The Department of Justice’s China Initiative prioritizes U.S. government enforcement actions against Chinese companies doing business in the U.S. or partnering with U.S. companies and universities, as well as individual researchers and scientists with ties to China. The focus of this initiative:
- Investigate and prosecute Chinese companies for trade secret theft cases.
- Target individuals, universities, and companies for transferring technology to the Chinese government and companies.
- Engage U.S. colleges and universities in identifying and monitoring persons and companies with ties to Chinese companies and the Chinese government.
- Aggressively use existing authorities, including the False Claims Act, Foreign Corrupt Practices Act (“FCPA”), Foreign Agent Registration Act, Foreign Investment Risk Review Modernization Act, NIH and DOD grant rules, university ethics rules and conflicts of interest policy, and export control laws, to target companies and persons seeking to obtain U.S. companies’ intellectual property and technology.
A number of recent cases involving companies or individuals with a China-related background show that the U.S. government has been actively pursuing the actions under the China Initiative.
- In early 2017, ZTE, a Chinese state-owned telecommunication company, agreed to plead guilty and pay USD 1.19 billion in fines for breaking sanctions and selling electronics to Iran and North Korea. In 2018, ZTE agreed to certain additional penalties and compliance measures as a result of its violations of the settlement agreement with the U.S. government, which brought the total penalties to USD 2.29 billion.
- In November 2017, Patrick Ho, the former head of China Energy Fund Committee, was arrested in New York over alleged FCPA violations. In March 2019, Mr. Ho was sentenced to three years imprisonment in the U.S. following his conviction of bribing officials in Chad and Uganda to obtain unfair advantages.
- In October 2018, the U.S. Commerce Department decided to prohibit Fujian Jinhua Integrated Circuit (“Fujian Jinhua”), a state-owned semiconductor company headquartered in China, from buying components, software and technology goods from U.S. firms on the ground that it posed a national security threat after its U.S. competitor, Micron, accused it of trade secrets theft.
- In January 2019, the U.S. government unsealed its criminal charges against Huawei, a privately-owned Chinese tech giant, for trade secrets theft and violation of U.S. sanction on Iran. Before that, Ms. Meng Wanzhou, Huawei’s CFO and the daughter of the company’s founder, had been arrested by the Canadian government based on U.S. government’s request for extradition.
- In March 2019, Dan Zhong, a former Chinese diplomat and the head of U.S. operations of Chinese Liaoning Rilin Construction (Group) Co. Ltd., was convicted of a number of crimes including conspiracy to provide forced labor, concealing passports and immigration documents in connection with forced labor, conspiracy to commit visa fraud, etc.
- In April 2019, the U.S. Justice Department unsealed its indictment against an American Chinese engineer formerly employed by General Electric and his Chinese business partner with charges on economic espionage and trade secret theft.
- In April 2019, a prominent cancer center made adverse employment decisions against several scientists, who were suspected of disclosing confidential information regarding federally-funded research to China.
- In February 2020, Harvard University Professor Charles Lieber, Chair of the university’s Department of Chemistry and Chemical Biology, was arrested and charged criminally with making a materially false, fictitious and fraudulent statement about his involvement in the “Thousand Talents” program and affiliation with Wuhan University of Technology in China.
Dorsey & Whitney has deep experience and longstanding involvement with China-related legal issues. The firm’s U.S.-China Practice Group can help you navigate this enforcement environment. Dorsey’s uniquely positioned U.S.-China Practice Group is multi-disciplinary and spans multiple industries. We can help you identify and successfully navigate the increased risk posed to your organization or you individually by the China Initiative. Our representations including U.S. academic research institutions and organizations, individuals, and Chinese corporations.
This Group is composed of a highly-skilled team of attorneys and professionals, many of whom formerly worked at U.S. government enforcement agencies or who are bilingual and work out of offices in the United States or China. Our U.S.-China Practice Group is able to deliver around-the-clock, seamless legal services to our clients with cross-border legal needs.
Dorsey helps clients with:
- Complying with IP Policy, Ethics Rules and Grant Rules. Combining business perspectives, technical knowledge and industry experience, Dorsey attorneys help our clients protect their sources of competitive advantage and maximize their revenue streams. We assist clients with IP dispute matters and have experience representing both plaintiffs and defendants in seeking satisfactory outcomes. We also work with universities, research institutions and individual faculty members to ensure compliance with federal grant rules in government-sponsored research projects and provide guidance and advice in grant fraud investigations and litigation.
- White collar and criminal defense of companies and executives. Dorsey attorneys have decades of experience prosecuting and defending criminal charges brought by U.S. and state governments for a broad range of matters. With deep experience in the Department of Justice, Dorsey attorneys have been involved in many prominent white-collar criminal and civil fraud matters. Our clients have included large publicly and privately held corporations and partnerships, officers and directors, and individual professionals. We have extensive experience in DOJ, FBI and SEC investigations and litigation, and in parallel regulatory investigations and proceedings, and aggressively defend our clients in complex criminal trials.
- Allegations of sexual harassment and assault. Dorsey attorneys also represent companies and senior executives defending against allegations of sexual assault and harassment. As the #MeToo Movement continues, Chinese-owned companies in the U.S. and Chinese subsidiaries of U.S. companies are facing an increasing number of sexual harassment complaints from their employees. Dorsey attorneys regularly counsel companies in understanding and responding to this risk with practical advice to these global players on how to handle cross-cultural sexual harassment complaints from legal, language and cultural perspectives.
- Complying with U.S. export controls for the transfer of technology. Dorsey attorneys understand the complex regulatory landscape presented by these often interrelated U.S. export control laws and regularly advise U.S.-based and international clients on compliance with U.S. sanctions programs and export controls to mitigate operational risks. We regularly advise on the many ways the EAR and the ITAR impact businesses, and help clients investigate potential violations of the laws and navigate disclosing those violations to the relevant U.S. Government agencies.
- Foreign Corrupt Practices Act education, investigation and defense. Dorsey’s Government Enforcement and Corporate Investigations group has deep experience through decades of service with government enforcement agencies as well as in private practice counseling business organizations. Whether it's reviewing compliance procedures, planning a cross-border transaction, making an acquisition or successfully resolving an investigation, our experience will help guide your organization to the successful result it seeks. We assist clients on all aspects of compliance, anti-corruption and FCPA matters.
Experience of our firm and individual team members includes:
- Conducting internal investigation into employees’ misappropriation of confidential information and advising on enforcement of confidentiality agreement and non-compete covenant.
- Assisting research institutions in handling government investigation of grant fraud, including internal investigations, compliance counseling, and disclosures related to the same.
- Assisting individual scientists, researchers and faculty members in disclosures and investigations relating to “Thousand Talents” program (千人计划), Chang Jiang Scholar (长江学者) and other honorary positions and related NIH and DOD grant applications issues.
- Conducting internal investigation into ethical violations such as self-dealing, channel stuffing and conflict of interests and advising on disciplinary actions against employees.
- Providing training to employees regarding code of ethics and confidentiality requirements.
- Formulating employee handbooks and internal policies for multinational companies and research institutions.
- Customizing employee confidentiality and non-compete agreements for high-tech companies in different industries.
- Assisting senior executives and technicians in reviewing their employment documents and advising on their employment-related issues from hiring to firing.
- Defending senior executives of Chinese companies against sexual assault and forced labor charges.
- Defending Chinese companies against charges of trafficking in weapons and counterfeit goods.
- Conducting investigation for multinational company into alleged violations of the Iran sanctions laws.
- Conducted FCPA investigations involving multinational companies’ Chinese operations.
- Advised companies with Chinese operations regarding anti-corruption compliance activities. This includes training sales agents, executives, and boards regarding anti corruption principles, developments, and advice regarding specific situations.
- Conducted an FCPA investigation into U.S.-listed companies’ supply chain in China as part of a wider inquiry of corruptions in their China supply chain.
- Assisted with a leading multinational pharmaceutical company with the internal investigation of an alleged commercial bribery case in China and prepared report regarding same.
- Assisted a Chinese state-owned telecommunication company with the internal investigation of its alleged breach of the settlement agreement with the U.S. government.
Industries & Practices
- Commercial Litigation
- Government Contracts Counseling & Litigation
- Government Enforcement & Corporate Investigations
- Intellectual Property Litigation
- International Arbitration & Litigation
- International Trade