system chips.

Trade-secret theft largely has been the domain of civil lawsuits, but law-enforcement authorities have become more active. In 2001, for example, criminal trade secret charges were filed against a software company called Avant, now part of Synopsys, and against an employee of the Barksdale Group investment company.

Sun declined to comment beyond the information in the indictment. Transmeta didn't immediately respond to requests for comment.