Former Employee Stole Ford Secrets Worth $50 Million 236
chicksdaddy writes "A ten year veteran of US automaker Ford pleaded guilty in federal court on November 17 to charges that he stole company secrets, including design documents, valued at between $50 million and $100 million, and shared them with his new employer: the Chinese division of a US rival of Ford's. Xiang Dong ('Mike') Yu admitted to copying some 4,000 Ford Documents to an external hard drive, including design specifications for key components of Ford automobiles, after surreptitiously taking a job with a China-based competitor in 2006. Yu, who took a job for Beijing Automotive Company in 2008, was arrested during a stopover at Chicago in October, 2009. The FBI seized his Beijing Automotive-issued laptop, and an analysis found 41 stolen Ford specification documents on the hard drive. He faces five to six years in prison and a $150,000 fine (PDF)."
Wake up, people. (Score:5, Interesting)
valued at between $50 million and $100 million
That's probably an inflated value. When companies get burned like this, they generally vastly overstate the value of the stolen goods.
and shared them with his new employer: the Chinese division of a US rival of Ford's.
Hello boys and girls. Can you say "tip of the iceberg?" I knew you could.
He faces five to six years in prison and a $150,000 fine (PDF).
Good. And before we judge if that seems too harsh a punishment, I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.
Re:Wake up, people. (Score:5, Informative)
Good. And before we judge if that seems too harsh a punishment, I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.
8 years
http://www.foxnews.com/world/2010/07/04/chinese-court-sentences-geologist-tortured-state-security-agents-years-jail-1624851947/ [foxnews.com]
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I dunno, do you get raped by the other inmates in Chinese prisons?
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Playing Devil's advocate here: so we can commit injustice and that's okay, because another country's injustices justify it?
I'm not claiming that this punishment is too harsh or too lenient for that matter. I'm not familiar enough with this incident nor do I know why this is a criminal matter and not a civil
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How did you arrive at that question from the gp's comment?
The point made was rhetorical: it may seem like a harsh punishment, but the punishment if the situation were reverse would obviously be harsher. You really don't understand the reasoning when comparing China and America?
Oh, I get it. I just think it's invalid. I'll try to clarify.
If I believe that a punishment is too harsh, it's because the punishment doesn't fit the crime. How someone else would punish the same crime is a separate discussion. If the USA fined people ten million dollars for jaywalking, I would say that's too harsh
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Re:Wake up, people. (Score:4, Insightful)
I bet that hypothetical American Engineer would avoid stop-overs in Beijing.
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I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.
FTFS - "Chinese division of a US rival of Ford's."
Sounds like american companies doing it to each other, to me.
Re:Wake up, people. (Score:4, Informative)
"Chinese division of a US rival of Ford's."
Sounds like american companies doing it to each other, to me.
All the manufacturing companies in China must be majority owned by a local Chinese company which is owned by Chinese citizens. So it may be a joint venture partnership "division" of a US rival who owns a large chunk, but no, it is not just two US companies involved.
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I kind of doubt they would. Possession of the stolen information has a stack of laws against it here in the US. Corporate America would prefer to ignore any indiscretions on the part of foreign corporations, especially where it's in their best interest.
I have to wonder what the terribly expensive secrets were though. Most automobile parts are reverse engineered rather rapidly. Check our your local auto parts store, and see how many aftermarket options there are for any give
Re:Wake up, people. (Score:5, Interesting)
I suppose that by failing to elaborate on how they came up with the value, they invite speculation.
Sometimes, when asked the value of a document, companies will give a figure that corresponds to the cost of producing that document. In other words, if you were to add up all the engineer-hours involved in designing a car, it might add up to $50-$100M. Since Ford is not deprived of access to their own design (because they still have copies of it), this does not represent $50-$100M losses to Ford. They could be saying that, by stealing the design, the Chinese company saved themselves $50-$100M in engineering costs, but that explanation isn't really complete, because the design was manufactured, so the Chinese company could easily buy one and reverse engineer it. So, by stealing the design, the Chinese company at the most saved themselves the cost of a full reverse-engineering job on the Ford car. This might still be a substantial figure. However, automobile manufacturers regularly buy each others products and reverse engineer them anyway, to keep track of what the competition is doing, so the Chinese auto company's engineers were probably already pretty familiar with the basic Ford design before they stole the documents. They probably had already done most of the reverse engineering. These documents let them fill in the gaps in their knowledge.
This has damaged Ford to the extent that the design revealed trade secrets that the Chinese car company might not have been able to reverse engineer from existing cars. This might allow them to improve their cars to the extent that some number of people choose to buy Chinese cars instead of Fords. That is the real value of the stolen documents and might be worth $50-$100 million or more.
Re:Wake up, people. (Score:5, Insightful)
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It could also be that the design docs were from the manufacturing process rather than the product itself. The process engineering behind a plant could easily be worth significantly more than even $100M because the plants today cost upwards of $1B to design, build, and furnish and the lifetime efficiency gains for a well engineered plant can also reach into the billions.
That, and its a lot harder to buy one of your competitors' manufacturing plants and reverse engineer it. Plus you have to pay customs getting the plant off the boat into the country... its just a big mess.
Let me put it this way... (Score:2, Interesting)
Let me put it this way:
I work in a high technology company that makes a lot of software.
If our source code got into the hands of the competition, it would set them back a few decades.
They would run into so many bugs without knowing the 'workarounds' (or just flat out what to avoid), they wouldn't know what hit them.
Considering the crap that American car companies design, I think the Chinese are probably just trying to figure out what NOT to do.
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Ah, so that's why developers never comment their code - it's to protect industrial secrets!
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No, no, that would be the case if it were Chrysler or GM product design. But this was the *good* stuff that they stole.
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Re:Wake up, people. (Score:5, Informative)
Maybe not american, still accusation is theft of state secrets: 10 years prison.
http://www.theaustralian.com.au/business/mining-energy/rio-tintos-stern-hu-jailed-10-years/story-e6frg9df-1225847088979 [theaustralian.com.au]
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Plus a fine of RMB 1 mln (approx USD 150,000).
Sorry for replying to myself, was too quick in posting.
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I agree
And by the way, what kind of "secrets" are that?!
How they are going to screw up their next models?
How they are going to keep pushing gas guzzling SUVs after SUVs?
The design of the new models? (hint: they're going to look like exactly the same as last years model)
Really guys, really...
Sometimes I think that some companies have overall lower intelligence than others. Like, stealing "secrets" for '1+1'
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He faces five to six years in prison and a $150,000 fine (PDF).
Good. And before we judge if that seems too harsh a punishment, I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.
I'd say it depends on the real value of what he stole. If he stole something valued at 100 million, then giving it back and paying a fine equal to 0.15% of that amount seems like a slap on the wrist.
I do disagree with the notion that we should judge our actions based on how China's laws work. Had he been from a country where this is legal, it wouldn't make sense to let him go, or reduce his sentence, so we shouldn't argue for a tougher sentence because he is from a country where such is the norm.
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Be sure to tell that to all the people who point out the US still has the death penalty and is one of the few 1st world nations to do so.
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What the Chinese do or do not do as punishment is irrelevant to a discussion over whether the punishment fits the crime. For example, if the Chinese are extremely unjust in applying punishment, that does not mean we are OK to be somewhat less unjust; we should be just in our punishments regardless of the actions of other nations.
Be sure to tell that to all the people who point out the US still has the death penalty and is one of the few 1st world nations to do so.
Who needs to compare it with the rest of the world? Just pointing out the serious problems in our own legal system should be sufficient to show that it's highly irresponsible to put anyone to death based on the results of that system.
A word to the wise ... (Score:5, Funny)
The FBI seized his Beijing Automotive-issued laptop, and an analysis found 41 stolen Ford specification documents on the hard drive.
Dear "Mike",
When you get out, and if you decide to again play industrial spy, try this [truecrypt.org]
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Damn Slashdot thieves! It's not like just anyone could... oh... google for disk and partition encryption software!
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I would imagine the first thing they would do when they seize something like a laptop is take the HD out and do a bit by bit copy of the entire disk without executing any code from the original machine. Even if you have something which wipes the disk if you boot in the wrong way, they will have a full bit prefect copy for them to try again.
You would need a way which wipes the data before the disk can be copied which means a way of wiping the data if the HD is removed, you joked about putting an explosive ch
Does this mean all the Chinese cars are going to (Score:5, Funny)
have bad power steering pumps and short life torque converters from now on?
(sorry, had to go there, the problems I've had to deal with on my own/families/friends Fords the most)
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or V6 engines that die prematurely due to head gasket failure?
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or V6 engines that die prematurely due to head gasket failure?
Head gaskets are called engine failure now?
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I guess replacing a head gasket is a normal occurrence on a domestic vehicle. Yes I do consider that an engine failure due to the amount of labor involved.
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When the head gasket failure results in large quantities of coolant going into the oil followed by rapid failure of the main bearings, [f150online.com] yes. You will see from the linked page that the repair bills from these failed head gaskets could be up to $4000. It was a common problem on Ford V6s built during the '90s.
Re:Does this mean all the Chinese cars are going t (Score:4, Informative)
Re:Does this mean all the Chinese cars are going t (Score:5, Insightful)
>>Europe (is it flamebait to say they are better because they are away from US unions?)
Probably yes, because:
1) Workers in good old Europe have stronger unions than the withering joke the U.S. has.
2) European workers enjoy a terrific safety net which looks like the great wall of china compared to the spider web the U.S. wage slaves have. Never underestimate explosion of creativity in a geek who feels safe for economic future of his family.
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Yeah, all our incompetents are in the hundreds of layers of management. The manual workers, because we abolished promotion-from-the-ranks decades ago, get pretty good at the jobs they will do forever (until they get downsized).
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This also explains why Ford was the only one of the big-three not begging for cash handouts from your central government. Not sure whether they actually got any bailout money or so, I didn't follow it well enough.
Anyway. Ford has been selling quite well in Europe for a very long time - many decades. My parents used to own one, and were quite happy with it. They called it the most European American car when it comes to quality, reliability and overall design. American cars have the name to be oversized and
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This also explains why Ford was the only one of the big-three not begging for cash handouts from your central government. Not sure whether they actually got any bailout money or so, I didn't follow it well enough.
Ford didn't ask for Bailouts because they had just finished mortgaging the company through private sector borrowing because they saw the writing on the wall. They got in just before the available cash in the US tightened up so nothing was being loaned out. Because they had just got a nice cash infusion, Ford was the only company that didn't require a bailout.
I will be buying Ford when I need a car again just because they didn't need a bailout, even if they were having problems, they handled them on thei
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Have you driven the Mustang though? I rented one in Florida a year or two back (V8), and it drove like one of their F150s. Fuel economy doesn't fix other engineering problems.
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Try a Corvette if possible (I'm aware it's a bit above the Mustang's class). Renting is difficult, but buying one isn't that expensive if bought used (C6, the latest generation, go for about $27-29K at Carmax around here with 20-30K miles on them). I used to own a '99 Targa Top and '01 Convertible (both bought used) and they were awesome. Excellent handling and quite a bit of power.
If that's not your thing, I'd look at the Subaru WRX, a Lexus IS250, a Mini Cooper (++handling), or a Mazda RX-8. I've had grea
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Ford engineers are *not* unionized.
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Yes, it does [google.com]. Just because the Duratec engine did not have problems doesn't mean that other Ford V6s did not.
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Wow, you drive a lot. My 99 Neon *only* has 301k miles on it & I do about 100 miles a day during the week.
Re:Does this mean all the Chinese cars are going t (Score:2)
Of course. Part of the skill of a good engineer is to ensure the parts fail as soon as possible after the warranty expires.
I doubt that penalty is compelling (Score:2)
Let's see, steal $ 75 million USD worth of stuff. 10% "finders feee" seems reasonable. So, with a 6 year sentence, that's over $ 1 million USD / year. (The fine is of course irrelevant in this scenario.)
I bet a lot of people would sign up for that.
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Good thing he didn't P2P them. The amount would have run into the trillions.
Pffft...amateur... (Score:5, Interesting)
Small potatoes [cnet.com]
"Lopez was head of purchasing for GM and defected abruptly to VW in 1993. GM accused Lopez of masterminding the theft of more than 20 boxes of documents on research, manufacturing and sales. The world's largest international corporate espionage case officially ended in 1997, when VW admitted no wrongdoing but settled the civil suit by agreeing to pay GM $100 million in cash and spend $1 billion on GM parts over seven years.
Common Sense.... (Score:2)
LOL
90's-era Ford's weren't exactly the pinnacle of world-class engineering.
Now if they claimed $100 million dollars in plans to trick consumers into buying three transmissions, two alternators, and four water pumps for every car they sold, I'd maybe believe it...
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Because as well all know, the turn around on any new R&D is 1-3 months tops, nothing is ever the fruition of 5-10years R&D.
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Prove to me that you car will last that 10 or 15 years - like my Hondas - and my Toyotas - and *then* we will talk. Don't try to bullshit me with a Consumer Reports survey that goes 3 years back - or a JD Power & Associates study that measures **INITIAL** quality.
That kind of reputation *does* take 20 years to shake, sorry to
FBI? O RLY? (Score:2)
Why was the FBI and taxpayer money involved?
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From the FBI's website [fbi.gov]
The FBI investigates matters relating to fraud, theft, or embezzlement occurring within or against the national and international financial community. These crimes are characterized by deceit, concealment, or violation of trust and are not dependent upon the application or threat of physical force or violence. Such acts are committed by individuals and organizations to obtain personal or business advantage. The FBI focuses its financial crimes investigations on such criminal activities as corporate fraud, securities and commodities fraud, health care fraud, financial institution fraud, mortgage fraud, insurance fraud, mass marketing fraud, and money laundering. These are the identified priority crime problem areas of the Financial Crimes Section (FCS) of the FBI.
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They are often involved when someone is being arrested for a Federal crime.
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You must be right. Lord knows that corporations never robbed anybody and we have government to thank for that.
Are US companies wise to trust in foreigners? (Score:3, Interesting)
This story come right on the heals of that other slashdot story: "Malaysian Indicted After Hacking Federal Reserve."
http://yro.slashdot.org/story/10/11/22/1446256/Malaysian-Indicted-After-Hacking-Federal-Reserve
I guess US companies are saving a bundle by putting so much trust in foreign nationals.
These two stories are hardly unique.
Sure, offshoring jobs has ruined the careers, and lives, of countless Americans, but look at the money that the US companies are saving!
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Maybe if US companies hired more Americans, more Americans would train to engineers?
Also, where do you get that insane "information" about there not being enough home grown engineering talent?
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Americans do not abandon science and engineering because they couldn't get the jobs. They abandon them because they are hard and do not earn enough money. Why be a hardworking engineer when you can basically steal everyone's money legally at Wall Street, or be a lawyer?
Industrial Espionage (Score:2, Interesting)
When I was working at a defense contractor, they would tell us in training about industrial espionage being a huge problem. And not just by other companies.
I would surmise that most American companies are blissfully unaware about the threat they face.
Ford designs? (Score:2)
The government should be giving this guy a medal, not prosecuting him. By sending those designs and documents to China, he single-handedly set their automotive industry back by at lease a decade.
Good thing he didn't share a few music files (Score:2, Funny)
old news (Score:2, Interesting)
This is how Chinese companies generally innovate, they steal the information so they don't have to invent it themselves. We were constantly trained to keep eyes out for people stealing confidential and classified information when I worked on some Air-force Systems. Even back then, we were told the greatest threat was people being bought out by the Chinese, the US government were already dealing with tons of them trying to steal military technology. They are so far behind, they would generally do anything
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You can bet there are many more Chinese spys - (Score:4, Interesting)
- hard at work stealing our information and creative processes. People (that includes politicians + CEOs) just tend to forget that China is not some quaint country that has rules of law and enforces those laws. This is a state run government and economy - anything goes to enrich the state and acrue power. We've already sent most of our production machines over there - now they are coming back to collect any intellectual property they can grab as well.
They are starting to eat our lunch and will shortly just take our lunch money
And contrary to some comments -- Ford makes some damn fine vehicles -- I dearly miss my 2001 F-150 4x4 - great truck
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Like this one [amazon.com]?
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Ford makes some damn fine vehicles
My '85 E150 with almost 180,000 miles runs like a champ. Just failed smog because the cat failed, but they said the exhaust directly from the engine is clean as a whistle.
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That's why WE need to do the same thing to compete, and fuse state and business into an international weapon to make money. The Chinese system is more profitable, has brought the people of China vastly more wealth than ever in their history, and took China from a smoking ruin in 1948 to a near-superpower now.
We must have wealth. Business is war.
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Sentence (Score:4, Insightful)
"five to six years in prison and a $150,000 fine"
Can you imagine how awfully unbalanced it would seem if people got lesser sentences for causing death by dangerous driving?
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Surely the judge was thinking that this case would allow the rival company construct cheaper cars by saving R&D costs, thus enabling MORE people to buy a car and cause death by driving dangerously!
Was this an H1-B employee by any chance? (Score:3, Interesting)
Returning home, outside US jurisdiction? Just wondering.
Gotta love those non-compete agreements. The employer can harass you to the end of the earth for simply trying to get a job after being laid off (even if you have no access to "secrets" at all). Meanwhile, if you take a boatload of top-secret material offshore, all they can do is shrug their shoulders and have the legal department send a few nastygrams.
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Wow, put away your xenophobia for 5 minutes to RTFA. He was a naturalized US Citizen who completed his doctorate at UChicago.
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Spare me the xenophobia crap.
TFA does not mention citizenship. Maybe a link of a link of a link does, but I never saw it.
In any event, mentioned H1-B because I have direct knowledge of a case where the employer was shocked...SHOCKED! to discover they had no recourse when an H1-B returned to his home country and brought proprietary information to a competitor.
Although anyone can leave the country and take trade secrets with them, you have to wonder about the wisdom of giving such secrets to people who have
I have reason to believe (Score:3, Informative)
That Ford and its competitors have stolen significantly more information than that from independent inventors, small firms, employees, etc. Call it stealing or not, but making millions-billions on others work is immoral and stealing in my book, even if you make them sign something to let you.
Stupidity (Score:2)
There was a workshop, big enough for two cars, and it always held two cars. A team of techs would strip the car, measure and digitise the parts. Anyone in the company could borrow any car part they liked complete with drawings.
I beleive it's called reverse engineering in the game.
Stealing drawings? Laughable.
When I worked for BMW, inbetween leads for new models, we often did work for Renault, Peugeo
Subject (Score:2)
"Corporate espionage": Chinese for "good morning."
Outsourcing would have solved that problem (Score:2)
If the Chinese had waited a few more years, Ford would have *given* them the documents anyhow as part of an offshoring initiative. And what does China hope to gain from these documents? They are going to ignore them anyhow, as each subcontractor cuts a corner or two to maximize profit.
So you wind up with a car with paper-mache quality steel, that folds the passenger compartment upon impact, with airbags that don't work, and the door handle falls off while still at the dealership.
Seriously, have you *seen* t
Re:Why (Score:4, Interesting)
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It's breach of trust.
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I thought the conses here would lead to people just calling this copyright infringement, since surely he copied the documents and did not steal them...
Re:Why (Score:5, Informative)
When trade secrets are involved it's called theft, not copyright infringement.
"Theft" is when the original owner is deprived by the action. In this case, the trade secrets were stolen, because the original owner was deprived of the secret (as its not secret any more).
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> It's not theft. It's breach of trust.
According to the press release (also linked above), it's theft of trade secrets:
http://www.justice.gov/usao/mie/press/2010/2010-11-17_xyu.pdf [justice.gov]
I assume it's also a breach of his employment contract. (Which would be relevant to a civil case by Ford against him.)
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Why is this a criminal offense? Seems to me it's an internal problem within Ford that they trusted untrustworthy people. I could understand Ford taking him to court for damages numbering in the millions of dollars, but why is the enforcement agency of the federal government (the FBI) involved in this matter?
I think you just answered your own question. "damages numbering in the millions of dollars." If they say the documents were worth what they probably are worth, the Feds most likely wouldn't take an interest.
This has happened before. A few decades ago, some youthful crackers logged on to a Bell System server and downloaded some documents. The phone company immediately brought in law enforcement, claiming the documents were worth (if memory serves) some fifty grand. That was to interest the Feds: below a c
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It was a secret. Now it's no longer a secret. The original owner was deprived of a secret. Therefore, it's theft.
Your use of "physically stolen" to define theft is too narrow. Instead ask "did the original owner lose something?" If so, it's theft.
Re:Why (Score:4, Informative)
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why is the enforcement agency of the federal government (the FBI) involved in this matter?
Because economic espionage [wikipedia.org] is a Federal crime.
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Seems to me it's an internal problem within Ford that they trusted untrustworthy people.
I suppose you have a magic solution that tells who is trustworthy and who is not? Are you selling any such snake oil? There are several different ways to reduce the problem, but until there is some kind of deep brain scan that can learn the thoughts and motivations of a person, I don't think there is even a shot at eliminating the risk of hiring untrustworthy people. And even then, an employer that uses that is probably not an employer that many people would want to work for.
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It was $1.92M for 24 songs so $80,0000. Using the same ratio - $50M * 80,000 = $4 trillion. It seems fair. We should apply that judgement against China and take one of their provinces as settlement.
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Seriously. Theft has ALWAYS been jail time.
I heard in some places they just chop off your hand[1].
I don't know about other people, but I'm quite attached to my hands :).
[1] I doubt there's someone standing by to reattach it for you. Hmmm maybe in the future they could preserve it and when you've served your time and been a good boy they'll reattach it back? Heck, I'd certainly be on my best behaviour if it means getting my hand back even if it'll only be 80% as good as before...