Chinese firm denies involvement in alleged theft of Apple self-driving car tech by its new employee

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The Chinese hirer of a former Apple engineer who was charged with stealing trade secrets has distanced itself from the case, saying it was “not involved in any form” of the alleged theft.

Zhang Xiaolang, a former Apple Inc employee, was alleged to have downloaded a blueprint related to a self-driving car to a personal laptop in the United States before trying to flee the country for China. Zhang intended to work for a Chinese electric car start-up and booked a last-minute flight to China after downloading the plan for a circuit board for the car, according to a criminal complaint filed in the federal court.

He was arrested on Saturday at San Jose airport in California after he passed through a security checkpoint.

Zhang’s new Chinese employer, Xiaopeng Motors – also known as Xpeng – issued a statement on Wednesday confirming that it hired Zhang as an employee in early May but not disclosing Zhang’s title or the terms of his employment.

The Guangzhou-based company said Zhang did not flag any “sensitive or irregular” information when he signed a “compliance document on intellectual property protection” on day one of his employment.

Xiaopeng was informed on June 27 about the US investigation of Zhang and then “sealed Zhang’s computer and belongings at the office as required”, the company said in the statement, which added: “Prior to that, we had no knowledge of the matter and we were not involved in any form of the matter.”

The firm said that it would “cooperate with the investigation”.

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Autonomous driving is one of the technology areas China is trying to lead. The National Development and Reform Commission, China’s top economic planning agency, unveiled a three-year plan last December making the development of smart cars a national priority.

Xiaopeng is one of dozens of Chinese electric car start-ups that have mushroomed in recent years after Beijing started issuing permits to companies outside the traditional automotive industry to make new-energy vehicles.

Backed by grand ambitions and considerable venture capital, the new carmakers are poised to engage in fierce competition, in which technologies related to autonomous and connected driving will be highly prized.

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Competition in autonomous vehicles had already spilled into the courts, with industry leaders Alphabet and Baidu filing lawsuits accusing rivals of intellectual property theft.

Xiaopeng aims to start mass production of a car with level-three automation – the capability to drive itself in certain operating environments, including freeways – by 2020.

Still, road test data from the US has shown that China is lagging behind the US.

The arrest of Zhang has come during an escalating trade dispute between the US and China that was fuelled partly by US President Donald Trump alleging China was stealing US jobs and technologies.

Luo Jun, from the International Robotics and Intelligent Equipment Industry Alliance – a China-based private agency facilitating cross-border research exchanges – said that with the US becoming more protective of its technology, people of Chinese origin working in the US were expected to be closely watched.

“That is surely bad news for China’s research and innovation, especially in cutting-edge areas like artificial intelligence, self-driving and virtual reality,” said Luo. “It’s part of a contest between the US and China which will last for a long time.”

Apple has been tight-lipped about its plans in autonomous driving. It said in a statement about Zhang’s case: “We’re working with authorities on this matter and will do everything possible to make sure this individual and any other individuals involved are held accountable for their actions.”

Tamara Crepet, a lawyer provisionally appointed to represent Zhang, did not immediately respond to a request for comment. The FBI also did not immediately respond to a request for comment.

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The criminal complaint said Zhang had been hired to develop software and hardware for Apple’s autonomous vehicle project.

In April, it said, he took paternity leave following the birth of a child and travelled with his family to China, according to the complaint, filed in the US District Court for the Northern District of California.

When he returned, he told his supervisor he planned to resign, move back to China and work for Xiaopeng.

Zhang’s supervisor called Apple security officials, who discovered that Zhang had run extensive searches of secret databases and had entered Apple’s campus on April 28 while he was supposed to be on paternity leave, the complaint alleged.

While on campus, the complaint alleged, Zhang took circuit boards and a computer server from a self-driving car hardware lab, and his Apple colleagues showed him a chip. The complaint did not state whether the chip was intended for self-driving cars.

About 5,000 of Apple’s 135,000 employees were allowed access to information about its self-driving car project, but only 2,700 of them could view the secret databases Zhang had access to, according to the complaint.

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Zhang told Apple officials he had taken the hardware from the lab because he wanted to transfer to a new position within Apple and thought it would be useful to him, the complaint said.

He also allegedly downloaded including a 25-page secret blueprint of a circuit board for a self-driving car, which investigators described as “the single file” that “serves as the basis for the instant criminal charge”.

FBI agents questioned Zhang and served a search warrant at his house on June 27, according to the complaint. Agents learned he had bought an airline ticket to China on July 7 and arrested Zhang at the airport.

Additional reporting by Reuters

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