Arrests for trade secrets theft

Three former employees of a company in Zhuzhou were arrested in early May for stealing trade secrets and causing a huge loss to their previous employer.

One of the men was an executive vice-manager in charge of daily operations at a company based in the industrial city Zhuzhou, while another headed its technology department and the third was part of the R&D team.

Based on its own intellectual property rights, the Zhuzhou company signed a contract with a Xinjiang firm in July 2008 to make water-cooled electrical reactors - large coils used to prevent short circuits - and after two years of effort, the reactors were ready for sale.

A Beijing buyer then ordered 174 of the new devices worth nearly 6 million yuan ($923,219). Eighty-five had been delivered by last October.

Yet the buyer then rejected the next delivery, claiming that the project was postponed.

As a result, a large number of electrical reactors were not shipped and had to be stored in a warehouse, causing a loss of more than 1 million yuan to the company.

After the Zhuzhou company initiated legal proceedings against its former employees, they admitted the real reason behind the rejected order was the three men used the same technology and produced reactors for another Beijing firm, which were then sold to the original buyer.