Medical Device CEO Catches Stranger After Hours, Prompting Espionage Charges
wsj.com
wsj.com
I briefly worked for Boeing once and they were working on a new fuel boom for the KC-135 Fuel tanker. Spent millions in research and then some idiot takes a bunch of photos of the blueprints and physical hardware and then sells it to someone in China. Thankfully he was busted. A company just trying to make a profit on what they spent millions developing is not inherently evil.
Industrial espionage is as old as industry. It got porcelain and tea out of China and is, in fact, the reason the UK was able to grow tea as early as it was.
It isn't nice, but business isn't nice.
http://www.brahmsmount.com/blog/american-textile-history/
I'm not defending industrial espionage, I'm merely pointing out that treating it as a grave and horrible thing is at odds with how important it's been historically.
There are some interesting jurisdictional issues here regarding outright legality of such info and if there is a duty to act by a US corporate officer who is offered such info that is known or suspected to be stolen. If the info theft takes place in the US then all sorts of laws apply (as, for example, Uber is likely to experience in the near future) but if the theft took place outside the US I wonder if the Foreign Corrupt Practices Act makes such a purchase illegal and failure to report a potential crime? I think the Economic Espionage Act only covers theft that goes from US to some other country, but I am curious if the FCPA covers things coming in the opposite direction?
God, I wish that was true.
Pre industrial times, I would assume that people were more private in general, and a desire for privacy was more acceptable. But I really don't know...my impression is that this force openness popped up especially around WWII when propaganda and espionage were immediately deadly things.
As Musk says, patents aren't going to help you.
I'm struggling to understand how the stolen design could be turned into money. China's booms and refueling ports aren't compatible with the US versions, and no way DoD is going to buy direct from China. Best case China modifies the boom for compatibility with the Russian ports they use and then produces it in-house, more likely they see if there's anything useful to to learn from it and incorporate that into future designs.
Frankly ounds more like someone who saw a way to make a quick buck got found by Chinese intelligence, rather than actual industrial espionage - which is a fairly common story in intelligence gathering operations.
> “Mr. Liu adamantly asserts his innocence and we fully expect he’ll be exonerated after a careful review of the evidence,” said Robert Goldstein, Mr. Liu’s defense attorney.
The best-case scenario still seems reasonably illegal here
>On that evening in late August, Dr. Straface said he introduced himself to Mr. Liu as the CEO and asked who Mr. Liu was and what he was doing in the office.
>Mr. Liu mumbled at first, then said he was there to visit the company’s head of intellectual property and also the sales director for the European division, according to Dr. Straface.
>“At one point he mentioned that he was here to do business with the CEO, not seeming to realize he was looking at the CEO,” Dr. Straface said.
It's certainly a civil tort.
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Its never been easier to send an email than now
This was in the early 90s. We didn't have internet yet.
http://blog.erratasec.com/2017/06/how-intercept-outed-realit...
> The FBI confiscated “an unusual amount of computer equipment” that Mr. Liu had brought with him, including the laptops and tablet and also two smartphones, a smartwatch, a computer thumb drive, two digital video cameras, several SIM cards and high-capacity storage drives, according to the affidavit.
For me, someone who occasionally carries two laptops (bulky company-issue, light personal worktop) and a sundry of perboard assemblies that would make the TSA raise an eyebrow. But I think even that might count as 'unusual' if you're talking about the average population. How many peoples' jobs require them to occasionally have 24/7 access to their work computer? How many people carry around devices solely because they vaguely intend to tinker with them at some point, and you never know when you'll have a spare hour?
Probably less than 10%. Also, side-note, as much as I hate the TSA's security theater, I've never actually had problems with bringing things that look like bombs through security. Including a wired belt with a black box covered in electrical tape (compass)...good thing I'm white!
This is in part because I switch between working from home and working at the office fairly often, have travel time in between, and need to have access to more VMs than I can fit on my laptop's internal SSD comfortably.
I also may have SIM cards rattling around somewhere; when I travel internationally, I buy a local prepaid SIM, and I may have older SIM cards left over from the last time I replaced one.
Exactly the same with me, I regret only getting the 256GB internal drive with my Thinkpad but I wanted the 2560x1440 so I had to trade something off (since it's a personal machine not a work machine), I suspect I'll be upgrading it before long.
My laptop bag right now contains, 3x1TB USB3 drives, a Thinkpad T470P, an iPad Mini-2, 4-5 4-16GB thumbdrives, two phones (Nexus 4 and a Moto G5 Plus).
Not a spy, just an enterprise web developer.
.. time to do some house cleaning, I guess.
Then again, I didn't break into the office I'm sitting in.
The FBI confiscated “an unusual amount of computer equipment” that Mr. Liu had brought with him, including the laptops and tablet and also two smartphones, a smartwatch, a computer thumb drive, two digital video cameras, several SIM cards and high-capacity storage drives, according to the affidavit.
If the guy pleads not-guilty, I wonder how he'd explain why he had that much equipment with him for a business meeting.
I hope that we're not entering a world where having a bunch of computer equipment automatically makes you suspect.
I already get funny looks in Cafe's when I'm in a shell on a server/writing code.
You'd think these days people would be more used to it but where I live isn't exactly the tech capital of the world.
Edit: You might have to try a few links to find a working version.
The 2nd link works: http://www.cetusnews.com/business/CEO-Catches-Stranger-After...
javascript:window.location.href='https://m.facebook.com/l.php?u='+encodeURIComponent(window.location.href);
Onboarding was super easy (just an email address) and they give you a gift balance good for a couple articles ($2.50 in my case). Articles themselves seem a little on the high side (this one was $0.49, which seems to be the norm), but I'll probably continue to use this over other tricks to read WSJ content that crops up here, at least until my credits get used up.
One question, is there a simply way to navigate to the Blendle copy of an article that's paywalled? Do you have to just go to Blendle and search the article title, or is there an easier way?
I requested a refund and gave that as my reason.
1. Go to the submitted link. It will give you the first paragraph or so.
2. Pick something distinctive from that and copy it. I picked "Samuel Straface".
3. Google for that, and filter that by last 24 hours.
There will usually be another source in the results. Sometimes it is a separate article covering the same underlying story. Sometimes it will be another paper or magazine reprinting the submitted story, which is the case here:
http://www.theaustralian.com.au/business/wall-street-journal...
which is a reprint of the WSJ story.
https://www.facebook.com/l.php?u=
to any WSJ article to bypass the paywall. You have to click "Follow Link" to continue. You don't need to be logged into Facebook (or even have an account) for it to work.
The non-paywalled link is https://www.facebook.com/l.php?u=https://www.wsj.com/article....
Use AMP URL above.
Then, either 1. use "Reader Mode" or 2. retrieve html and strip out the Javascript before viewing with browser.
2. in simplest form, something like
curl -o withjs.htm https://www.wsj.com/amp/articles/an-after-hours-company-visit-spurs-espionage-charges-1505813401
exec sed '/<p>/,/<\/p/!d' withjs.htm > withoutjs.htmOn the flipside though, industrial espionage is a wealth transfer that reduces inequality. I recently purchased tires for my car - I got some Chinese ones that were 1/2 the price of the other tires and the Chinese tires are shockingly fine. I don't know how they'd get the price and quality without benefiting from industrial espionage.
Perhaps something more ideal would be to opensource everything that's been stolen. It'd encourage companies to take security seriously and it would reduce the value of the stolen property.
Lastly, I kind of wonder how much of this problem is due to companies insisting on removing dependencies from certain people / groups. Think of all the documentation people create 'in case you get hit by a bus tomorrow'. When my grandpa worked, it sounds like it was fine to have undocumented things so long as people knew about it (e.g watch out for that machine, it's sensitive to humidity and here's how to reset it). Now, I'm sure some middle manager would insist that the 'operational knowledge' be documented and stored somewhere that becomes that much more lucrative for a thief.
Steal and steal alike? No thanks.
> I don't know how they'd get the price and quality without benefiting from industrial espionage.
They engineer their internal economy to keep cheap labor at near starvation levels of subsistence.
> Perhaps something more ideal would be to opensource everything that's been stolen.
Robin Hood arguments are vapid. Stealing is often costly. Hackers aren't free, although the Chinese government does basically quarantine anyone with any chops.
> Now, I'm sure some middle manager would insist that the 'operational knowledge' be documented and stored somewhere that becomes that much more lucrative for a thief.
Actually, all levels of management want information to be there because you don't want to lose enormous sums of money if someone leaves and doesn't document the location of encryption keys before taking a secret job and disappearing into Asia or eastern Europe.
But that doesn't explain how the tires are so good. Building a good tire is very, very difficult. I'd say that my cheap chinese tires are comparable with state of the art tires from 2002/2003, that requires much more expertise than a dozen good engineers can provide. In my opinion, the tires' performance is evidence that they use someone else's technology.
Robin Hood arguments are vapid. Stealing is often costly. Hackers aren't free, although the Chinese government does basically quarantine anyone with any chops.
But stealing is worth it and the right robin hood arrangement could reduce the expected value of industrial espionage. Weigh the costs and benefits yourself.
Actually, all levels of management want information to be there because you don't want to lose enormous sums of money if someone leaves and doesn't document the location of encryption keys before taking a secret job and disappearing into Asia or eastern Europe.
And there's the rub, how many people would leave their company if they had the company's commitment to stable employment? About once a year I sign something that verifies I understand that I'm an at-will employee, do you think that garners my loyalty?
The first clause is true enough, the latter seems to be missing a ton of context, given y'know, the actual famine this same government caused two generations ago.
Low wages being a growth engine may not be fair or uniformly beneficial. Compared to the desperation of the cultural revolution it's sort of a paradise. Things are getting better, not worse.
It’s OK to not know how, but that doesn’t mean there wasn’t a legit path to that knowledge for them. Having a theory doesn’t mean the theory is the only explanation.
Definitely industrial espionage happens all the time but another thing that also happens is that western companies hook up with Chinese partners and give over their know-how in exchange for dubious benefits like limited access to the Chinese market.
Does China have a comparative advantage in tire technology over Thailand? Probably. Why? Probably because of industrial espionage. If it were that easy to make decent cheap tires, you'd probably see other places doing it.
https://www.michelin.com/eng/michelin-group/organization/fac...
If the Thai tire technology were world class, Michelin wouldn't be able to add value to the Thai factory.
That makes makes western companies do remarkable things in China. Not just partnering, but also opening branches in China and training up local staff with the latest techniques. Before long the leading edge technology is being developed in China, not elsewhere. This isn’t a made up scenario; it’s what has been happening for a couple of decades and now it’s getting pretty hard to ignore.
Tim Cook (Apple) said: “The U.S., over time, began to stop having as many vocational kind of skills,” Cook explained. “I mean, you can take every tool and die maker in the United States and probably put them in a room that we’re currently sitting in. In China, you would have to have multiple football fields.”
So the skills move there, the techniques move there, and pretty soon it should no longer be surprising that they also have the ability to make stuff well there.
What do you think all the stuff about "information wants to be free", Aaron swartz ect is about?
It is about ending intellectual property laws, and all laws that keep information and science and innovation locked up.
Higher price can mean mean price gauging (like you are refering) but it can also mean straight up higher quality, reliability(consistency), or it can or many other things.
FWIW, I buy top of the line tires for my snow tires and motorcycle tires.
Besides, you're not making this statement to everyone else who has an elevated risk factor - tires are more likely to fail as they age, tires are more likely to fail when they're not properly inflated, or etc. Why single me out? Go lecure the stancenation crowd about their risk factors. Additionally, I carry very good insurance and I drive a lighter car. From a utilitarian perspective, you'd be better off checking truck tires.
I'd rather have my tires than 10 year old Goodyears. In fact, I got my tires because one of my 10 year old tires blew out. My car is safer now than it was prior to installing the Chinese tires.
yeah, the worst kind of reduction in inequality -- stealing the work product legitimately earned by the developer.
Someone going into your house and stealing all your electronics, and publishing your code also reduces inequality, I suppose you're ok with that?
>...1/2 the price of the other tires and the Chinese tires are shockingly fine Just because you aren't able to discern the difference between your cheap Chinese tires and real ones doesn't mean that there is no difference. Perhaps they are adequate to the task of your daily driving, or perhaps the difference will only appear when they delaminate/burst/tear off the bead/fail to grip/etc. at the wrong moment and you find yourself in the ditch or in oncoming traffic.
I'm continuously surprised at how credulous the HN readership is about counterfeit/stolen/copied technology (perhaps have a look at my post in my current field of expertise regarding counterfeit carbon bicycles, not unlike tires in complexity [0]). Perhaps HN readers have a bias from experiencing digital copies as 100% reliable, but in the manufacturing world, there are myriad opportunities to introduce bad variables. It's certainly remarkable that the Chinese company has produced a minimally usable tire, but I wouldn't trust my life to it without a lot more testing (for a yard truck, sure, but on the road...).
I'd say that a "people's revolution" is worse but that's political.
Someone going into your house and stealing all your electronics, and publishing your code also reduces inequality, I suppose you're ok with that?
You wouldn't download a car... the mechanism of IP theft usually isn't taking something tangible, it's duplicating something. If you take my phone, it means I can't use my phone. If you copy my journal, I can still use my journal. They're categorically different.
but in the manufacturing world, there are myriad opportunities to introduce bad variables. It's certainly remarkable that the Chinese company has produced a minimally usable tire, but I wouldn't trust my life to it without a lot more testing
So I hope their IP theft team was good enough. But tires have to pass DOT certification so they meet some minimum standard.
I'm glad to live in a country where I can decide what's right for me and you can decide what's right for you.
But the knife of quality variability cuts both ways, sometimes major manufacturers have issues. The top of the line tires (Pilot Power 3) I recently put on my motorcycle we recalled [0]. Thank goodness they didn't fail on me, but I might have been better served by crappy tires than my defective Pilot Power 3 tires. Unless you have some analytical way to evaluate the specific tires you're putting on your vehicle, you have to take a leap of faith. It's not unlike handmade carbon bicycles - some of them have issues even from the best manufacturer, the quality difference is a measure of degree, not a binary function.
FWIW, this Chinese tire manufacturer also makes FAA certified tires for airplanes so they have demonstrated the capability to make tires for demanding applications.
maybe sub-categorically different, but not completely different.
If I steal your journal, you lose a key property of it -- its privacy. If your journaling your life as a thief, you could lose your freedom, if you're journaling your life as a spy, you may die. But sure, you haven't lost your ability to use your journal!
More importantly, if you have spent your time, effort, and savings do develop a new valuable process, and I steal it, sure you can still use it, but you LOSE the ability to use all of the profits that MY company now gains by selling products made of that same process. You lose your market advantage, you lose sales, you lose income.
I watched this happen with a small high-performance engine producer who had their engines made in Taiwanese factory. They saw some identical models that were basically being made by their factory & sold out the back door. They called their factory and they stopped the sales. But the competitor now had a large enough bankroll to hire another factory to make similar designs. AAANND now, they have a half-priced competitor, much lower quality, but similar specs, and they can do less R&D.
So, NO, your justifications that 'they can still use the thing that they had/have' are, to put it bluntly, merely bullshit justification for theft.
And it seems that you just said it was OK to take and publish your code under my name? Care to publish your IP addr and credentials so we can freely access your journals and code to publish for ourselves (presuming that you produce something of value)?
> quality variability cuts both ways yes, virtually every manufacturer has an occasional problem. The good ones have fewer, address them proactively, and don't wait to be forced by the govt regulators. Hope your Chinese guys are the former, but I wouldn't bet on it.
Happy that your tire guys pass DOT and some FAA certs on their products; that is indeed a good sign. Still doesn't justify IP theft tho.
Though to be fair, I'd lose my freedom or life because of what I did, not because of the thief.
More importantly, if you have spent your time, effort, and savings do develop a new valuable process, and I steal it, sure you can still use it, but you LOSE the ability to use all of the profits that MY company now gains by selling products made of that same process. You lose your market advantage, you lose sales, you lose income.
I'm well aware of the cost, though it's unclear whether society is strictly worse off. I imagine a lot of IP theft is Pareto superior - that shouldn't affect the calculus of whether or not we prosecute it, and I'm simply arguing about what could be.
So, NO, your justifications that 'they can still use the thing that they had/have' are, to put it bluntly, merely bullshit justification for theft.
Under my system, it wouldn't be theft. It'd be business as usual. It might even be better than the current status quo that asks rights holders to perform a lot of work to get their rights catalogued but doesn't do a ton for rights holders when their work is infringed upon. How much does a patent cost? Too much. How much does it cost to get an injunction at the WTO? If you have to ask, you can't afford it.
And it seems that you just said it was OK to take and publish your code under my name? Care to publish your IP addr and credentials so we can freely access your journals and code to publish for ourselves (presuming that you produce something of value)
If turn about is fair play. You can publish my code under your name if you permit others to do the same.
The status quo is that IP laws exist and there are mechanisms to enforce it - those mechanism seem underutilized. If I had any authority in the United State or the WTO, I'd CHIMP OUT at what China's doing. Especially if I were in America and controlled a police force, I'd immediately start rattling the sabers. I'd arrest every Chinese person in America with affiliations to the Communist Party and I'd take the passport of every Chinese student (though I'd probably offer them U.S citizenship if they renounced their Chinese citizenship and really do a brain drain). I'd put the communist party affiliated people in bad conditions and use not-quite-tortue to force concessions out of China all while pounding them with an unrelenting cyber attack, very aggressive maneuvers in the South Chinese sea, and construction an iron dome of missile defense systems in every US aligned nation in Southeast Asia. What their doing is nothing short of economic acts of war and I would respond in kind.
Open source is great, but your original argument would say that it's OK not only for me to copy and republish your works, but also to close-source it under my name.
It'd also be OK for me to take your journal, edit it a bit, and publish it. Then you might die because of my editing rather than your actions.
No question, IP rights as constructed are often abused. We might also note that SpaceX is not using patents, but trade secrets because of this. And just because it's not patented, doesn't mean that Elon would not be justifiably pissed if the secrets got stolen.
Stealing is still stealing, and we need to understand that just because part of the bundle of rights to some IP still remain behind (e.g., the original copy remains), that something valuable hasn't been stolen.
If your business can be copied by the people who actually make your products, you have no barriers to competition, and thats a terrible business.
For the reverse-engineering, you must first purchase some units, then produce your own accurate measurements & drawings, then find a manufacturer or setup your own factory, and then pay for tooling, all BEFORE you make unit #1. This is far more complex & costly than "simply purchasing one".
For the thieves, all of those expenses had already been paid by the original designer. They merely bought their units at the marginal cost of production.
This eliminated the startup cost for the competitor's business. The seed capital and IP investment they would have needed was replaced by the theft. They then bootstrapped the stolen knowledge and new profits into their own production.
And the oritinal company is surviving and outpacing the theiving Chinese competitor, disproving your contention that 'they have no business'.
More generally, there isn't any business where you wouldn't be able to compete if you could buy the finished product out the back door of the factory at the marginal cost of production. If we could buy Apple or Samsung products out the back door of their factory at the marginal cost of production, we could certainly make a lot of profit very fast. Yet I see no viable argument they have no business model.
Seriously, stop trying to justify theft.
What is the engine designers key competitive advantage or advantages? What is their IP?
Foxconn could ship iPhone X's out the back of the factory and sell them itself as "FoxPhone X"s. What stops Foxconn from doing that, that didn't stop the engine designers outsourcers?
What did the engine designers do wrong, that they should have done differently?
Their biz model is pretty good, as evidenced by the fact that they're still going strong despite the theft.
Their IP is primarily the engine designs for high power-weight ratios, reliability, manufacture-ability, etc. They sell to military and high-performance hobbyists.
Foxcon is probably stopped only by the threat of Apple's large legal dept and the likelihood that they'd lose their biggest contract, probably be put out of biz, executives possibly executed for making an international incident/harming the PRC (it's China...).
Basically, compared to a startup who is a small customer of a foundry/machine shop, Apple stops Foxconn with threat of enormous power.
IMO, what this biz should have done differently is found a way to build in US or MX with a more trusted manufacturer.
Or, if they had no choice but China, split the work between multiple unrelated suppliers so that no one supplier has any surplus or ability to create it. e.g., buy the materials at Source A, provide to Source B for with requirement to produce X cast parts, take those cast parts to machine shop w/req to produce X machined parts and ship all bad parts for inspection. Preferably ship each intermediate step to your own agent for inspection and shipping to next step, partly for verification, and partly to prevent supply chain from making knock-offs.
I know one of my Swiss suppliers had some of their material mfg in China just for the Asia market, I expressed skepticism, and they said, "oh, no, we're making sure they have nothing -- we send them only the pre-made chemicals ready to mix & pour, and their only job is to pour/cure/cut. They have no idea what they are mixing, and it'd be nearly impossible to reverse engineer".
In short, take more serious steps to protect IP.
I primarily buy performance tires and will avoid the hell out of Chinese tires, but I legitimately am curious about what metrics you're using. We all know there are ways to measure dry and wet grip, compliance, cold weather performance, longevity, resistance to drying/cracking/aging, but I'm not really familiar with any studies that try to compare Chinese brands with more traditional brands. I'm sure they're out there, though.
I haven't tested these tires in the cold and I don't intend to - I have a winter wheel / tire set with WS80 Blizzacks. The chinese tires seem to struggle with rain but not to the point of reduced safety (at least compared to my old tires).
Lastly, the side wall seems to flex in a very predictable way, I was very surprised by that. The tires are 225/60r16s so the side wall is relatively tall, and the suspension in my car is somewhat imbalanced, the weight transfer can sometimes be abrupt and my old goodyears would flex dramatically and suddenly, these new tires flex very progressively and it's easy to feel what's going on even though my steering isn't particularly communicative (it's a 2001 Toyota hydraulic system). I think it's because my car has double wishbone suspension at all 4 corners and the suspension controls the camber of the wheel very well throughout the suspension stroke.
I'm not optimistic about the life of these tires - the warranty is for 40k and most people say they're toast by 50k, my parents exclusively get Michelins and they get about 70k-90k miles out of their tires (although they drive relatively light cars and they drive slowly). I'm not sure the total cost of ownership is as dramatic as the initial price difference but as I've stated prior, I felt confident enough to roll the dice.
Do you think it's fair to say that performance tires just get noiser and noiser? I have a friend with an Evo X and he runs really nice tires but for the last 2k miles, they're like banshees. I don't know how he tolerates it but he also rides a CBR600RR without a helmet or ear plugs (though I repeat myself...) so he's made of stubborn stuff.