4 Applied Materials executives fleece company and get indicted

U.S. Attorney for Northern California indicted four former execs for stealing trade secrets from Applied Materials.

4 Applied Materials executives fleece company and get indicted
Applied Materials

Playing out in the Northern California Federal Court is interesting case where multiple executives from the Applied Materials conspired to steal the intellectual property of their employer. The executives' desired outcome was to use this information to create their own startup, "Envisions," in the United States and China. But their employer, Applied Materials, and the Department of Justice’s U.S. Attorney’s Office of Northern California had other ideas. The four trusted insiders were indicted Nov. 30, 2017.  

Who are these untrustworthy trusted insiders?

  • Liang Chen – Vice president and general manager of Alternative Energy Products (AEP Division of Applied Materials), 12-year veteran of the company who resigned on Dec. 4, 2012.
  • Donald Olgado – Managing director of engineering within the Product Business Group, 21-year veteran of the company who was involuntarily terminated Jan. 25, 2013.
  • Wie-Yung Hsu – Vice president and general manager of Semiconductor LED division, 12-year veteran of the company who resigned on Dec. 4, 2012.
  • Robert Ewald – Director of the Energy Environmental Systems within AEP Division, 12-year veteran of the company who resigned on Nov. 12, 2012.

What makes this instance of a trusted insider gone bad unique is the seniority, longevity and number of co-conspirators. We are accustomed to reading of the insider who came into the company, saw something of value and took the information with them on their way out the door. Rare is the instance where four senior executives, all of whom enjoyed 10-plus years with their employer, collude to steal their employer’s intellectual property. And then, amazingly, proceed to attempt to set up shop to compete directly against the employer using those stolen trade secrets.

What did they steal?

As previously noted, the individuals stole the trade secrets of Applied Materials. 

The specific technology, valued at millions of dollars in R&D alone, was “related to the high-volume manufacturing of semiconductor wafers to be used in lighting and electronic devices, such as flat-screen televisions and smart phones.”

The indictment continues how the four conducted what appears to be a wholesale fleecing of Applied Materials. They used their subordinate colleagues to collect and collate the confidential information that they wished to steal and had them upload the materials into a Google Drive account.

They purloined physical hardware associated with the Applied Materials’ “Metal Organic Chemical Vapor Deposition” (MOCVD). Furthermore, they collected all the chemical recipes, prototypes, client data and marketing materials. And over the course of three months, they successfully downloaded and secured, 16,000 CAD drawings associated with the MOCVD, which included 100 percent of the “autoloader assembly” and 97 percent of the “chamber module” — two critical components of the MOCVD.

The quartet used their personnal email accounts (Yahoo, Google and SBC Global) to collaborate and conspire in the creation of “Envision” and their attempt to acquire Chinese venture funding.

What's next?

For the four former executives are to be arraigned Dec. 15, 2017, on multiple charges of trade secret theft. If convicted, they face up to 10 years in federal prison.

According to Bloomberg, Applied Materials said, “Applied Materials vigorously safeguards its intellectual property from theft or unlawful use. We support the legal action in this criminal case to ensure that anyone who obtained our trade secrets illegally is brought to justice. We cannot comment further on pending legal actions.”

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