Chinese companies accused of conspiring to steal imaging trade secrets from Philips
Federal authorities have charged four individuals with allegedly conspiring to steal imaging trade secrets from industry giant Philips.
The U.S. Attorney’s Office issued the indictment Feb. 13, placing two Chinese companies at the center of the conspiracy. Philips owned and operated a facility in Aurora, Illinois, which had spent years developing and manufacturing proprietary X-ray tubes used in CT imaging machines.
However, 63-year-old Xiaoqin Du, of Suzhou, China, purportedly formed a rival X-ray tube company in the same Chicago suburb. He then allegedly lured three Philips engineers to come work for him in early 2018, according to the complaint. Before ending his tenure with Philips in Illinois (which started around 2006), 69-year-old Chih-Yee Jen, of Mequon, Wisconsin, allegedly stole proprietary information from the company’s internal databases.
He then allegedly used these secrets in his work developing X-ray products for Du and the Chinese company of which he was vice president, Kunshan GuoLi Electronic Technology Co. Amsterdam-headquartered Philips later filed a civil suit in April 2019, leading to these eventual charges.
“The indictments support our taking decisive action to protect our customers and their patients who rely on safe and effective healthcare technologies, and to defend the company’s intellectual property rights,” a Philips spokesperson told Radiology Business Friday. “We would like to express our appreciation to the U.S. district attorney for the Northern District of Illinois for their strong cooperation and support in this matter.”
Authorities have arrested Jen (who also went by Sherman C. Jen) and his former coworkers, 56-year-old Fince Tendian of Aurora and 76-year-old Vladimir Nevtonenko of Arlington Heights, Illinois. All three former Philips engineers pleaded not guilty in a Chicago federal court to allegations of conspiring to unlawfully possess trade secrets. Jen also is charged with one count of attempting to possess a trade secret. Arraignments for the two companies—Kunshan GuoLi Electronics and the related Kunshan Yiyuan Medical Technology Co.— have “not yet been scheduled,” according to authorities. The feds have issued an arrest warrant for Du, the purported leader of the scheme, who remains at large.
After leaving Philips—which announced it was ceasing operations in Aurora in late 2017—Jen allegedly relayed the stolen information to Tendian, who used it in her work at the rival Chinese-owned company. Nevtonenko also allegedly possessed and used the stolen information, the indictment claims. The rival firm in Illinois, labeled “Company A” in the indictment, dissolved in November 2022. Due and colleagues also later sold products in China using Philips trade secrets. In a declaration filed in the civil case in May 2020, ringleader Du allegedly made “knowingly false” statements declaring the design of his company’s X-ray tubes had been completed in December 2017 without the help of Jen and others.
“The public is reminded that an indictment is not evidence of guilt,” the U.S. Attorney’s Office emphasized in an announcement. “Defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.”
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.