SAN JOSE—Two attorneys for Avago Technologies alleged that Hao Zhang, a Chinese scientist accused of stealing Avago trade secrets, has been violating federal court orders by communicating with a purported criminal co-conspirator in China and continuing to invest in their company.
Michael J. Word and Michael Martinez told U.S. Magistrate Judge Nathanael Cousins at a Feb. 21 court hearing that the judge’s previous orders had not protected the company’s intellectual property. That made executives extremely unwilling to share more internal records, despite Zhang’s claim that they were crucial to his legal defense.
“The very trade secrets that were stolen, Avago is in China defending. It happened because of Hao Zhang’s post-arrest assistance. We have proof,” Martinez charged.
The judge has prohibited Zhang from having any contact with his five co-defendants outside the presence of his attorneys. All five men are Chinese citizens; none of them has been arrested.
A Zhang attorney disputed the Avago attorneys’ allegations. “Our client takes the conditions of his release very seriously,” Leanne Marek told the court.
The U.S. government has accused Zhang and the others of spying and stealing trade secrets to benefit themselves, the People’s Republic of China, and Tianjin University, where Zhang is a professor. Zhang has been under U.S. federal court supervision and police control since May 16, 2015, when he was arrested at Los Angeles International Airport. He’d traveled from China with his wife en route to a professional conference in Phoenix.
Zhang earned a doctoral degree in electrical engineering from the University of Southern California in 2006, then worked for Skyworks Solutions Inc., a Massachusetts semiconductor company also alleging trade-secret theft.
Cousins set the hearing to resolve an impasse between Avago lawyers and Zhang’s legal defense over Avago’s production of certain internal documents. The company already has released millions of documents to federal prosecutors and to Zhang.
“This is not a hearing on the condition of (Zhang’s) release,” a tight-lipped Judge Cousins told the Avago attorneys in response to their allegations.
Maybe so, but the Avago attorneys’ point had been made: Avago believed that Zhang’s freedom in the United States, as determined by the judge, had allowed Zhang to harm the company further, and they weren’t eager to forward what they believed was fresh ammunition.
Cousins spent weeks crafting the terms of Zhang’s July 2015 release from the Santa Clara County jail, where Zhang was transported after his Los Angeles arrest. Over the objections of federal prosecutors, Cousins ordered Zhang freed on a $500,000 bond secured by $225,000 in U.S.-located retirement savings and other financial assets belonging to Zhang and his wife, as well as the equity in four Tampa, Fla., homes owned by Li Jiang, whose nephew is married to Zhang’s sister. All of those assets would be at risk were Zhang actually to have violated the terms of his release, based on Cousins’ admonitions to Zhang, his wife and his relative when he was allowed to leave jail.
Cousins has liberalized Zhang’s release conditions with time, moving him from complete house arrest at an undisclosed Mountain View home to allowing Zhang to grocery shop, exercise and, more recently, possibly to work. It is impossible to verify the exact detail of current conditions as the court has sealed so much of the court record. It was also impossible to know if Avago offered documentation of its allegations, as the judge also allowed its motion to be filed under seal.
“Where is Avago’s concern? Post his (Zhang’s) arrest, while he’s been out on bail, we have publicly available documents showing he invested $1.8 million in ROFS,” Martinez told the court.
ROFS Microsystems is the Chinese company that federal prosecutors contend Zhang and his co-defendants created and operated to manufacture—using the contested technology—high-tech static-filtering devices for cell phones and other electronics.
“Hao Zhang has been assisting ROFS in suing Avago’s customers,” Martinez said, citing Apple Inc. as one example. “There is a huge risk (to releasing more records), and it is not hypothetical. There is ongoing litigation in China right now, and the risk to Avago is very real. We have serious concerns that the (protective orders) haven’t worked in this case.”
Zhang did not speak during the unexpectedly electric hearing—this is, after all, a case about patents and intellectual property—nor did he and his attorneys interact in the moments before it began. Zhang eschews all questions from this reporter, too. But his body language and that of his attorneys are consistently curious. As all await the judges’ arrival, Zhang typically sits near the back of the courtroom’s spectator gallery, and his invariably dour expression contrasts sharply with his attorneys’ often jovial banter. Zhang faces the prospect of years in prison in a foreign country and long separation from his wife and family.
The case had been set to go to trial this month, but that timeline proved too ambitious. He also lost a motion earlier this month to throw out statements he made to two FBI agents who interviewed him at LAX in 2015. Zhang waived his right to have an attorney present during the questioning, but now says he didn’t know what he was doing and that an agent misled him. As the indictment also had been sealed, he did not know at the time that he faced dozens of criminal charges. He was traveling on a U.S.-government issued visa.