Scientist found guilty of leaking data to Chinese firm

A former Chinese employee of Japan’s state-run research body was found guilty of industrial espionage after providing the organization’s confidential research data to a Chinese firm.

The Tokyo District Court on Feb. 25 sentenced Quan Hengdao, 61, to two years and six months in prison, suspended for four years, and fined him 2 million yen ($13,300).

Prosecutors had sought the same prison term and fine for the Chinese scientist.

According to the ruling, Quan leaked research data from the National Institute of Advanced Industrial Science and Technology (AIST) to a Chinese company via email in April 2018 in a violation of the Unfair Competition Prevention Law.

His wife was a major shareholder in the Chinese firm.

The defense argued that the data on fluorine compound technologies did not qualify as confidential information under the law, requesting a not guilty verdict.

However, the court dismissed this argument, finding that the data contained the AIST’s research findings that were not publicly available.

The court concluded that the leak allowed a foreign company to unfairly benefit without providing proper compensation, thus undermining fair competition.

EASY TARGETS

The case underscored the vulnerability of Japanese organizations to corporate espionage acts. 

“Many Japanese companies lack robust security measures and have a low sense of urgency, making them easy targets for industrial espionage,” said Kei Umebayashi, a lawyer and corporate information security expert.

Industrial spies often gather information by infiltrating companies or persuading employees to leak confidential data.

A 2020 survey by the Information-technology Promotion Agency (IPA) involving 2,175 companies revealed that approximately 5 percent, or 113 companies, experienced information leaks or suspected leaks.

Of these cases, 36.3 percent were committed by former employees, while 8 percent involved active employees motivated by financial gain.

A separate IPA survey published this month, involving 4,191 companies, found that about 60 percent had not invested in information security measures. Many cited the lack of clear cost-effectiveness for their inaction.

Umebayashi suggested several low-cost security steps for businesses, including banning private email accounts at work, physically disabling USB ports on company computers and implementing monitoring systems to detect unauthorized data transfers.

“Information is a valuable asset,” Umebayashi emphasized. “While trusting employees is important, companies must ensure that the necessary security practices are in place.”

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