After years of battling in court and securing guilty pleas from two former GlaxoSmithKline researchers, federal prosecutors have come up short in convincing the court to order restitution in a closely watched trade secrets theft case.
In an opinion filed this week, Judge Joel Harvey Slomsky said federal prosecutors failed to convince him that GSK suffered a financial loss in the case or that the company should be reimbursed for legal expenses worth nearly $400,000.
The legal filing comes in the case of the U.S. vs. Yu Xue and Tao Li, Chinese nationals who previously pleaded guilty to trade secrets theft to benefit a company they founded, Renopharma. The case stems back to late 2015, when the U.S. government filed a complaint against Li and four co-defendants for conspiracy to commit wire fraud. The former GSK researchers formed their company to serve as a "repository of stolen information," with financing from the Chinese government, prosecutors said.
In August 2018, Xue pleaded guilty to conspiracy to steal GSK’s trade secrets. And the following month, federal prosecutors secured a guilty plea from Li.
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While the government agreed to limit Li’s sentence to no more than seven years and drop other charges, the sides did not agree on any amount of financial loss, leaving the issue up to the court, the judge wrote this week.
Now, despite arguments from the government that GSK lost more than $1 billion in the “fair market value” of the trade secrets, the court is not awarding any restitution. In doing so, the court found that GSK “suffered no pecuniary loss.”
On the issue of legal expenses, the court said a 10-page summary of billing sheets contained “several fatal flaws.” The “timesheet summary was so amorphous that the Court could not identify which legal tasks might have been required or requested by the Government, and which legal tasks might have been performed at the behest of Defendants,” the judge wrote.
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The bombshell case generated significant interest in the biopharma community around the time of the initial lawsuit and the plea deals. Aside from GSK, other high-profile companies to suffer alleged trade secrets theft in recent years include Roche’s Genentech and AbbVie.