U.S. Federal Bureau of Investigation (FBI) officers on Thursday charged two Chinese
Nationals working at Lucent Technologies Inc. and a third man with stealing source
code and software and giving the trade secrets to a Chinese state-owned company
in an effort to develop the "Cisco of China."

The two and another man, a Chinese-American, sought to use the stolen technology
to create a leading data networking company as big as Cisco Systems Inc., according
to a statement from the office of U.S. Attorney Robert J. Cleary and the criminal
complaint. Cleary is the U.S. attorney for the District of New Jersey.

The FBI arrested the men on Thursday and they were scheduled to appear for
a hearing in the U.S. Federal District Court in New Jersey during the afternoon.

Federal agents arrested Hai Lin, 30, of Scotch Plains, New Jersey, and Kai
Xu, 33, of Somerset, New Jersey, both of whom work as scientists at Lucent.
The third man is Yong Qing Cheng, 37, of East Brunswick, New Jersey.

The investigation has been ongoing since about February, according to a source
close to the investigation. Lin and Xu had worked as product development engineers
in Lucent's switching business for less than five years, the source said.

Lucent spokeswoman Mary Lou Ambrus declined to provide specifics of what was
stolen or the value of the intellectual property. The Murray Hill, New Jersey-based
company has a comprehensive system to protect its intellectual property and
that system worked, she said. The company contacted authorities when it learned
that the employees were allegedly stealing the technology.

An affidavit with the criminal complaint filed Thursday disclosed that the
men were experts in the source code, software and the entire design of Lucent's
PathStar system. Pathstar is a system that is capable of sending voice and data
services over the Internet and it generated approximately $100 million in revenue
for Lucent in 2000. Federal authorities allege the three worked together to
steal and transfer the technology out of the U.S.

Lin, Xu and Cheng allegedly founded New Jersey-based ComTriad Technologies
Inc. in January 2000. Cheng traveled to Beijing in July 2000 and began negotiations
for a joint venture between ComTriad and Datang Telecom Technology of Beijing,
a company that is majority-owned by the Chinese government, according to the
complaint.

Negotiations continued for the joint venture and, ultimately, Lucent's Pathstar
source code and software was stored on a password-protected Web site by ComTriad
-- http://www.comtriad.com. Federal authorities allege that earlier this year
the three men transferred the Pathstar data to Datang for the use in developing
a ComTriad system. The system, known as the CLX 1000, was virtually identical
to Lucent's Pathstar system, according to the complaint.

The Datang-ComTriad venture was financed by $1.2 million from Datang and was
approved by Datang board of directors in October 2000, according to federal
authorities.

Lin, Xu and Cheng are each charged with conspiracy to commit wire fraud and
face a maximum penalty of five years in prison and a $250,000 fine.

» posted by ITworld staff

IDG News Service

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