California biotech employees charged with theft of trade secrets on behalf of Taiwanese firm

by Meagan Martin Powers

Four employees of the California biotech company Genentech have been charged in federal court with stealing medical formulas and other trade secrets for a rival Taiwanese firm. According to an indictment that was unsealed in San Francisco federal court, a senior scientist at Genentech and three co-workers stole trade secrets on behalf of JHL Biotech from 2012 until 2017, when they were caught by the FBI.

On the same day that the indictment against the four employees was unsealed, Genentech also filed a lawsuit against JHL in California civil court. The lawsuit accuses the Taiwanese company of stealing trade secrets in order to make drugs to treat cancer, lymphoma, and cystic fibrosis at a lower cost.

California prosecutors allege that JHL decided to steal trade secrets from Genentech because of the profit potential of the biosimilar drug market, which is expected to increase to nearly $42 billion per year by 2024. However, rather than trying to master the details of developing and manufacturing biosimilars, JHL allegedly looted secrets from Genentech. These secrets allowed JHL to launch similar treatments in China with greater speed and to secure lucrative agreements with pharmaceutical companies such as Sanofi.

According to the indictment, a senior scientist at Genentech, Xanthe Lam, and her husband, Allen, downloaded secret formulas and analytical data from the company’s computers. With the help of a former Genentech employee, James Quach, the group passed the data to a former JHL employee, John Chan, who then passed the materials on to JHL.

The indictment alleges that two JHL employees, Racho Jordanov and Rose Lin, recruited Lam to help acquire trade secrets from Genentech because of her senior role with the company. The data that Lam acquired for JHL included information on the cancer drugs Avastin and Herceptin, the cystic fibrosis drug Pulmozyme, and the lymphoma drug Rituxan.

Prosecutors say that the conspiracy to steal trade secrets from Genentech came to light in 2016 thanks to an anonymous tip from a company employee. After the company launched an internal investigation, it also alerted federal authorities, who also began investigating the alleged theft of trade secrets. Genentech readied a civil suit against JHL, but did not file the case until the criminal indictments against Lam and her co-conspirators were unsealed.

Chinese corporations have faced numerous lawsuits in the U.S. over alleged thefts of traded secrets in recent years. In July, a Wisconsin federal judge ordered a Chinese wind turbine manufacturer to pay $1.5 million for stealing trade secrets from AMSC. In August, the FBI arrested a General Electric employee for allegedly stealing turbine technology on behalf of a Chinese company. That same month, a Chinese intelligence agent was charged with trying to collect trade secrets from GE Aviation. In September, a scientist with GlaxoSmithKline was charged with stealing information about a cancer drug.

Commercial Litigation Claims Handled by Heygood, Orr & Pearson

If your company has been the victim of stolen trade secrets, you may be eligible to take legal action against the individuals or corporations responsible for these actions. The first step in filing a claim is to speak with a commercial litigation attorney regarding your case.

The attorneys at Heygood, Orr & Pearson have handled hundreds of commercial litigation and intellectual property cases involving alleged damages ranging from tens of thousands of dollars to tens of millions. Our law firm has successfully represented businesses of all sizes, from small “mom and pop” businesses to some of the largest corporations in the world.

Beyond our specific experience in the field of commercial, our ability to prosecute intellectual property claims is aided by our extensive trial experience in general. While technical knowledge and familiarity with patent rules is a must for attorneys handling patent infringement claims, there is no substitute for courtroom experience. Our attorney can take even the most complex commercial case and explain it in terms a jury can understand.

If you or your company is in need of representation in an intellectual property matter, contact us for a free consultation by calling toll-free at 1-877-446-9001, or by following the link to our free case evaluation form and answering a few simple questions to get started.

by Meagan Martin Powers

Meagan Martin Powers is a licensed attorney and partner at HO&P who focuses her practice on commercial litigation, bankruptcy and creditor’s rights matters, and small business legal advisory.