Former Apple Employee Indicted On Theft Of Trade Secrets

Topics:  Apple, Xiaolang Zhang

U.S. Attorney’s Office
Northern District of California
16 July 2018

FOR IMMEDIATE RELEASE

SAN JOSE - A federal grand jury in San Jose indicted Xiaolang Zhang on Thursday, July 12, 2018, for theft of trade secrets, announced Acting United States Attorney Alex G. Tse and Federal Bureau of Investigations, Special Agent in Charge John F. Bennett. Zhang was arraigned before U.S. Magistrate Judge Virginia K. DeMarchi today on charges of theft of trade secrets, in violation of 18 U.S.C. § 1832. Zang entered a plea of not guilty at the hearing.

According to the indictment, Zhang, 33, of San Jose, is alleged to have taken a confidential 25-page document containing detailed schematic drawings of a circuit board designed to be used in the critical infrastructure of a portion of an autonomous vehicle, knowing that the theft would injure the owner of the trade secrets, Apple, Inc.

Court documents filed in the case allege that on April 30, 2018, Zhang told Apple personnel that he was resigning from his job so that he could return to China to be closer to his mother who was ill. Apple immediately terminated Zhang’s access to its computer systems and Apple personnel began a forensic analysis of Zhang’s Apple-owned devices and network activity.

According to an affidavit filed in the case, Apple subsequently learned that Zhang went to work for X-MOTORS – a company focused on electric automobiles and autonomous vehicle technology with its headquarters in China. Apple security personnel confirmed that in the three days prior to April 30, 2018, Zhang’s network activity increased notably compared to the prior two years of his employment. The majority of his activity consisted of downloading information from the project databases, and the downloaded information contained trade secret intellectual property.

On July 7, 2018, FBI Agents learned that Zhang purchased a last-minute round-trip airline ticket with no co-travelers, departing San Jose, Calif., on July 7, 2018, traveling to Beijing, China with a final destination of Hangzhou, China aboard Hainan Airlines. Federal agents intercepted and arrested Zhang at the San Jose International Airport after he had passed through the security checkpoint of Terminal B.

Zhang made his initial appearance in federal court in San Jose on July 9, 2018, before Magistrate Judge DeMarchi. On July 10, 2018, Zhang was released, subject to GPS electronic monitoring, on a $300K bond. Zhang’s next appearance is scheduled for August 27, 2018, at 1:30 p.m., before the Honorable Edward J. Davila, U.S. District Judge.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 10 years in prison, and a fine of $250,000. In addition, the court may order that Zhang serve a term of supervised release of up to 3 years following the prison term plus restitution, if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorneys Amie Rooney and Matt Parrella are prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI.