Former Coca-Cola scientist accused of stealing trade secrets to form Chinese beverage rival

A former Coca-Coca scientist is accused of stealing trade secrets in a bid to launch a company backed by China's government.

A Chinese-born scientist formerly employed by Coca-Cola is now accused of trying to steal trade secrets from companies reportedly working with the beverage giant in order to set up her own rival venture funded in part by China’s government.

The claims against Xiaorong You, 56, of Michigan -- who also went by the alias ‘Shannon You’ -- came in an indictment returned by a grand jury in Tennessee on Thursday.

“The conduct alleged in today’s indictment exemplifies the rob, replicate and replace approach to technological development,” Assistant Attorney General National Security John C. Demers said in a Justice Department press release about the case. “Xiaorong You is accused of an egregious, premeditated theft and transfer of trade secrets worth more than $100 million for the purpose of setting up a Chinese company that would compete with the American companies from which the trade secrets were stolen."

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The trade secrets You is alleged to have swiped relate to the development of cans and food containers.

“Until recently, bisphenol-A (BPA) was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss, and prevent the container from corroding or reacting with the food or beverage contained therein,” the Justice Department says. “However, due to the discovered potential harmful effects of BPA, companies began searching for BPA-free alternatives. These alternatives are difficult and expensive to develop.”

It added that from 2012 to 2017, You worked at an Atlanta-based company where, because of her background in that field, she was one of a “limited number of employees with access to trade secrets belonging to… various owners.”

She later worked for another company in Kingsport, Tennessee until June 2018. There, she had access to that company’s trade secrets, investigators say.

A Coca-Cola Co. spokesman also told The Wall Street Journal that You had worked for them. The newspaper, in their coverage of her indictment, cited authorities as saying the companies she worked for were doing research with Coca-Cola Co.

The indictment alleges that You, along with Liu Xiangchen, 61, of Shandong Province, China, “and a third co-conspirator formulated a plan in which You would exploit her employment with the two American employers to steal trade secrets,” according to the Justice Department.

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Then, it says, she would funnel the information to a Chinese company operated by Liu, which would “manufacture and profit from products developed using the stolen trade secrets.

“In exchange, Liu would cause the Chinese company to reward You for her theft, by helping her receive the Thousand Talent and other financial awards, based on the trade secrets she stole, and by giving You an ownership share of a new company that would ‘own’ the stolen trade secrets in China,” it concluded.

The “Thousand Talents Plan,” according to The Wall Street Journal, is a talent recruitment operation set up by the Chinese government in 2008. The program rewards scientists who gather “global wisdom” with housing, health care and contracts sometimes worth more than $700,000.

But the U.S. government suspects the program – and others set up by China like it -- is just a ruse to entice scientists to hand over secrets and expertise they pick up while working in America.

Those who are participating in such programs “travel from the U.S. at Chinese government expense, divulge technical knowledge through scripted venues, are briefed on China’s technology interests, return to their U.S. ‘base’ for more information, and repeat the process,” James Mulvenon, a manager at a U.S. defense contractor, told the Senate Judiciary Committee in December in a hearing on the matter, according to The Wall Street Journal.

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The U.S. Energy Department announced earlier this month that it is banning its employees and scientists from getting involved with such programs.

You and Liu, in their case, are each facing one count of conspiracy to steal trade secrets. You also has been charged with seven counts of theft of trade secrets and a count of wire fraud.