12/09/2010

News / Former Paint Manufacturing Chemist Sentenced to 15 Months in Prison for Stealing Trade Secrets Valued up to $20 Million

CHICAGO—A former chemist for a northwest suburban paint manufacturing company was sentenced today to 15 months in federal prison for stealing trade secrets involving numerous formulas and other proprietary information valued up to $20 million as he prepared to go to work for an overseas competitor. David Yen Lee, formerly a technical director in Valspar Corp.’s architectural coatings group since 2006, pleaded guilty in September to using his access to Valspar’s secure internal computer network to download approximately 160 original batch tickets, or secret formulas for paints and coatings. He also obtained raw materials information, chemical formulas and calculations, sales and cost data, and other internal memoranda, product research, marketing data, and other materials from Valspar’s offices in Wheeling.

Lee, 54, formerly of Arlington Heights and currently of Jersey City, N.J., was sentenced by U.S. District Judge Robert Gettleman, who also ordered mandatory restitution of $30,975 to reimburse Valspar for the costs of its internal investigation. Lee was ordered to begin serving the sentence next year.

Lee admitted that between September 2008 and February 2009, he had negotiated employment with Nippon Paint, located in Shanghai, China. On Feb. 27, 2009, Lee accepted employment with Nippon as vice president of technology and administrator of research and development beginning on April 1, 2009, in Shanghai. Lee was scheduled to fly from Chicago to Shanghai on March 27, 2009. He did not inform Valspar that he had accepted a job at Nippon until he resigned on March 16, 2009.

At Valspar, Lee’s duties included scouting new paint technologies, coordinating with other paint laboratories, coordinating staffing and projects with Huarun Limited, a Valspar subsidiary located in China, and overseeing Valspar’s technical service group, which conducted experiments for paint coloring.

Between November 2008 and March 2009, Lee downloaded technical documents and materials belonging to Valspar, including the paint formula batch tickets. He further copied certain downloaded files to external thumb drives to store the data, knowing that he intended to use the confidential information belong to Valspar for his own benefit. The total value of the trade secret information Lee took was estimated at between $7 million and $20 million. There was no evidence that he actually disclosed any of the stolen trade secrets.

The sentence was announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation. The government was represented by Assistant U.S. Attorney Jessica Romero.

http://chicago.fbi.gov/dojpressrel/pressrel10/cg120810.htm

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