Husband and wife accused of stealing trade secrets from medical research facility

Nationwide Children's Hospital in Dublin, Ohio.

A couple, former employees of an Ohio research hospital, has been charged with stealing trade secrets concerning the research, identification and treatment of a range of pediatric medical conditions.

“Nationwide Children’s Hospital devoted years of work and its own money to researching exosomes in order to promote honorable medical advances,” U.S. Attorney Benjamin C. Glassman said. “The hospital’s Research Institute took reasonable measures to keep its trade secrets secret. I commend the cooperation of Nationwide Children’s throughout this investigation.”

According to the indictment, Yu Zhou, 49, and Li Chen, 46, currently of San Diego, California, conspired to, attempted to and did steal scientific trade secrets related to exosomes and exosome isolation from Nationwide Children’s Hospital’s Research Institute in Dublin, Ohio.

The defendants were arrested in July and the case was unsealed Wednessday (sept. 18) at the defendants’ arraignments in federal court in Columbus, Ohio before U.S. District Judge Sarah D. Morrison.

Zhou and Chen, who worked in separate medical research labs at the Research Institute for 10 years each (Zhou from 2007 until 2017 and Chen from 2008 until 2018). Exosomes play a key role in the research, identification and treatment of a range of medical conditions, including necrotizing enterocolitis (a condition found in premature babies), liver fibrosis and liver cancer.

The husband and wife allegedly founded a company in China in 2015 without the hospital’s knowledge. While Zhou and Chen continued to be employed by Nationwide Children’s, they marketed products and services related to exosome isolation through their Chinese company.

The indictment also alleges that in 2017, Zhou and Chen helped co-found an American biotechnology company. As of 2019, the company’s website advertises multiple products and services related to exosome isolation, including a kit that was developed from a trade secret created at a Nationwide Children’s research lab.

Zhou and Chen allegedly used the hospital’s Research Institute resources and equipment to conduct the exosome research necessary for their unauthorized, outside work.

In November 2017, Zhou and Chen allegedly received more than $876,000 and stock related to an asset purchase agreement involving the American biotechnology company. It is also alleged Zhou entered into a stock purchase agreement with that same company under which he would receive $450,000.

Zhou resigned from the Research Institute at Nationwide Children’s, effective Nov. 10, 2017. On Jan. 31, 2018, Chen resigned from her position at the research institute.

Before his official last day of employment with the research institute, Zhou allegedly participated in a press release announcing the American company’s plans to market and distribute “proprietary exosome isolation systems” from its headquarters in Central Ohio.

Conspiring to, attempting to and committing theft of trade secrets is punishable by up to 10 years in prison. Conspiring to, attempting to and committing wire fraud carries a potential maximum sentence of up to 20 years in prison.

The couple's arrest is just the latest in the US clampdown on an alleged Chinese government conspiracy of spying, theft of intellectual property and trade secrets supposedly employing Chinese and Chinese American scientists, researchers and students.

The administration clampdown has resulted in a few convictions but it has also ruined careers of innocent people. Members of the Chinese American community also believe it is fomenting anti-Chinese suspicions among research and educational institutions that is sweeping up Chinese Americans in its wake.

EDITOR'S NOTE. The report was UPDATED Sept. 20 to include context.

_________________________________________________________________