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Battery Manufacturer Alleges Scientist Took Trade Secrets to China

by Chris Brook on Tuesday October 1, 2019

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In a new lawsuit, a U.S. based battery company is alleging one of its former employees brazenly took its trade secrets and infringed its patents.

A battery company is looking to take a Chinese competitor to court after one of its former scientists left the company and moved to China to work for a competitor, allegedly taking some of the company's trade secrets with him on the way out the door.

Celgard, a North Carolina-based company that manufactures battery separators, specialty membranes that are used in lithium battery systems, filed a lawsuit against the Chinese company, Shenzhen Senior Technology Material Co., Ltd., earlier this month.

Specifically, the lawsuit alleges that Senior - which as the company's name suggests, is based in Shenzhen, China - infringed and misappropriated Celgard's trade secrets and confidential information.

The lawsuit claims Senior infringed a patent involving Celgard's ceramic coated and polypropylene separators, membranes used in batteries for electric drive vehicles, like Priuses and Teslas, energy storage systems, and other devices, like laptops and mobile phones. Separators, thin insulating sheets, act as a barrier between the negative and positive sides of batteries while enabling the exchange of lithium ions from one side to another.

According to the lawsuit, Senior hired away one of Celgard's lead scientists, Dr. Xiaomin Zhang, who had access to the company's "most critical trade secrets and confidential information."

While Celgard says in the lawsuit that it keeps its trade secret information confidential, it made it available to Zhang during his employment with the company, from 2005 to 2016.

“Before leaving Celgard, Dr. Steven Zhang had access to, and accessed numerous Celgard trade secrets and confidential information,” the court document reads, adding that once he joined Senior, the company incorporated Celgard's trade secrets in at least its resin technology and dry process technology.

What makes the story even more fascinating is that at least according to the indictment, Zhang assumed a pseudo name in China, Dr. Bin Wang, allegedly so Celgard wouldn’t be able to locate him.

The trade secrets Zhang had access to run the gamut, from information on its resin technology to its dry process technology. Included in that information aref “manufacturing methods, techniques, standard operating conditions (“SOC”), standard operating procedures (“SOP”),  and processes, materials, performance issues (such as safety, temperature, battery life), suppliers, preferred resins, inspection and testing, resin properties, precursor properties, internal specifications, technical service, custom equipment, operating procedures, optimization of parameters, design, selling and marketing its products, and obtaining contracts and business with its customers.”

Celgard notes that in one of its patents ('520) it outlines a specific way to apply a series of layers - a ceramic composite layer and a polyolefinic microporous layer - to separators to improve battery safety. In another ('867) it describes how to remove a pin from battery assemblies

Upon resigning from Celgard, Zhang immediately joined Senior as the company's Chief Technology Officer. Given Zhang had full knowledge of Celgard's trade secrets, the company informed Senior in February this year that it would be impossible for him to serve in his role there.

The lawsuit alleges that several of Senior's separators infringe on some of the claims of Celgard’s '520 patent. Namely they're comprised of specific measurements of polymers and elements, measurements outlined in '520. Other Senior separators infringe on another claim of the '867 patent, Celgard alleges. Specifically, some of their separators contain a microporous membrane having a polypropylene surface portion including at least 50 ppm of a metallic stearate, the same specification as Celgard's.

While it's clear that Zhang had access to critical Celgard trade secret and confidential information, the lawsuit doesn't specifically say whether he physically took it before joining Senior.

When it comes to describing Zhang’s actions, Celgard pulls no punches in the lawsuit though, calling his alleged theft of Celgard's trade secrets brazen in the document’s introduction, shortly after demanding a jury trial.

While it's too early to tell which way the lawsuit will go, if nothing else, the case appears to be yet another instance of how organizations need to be cognizant of their trade secrets and take the necessary steps to defend them.

Car battery photo via Kevin Krejci's Flickr photostream, Creative Commons

Tags: IP theft

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Chris Brook

Chris Brook is the editor of Data Insider. He is a technology journalist with a decade of experience writing about information security, hackers, and privacy. Chris has attended many infosec conferences and has interviewed hackers and security researchers. Prior to joining Digital Guardian he helped launch Threatpost, an independent news site which is a leading source of information about IT and business security for hundreds of thousands of professionals worldwide.