Pangang Group Facing Criminal Charges in DuPont Trade Secret Case
Reuters reported tha 9th US Circuit Court of Appeals Judge Daniel Collins, rejecting their argument that they were immune under the Foreign Sovereign Immunities Act, pronounced that Pangang Group Co Ltd and its three affiliates with connections to the Chinese government must face criminal claims over an alleged conspiracy to steal du Pont de Nemours & Co's trade secrets related to a white pigment used in a variety of products. Sidestepping the question of whether the Foreign Sovereign Immunities Act applies to criminal cases, Judge said the Pangang Group Co Ltd and its three affiliates failed to show they were Chinese government entities under the law, a baseline requirement for Foreign Sovereign Immunities Act immunity.
Pangang Group and its three affiliates were indicted in 2016 in the US District Court for the Northern District of California for violating the Economic Espionage Act by allegedly conspiring to steal DuPont trade secrets related to titanium dioxide, a white pigment used in products ranging from paints to plastic to paper, for the Chinese government. The court said no Chinese company had been able to develop a clean and efficient way to produce the pigment, and DuPont wouldn't sell or license its technology to Chinese companies.
The Pangang companies asked US District Judge Jeffrey White in Oakland to dismiss the case in 2019, arguing they were immune from the claims under the FSIA as instrumentalities of the Chinese government. The indictment said Pangang Group is a state-owned enterprise controlled by the Chinese government's State-owned Assets Supervision and Administration Commission of the State Council, and the other three companies are its subsidiaries. Judge White denied the motion, finding that even if the FSIA applied to criminal cases, Pangang wasn't immune because it had engaged in commercial activity in the US and waived its immunity by participating in the case.
The trade secrets relate to TiO2 technology from DuPont. DuPont had developed the technology and controlled a significant amount of the world’s TiO2 sales. The defendants are alleged to have obtained confidential trade secret information including photographs related to TiO2 plant technologies and facilities. Further, the defendants are alleged to have paid an Oakland company at least $27,000,000 between 2006 and 2011 for assistance with TiO2 technology, including obtaining DuPont trade secrets. The defendants also allegedly attempted, between 2008 and 2011, to commit economic espionage related to DuPont’s TiO2 processes.
As per Wikipedia, Panzhihua Iron and Steel (Group) Company Limited is the state-owned enterprise in Panzhihua in Sichuan in China. It is the largest steel maker in Western China. It is also the largest vanadium product manufacturer in China, and the second largest in the world. It has three subsidiaries listed on the Shenzhen Stock Exchange and they are Panzhihua New Steel and Vanadium, Changcheng Special Steel and Chongqing Titanium. In total, the firm has eight subsidiaries and associates, who are engaged in smelting, processing and distributing iron and steel as well as vanadium products