The Scientist and the Spy — intellectual property and industrial espionage

In the current climate of escalating competition and tension between the United States and China on the technology front, Mara Hvistendahl’s The Scientist and the Spy: A True Story of China, the FBI, and Industrial Espionage is a very timely book. It raises important questions about a country’s intellectual property protection in the context of national interest and national security.

The book examines the case of a Chinese-born scientist Robert Mo, pursued by the US Government for trying to steal trade secrets — Monsanto’s genetically modified corn. This was deemed of such significance to US national security that the FBI spent two years “bugging rental cars, intercepting phone calls, and flying surveillance planes”, including using powers under the Foreign Intelligence Surveillance Act, to collect evidence and prosecute Mo.

In the end, Mo, who stole proprietary corn from Iowan fields, pled guilty to the charge of conspiracy to steal trade secrets and paid a heavy price for his actions — three years’ jail and deportation.

In 2018, Monsanto, whose intellectual property the US Government spent a fortune protecting, was sold to Bayer, a German company. This meant the company was no longer American. Shareholders and managers of Monsanto may have benefited from a potentially higher sale price from the US Government’s actions to protect its intellectual property assets. But did the American public benefit from this?

This case raises an interesting question of what is — or is not — in the national interest. It is difficult to accept the argument that protecting proprietary corn seeds from foreign governments or companies is a national security issue — the fact that Monsanto was sold to a foreign (German) company confirms that the case had little to do with national security.

The US Government’s actions are in Monsanto’s interests. But is the commercial interest of American companies the same as the American national interest? In some cases, domestic (and foreign) companies can provide employment opportunities for people as well as tax revenue to the federal and local governments. But in Monsanto’s case, its well-documented anti-competitive behaviours were detrimental to the interests of the American economy and American farmers.  It would seem that the American taxpayers ended up footing the bill to protect the assets of an American corporate giant.

When we delve into the ownership and management structure of global corporations, it becomes less clear which companies belong to which countries. Many big corporations are registered in a tax haven, operate in a number of jurisdictions, employ people from around the world, and have dispersed ownership. So it’s not immediately obvious that any given country should be spending its taxpayers’ money on investigating and pursuing intellectual property violations to protect the intellectual assets of these multinational companies.

As Hvistendahl notes in the book, intellectual property violations do not often result in criminal investigations with the involvement of the FBI and a jail term. Instead, standard practice is to use civil courts to resolve these trade secret cases. In civil cases, companies, not the government, pay the costs, and penalties tend to be fines rather than imprisonment. So why did this case involve a two-year investigation by the FBI using federal funds? Hvistendahl suggests that the heightening tension between the United States and China, coupled with the FBI’s bureaucratic imperatives, made this case a criminal case, with national security investigations by the FBI. In other words, an important factor was that the perpetrator was a Chinese company.

In the book, Hvistendahl also explores the role that race plays in espionage cases. She has written about the FBI’s spying of Chinese American scientists in a separate article. From the 1950s, the FBI was deeply suspicious of people of Chinese ethnicity, including people from Hong Kong and Taiwan. In the 1990s, these suspicions were reinforced by the emergence of the “thousand grains of sand theory” or as Jeff Stein from Newsweek describes it, China sends out individuals, who were like “locusts in a swarm, feasting on American technological secrets”.

In the new era of tense technological competition between the United States and China, we’re seeing the same arguments being repeated. US Senator Cotton has recently suggested that Chinese students should be banned from studying STEM subjects. The loyalty of scientists and researchers of Chinese ethnicity are being questioned repeatedly. These suspicions have prompted many scientists and researchers of Chinese ethnicity to give up working in the United States and go to China, or worse, commit suicide. They are delivering to China what its Thousand Talents program could not — driving scientists to China during the time of a global battle for scientists.

The Scientist and the Spy is an excellent book that illuminates the various facets of the nexus between intellectual property protection, industrial espionage and national security. It also highlights the personal costs for individuals who find themself on the frontline of US-China technology competition.