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Ex-Employee Admits Stealing Valspar Secrets

Thursday, September 2, 2010

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A former Valspar Corp. technical director has pleaded guilty to theft of a trade secret, admitting that he planned to take proprietary formula information to a new employer in China.

David Yen Lee, 54, of Jersey City, N.J.,  faces up to 10 years in prison and a $250,000 fine after entering his plea Wednesday (Sept. 1) in U.S. District Court in Chicago.

“Guilty, sir,” the Taiwan-born chemist told Judge Robert Gettleman, according to Bloomberg News.

Up to $20M in Data

Federal agents arrested Lee, who holds a doctorate in chemistry, in March 2009. At the time, he was carrying flash drives containing about 44 gigabytes of confidential Valspar formulation data that prosecutors said was worth between $7 million and $20 million. He was then indicted on five counts of economic espionage.

According to the indictment, Lee began work in 2006 as a Technical Director for  Minneapolis-based Valspar at its facility in Wheeling, Ill. Authorities said he was Technical Director of New Product Development for the company’s Architectural Group.

Some of Lee’s duties involved Huarun Ltd., a Valspar subsidiary in the People’s Republic of China, and he traveled there occasionally on business, authorities said.
 
Event Chronology

The indictment gave this sequence of events:

• September 2008 to February 2009: Lee negotiates a new position with Nippon Paint, Asia’s largest paint manufacturer, to work on developing paint products and technologies. (Nippon, a Valspar competitor, is not a defendant in the Lee case.)

• November 2008 to March 2009: Lee “downloaded technical documents and materials, including trade secrets, belonging to Valspar from Valspar’s secure internal computer network, and removed numerous documents and other materials from the offices of Valspar.”

• Feb. 27, 2009: Lee accepts a job with Nippon that is to begin April 1 in Shanghai, China.

• March 9, 2009: Lee buys a plane ticket to Shanghai for a flight on March 27.

• March 11, 2009: Lee transfers “Valspar and Huarun documents and materials, including product data, to an external thumb drive.”

• March 16, 2009: Lee tells Valspar that he is resigning.

• March 25, 2009: Lee again transfers “Valspar documents, including trade secrets, to an external thumb drive.”

On March 26, Lee was arrested.

Lee remains free on bond pending sentencing Nov. 23.

Valspar posted no information about the plea on its site, and the company did not respond Thursday to a request for comment.

   

Tagged categories: Valspar

Comment from John Linke, (9/3/2010, 8:37 PM)

Why do you think Asian tourist carry cameras?They take pictures of everything they see new, buy the product if they can, and take it home for reproduction. This is how they have operated for decades.I worked in the trade show industry many years ago and saw this happen first-hand many times, even with our tools. The CEO of a "major Japanese car" company was fscinated with my pocket Mag-Lite, borrowing it and taking it apart when I wasn't looking. Amazing!!!


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