Apple Employee Arrested for Trade Secret Theft

Written by John Peterson
Posted July 15, 2018 at 8:00PM

It was almost the perfect getaway...

A former Apple employee was captured at the airport before they could board a flight to China. This was after the employee had apparently stolen some of the tech giant's trade secrets for self-driving cars and attempted to take them with him to a new job at a Chinese startup.

The ex-employee Xiaolang Zhang had been working on Apple autonomous car project since 2015. According to the FBI, he "designed and tested circuit boards to analyze sensor data."

And for almost two years, he was privy to information that many in the tech world can only dream of having access to: the entire inner workings of Apple's top secret autonomous car research.

But at the end of April, Zhang informed his immediate supervisor that he was resigning from his position and moving to China to be with his sick mother. He also mentioned that he'd be taking a job at Chinese startup Xiaopeng Motors, also known as XMotors, which primarily focuses on self-driving cars.

The supervisor had thought that Zhang had been "evasive" during this conversation. So, he'd requested that Apple's security team look into the situation.

The team discovered that Zhang's activity on the Apple network had "increased exponentially" in the days before he announced his impending departure.

According to the FBI, Zhang had downloaded several documents from Apple's network and had transferred them to his wife's personal laptop.

The information he took, without approval from the company, was "largely technical in nature, including engineering schematics, technical reference materials, and technical reports."

Authorities also say Zhang "admitted to removing items" from Apple's campus. This included "two circuit boards and a Linux server from the hardware lab."

The criminal complaint against Zhang includes another interesting tidbit: Apple has as many as 5,000 employees involved in the self-driving car project.

The company has a compartmentalized culture where employees are only read into confidential projects on a need-to-know basis.

But the FBI says "approximately 5,000 of Apple's over 135,000 full time employees" have clearance to receive information about Apple's project to "develop software and hardware for use in autonomous vehicles."

Of course, not all of those 5,000 people are working on the project at the same time. But the FBI also says 2,700 Apple employees have access to one or more confidential databases related to Apple's self-driving car project.

But according to the official complaint, information about the project "is a closely guarded secret that has never been publicly revealed"... until now.

Authorities arrested Zhang "without incident" at the San Jose International Airport on Saturday. This was after he purchased a last-minute one-way ticket to China.

A statement Wednesday from XMotors said there was no indication that had Zhang communicated sensitive information from Apple.

The Chinese startup also added that it had been informed of the case late last month, had terminated Zhang's employment, and is currently working with local authorities to gather more details on the case.

Apple spokesman Tom Neumayr told Bloomberg in an email:

Apple takes confidentiality and the protection of our intellectual property very seriously. We're working with authorities on this matter and will do everything possible to make sure this individual and any other individuals involved are held accountable for their actions.

Zhang is facing charges in federal court in the Northern District of California.

According to court documents, Zhang appeared in court on Monday and was remanded to custody. A plea has not yet been filed.

He's scheduled to be arraigned on July 27th. And if he's found guilty, he faces up to 10 years in prison along with a hefty $250,000 fine.

But this isn't the first incident of stolen trade secrets related to autonomous vehicles...

Fierce competition in this sector has spilled into the courts, as well. Industry leaders like Alphabet and Baidu have filed lawsuits that accuse rivals of intellectual property theft.

That's all for now.

Until next time,

John Peterson
Pro Trader Today

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