GlaxoSmithKline's research facility in Upper Merion, Pennsylvania.

GlaxoSmithKline's research facility in Upper Merion, Pennsylvania.

Montgomery County Planning Commission/Flickr (CC BY-SA 2.0)

U.S. charges drug researchers with sending trade secrets to China, but will case stand up?

Attorneys are urging caution in evaluating the strength of a U.S. trade secrets case against two GlaxoSmithKline (GSK) scientists who were accused last week of transferring trade secrets to China. The case bears some similarities, they say, to other recent cases involving Chinese American or Chinese defendants in which federal prosecutors abruptly dropped charges because of improper analysis or insufficient evidence.

Last week, federal prosecutors in Philadelphia, Pennsylvania, announced the indictments of biomedical researchers Yu Xue and Lucy Xi, as well as three associates, for trade secrets theft, wire fraud, and other charges.  The scientists stand accused of emailing and downloading proprietary data about GSK products and sending it to contacts working for the Chinese startup Renopharma, which provides contract research services for early drug discovery, according to its website. Xue, the key scientist in the GSK endeavor and a researcher in the company’s Upper Merion, Pennsylvania, research center, told an acquaintance that she owned a 30% stake in Renopharma. The 66-page indictment, released 20 January, details emails and messages sent among the defendants over a 3-year period, and alleges that Xue hoped to profit off the transfer of information.

The alleged trade secrets involve biopharmaceutical drugs, or proteins that bind to receptor cells and cause a cell to behave in a certain manner. Xue, who holds a doctoral degree in biological chemistry from the University of North Carolina, Chapel Hill, was "one of the top protein biochemists in the world,” according to the indictment. She helped lead a GSK project focused on designing a monoclonal antibody to link to the HER3 receptor on human cells as a treatment for cancer.

The indictment alleges that Xue helped Renopharma obtain her and others’ research into the anti-HER3 antibody. In one seized email from 2012, she hints that her connection to GSK makes her “the core figure” in Renopharma. In another instance, she writes, “Although I am not resigning from my position to go back [to China] at the initial stage, my time and energy spent is not going to be less than anyone else’s. As a matter of fact, it will only be more.”

The case comes on the heels of several high-profile investigations into Chinese or Chinese American scientists in which prosecutors have abruptly dropped charges, sparking accusations of racial profiling. This past September, prosecutors dropped charges against Xiaoxing Xi, the interim chair of Temple University’s physics department, after experts submitted affidavits suggesting that his alleged crimes were merely standard scientific collaborations.

Some of the same actors from Xi’s case have resurfaced this time around. As in that earlier case, the GSK case was investigated by FBI Special Agent Andrew Haugen, complaints show. Both cases were also brought by the Philadelphia U.S. Attorney’s Office.

The question now, says Peter Toren, a litigator with Weisbrod Matteis & Copley in Washington, D.C., who specializes in trade secrets cases, is whether the U.S. Attorney’s Office has learned from its mistakes. “Hopefully they did a better job of investigating the information before charging somebody who does not really have anything to do with stealing trade secrets,” he says.

Indeed, an affidavit Haugen filed in seeking arrest warrants states that although FBI investigators relied primarily on GSK guidance in establishing that the knowledge involved was trade secrets, they also consulted an outside expert who is not affiliated with the pharmaceutical giant. In the case of Xi, the physicist, the government apparently did not confer with outside experts before proceeding with the indictment.

Xue, for her part, has hired Peter Zeidenberg, a defense attorney at Arent Fox in Washington, D.C., who is quickly becoming the go-to lawyer for Chinese scientists accused of trade secrets crimes. Zeidenberg successfully represented both Xi and Sherry Chen, a National Weather Service hydrologist accused of passing information about the national dam system to a Chinese official.

“My client is not guilty and is pleading not guilty and will be contesting the charges,” Zeidenberg told ScienceInsider

Other aspects of the current case evoke another botched case: the 2013 prosecution of former Eli Lilly scientists Guoqing Cao and Shuyu Li. They, too, were accused of passing on company information to a Chinese competitor. According to filings by defense attorneys in the case, the information had all appeared in published papers years earlier and did not include data or formulae owned by Eli Lilly. In December 2014, prosecutors dropped charges.

Only time will tell whether this latest prosecution will snag the Justice Department a victory or will prove a repeat of those earlier cases. “The government in this particular case may have very strong evidence,” Toren says. “But the crucial factor may be whether the information that the government is accusing these individuals of obtaining and transferring to China is in fact a trade secret.”

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