On April 29th, 2010, China sentenced Australian-citizen Stern Hu, an executive at the British/Australian Rio Tinto Company, to 10 years in prison.   In January, the Chinese government detained several employees of the British-Australian company in the wake of a large contract that made China the largest marketed served by Rio. China decided to prosecute four of the employees for acquisition of state trade secrets and allegedly accepting close to ten million USD in bribes.

Kevin Rudd, the Australian Prime Minister called this sentence, “harsh,” and the international community expressed surprise and outrage for the unusually long sentence given to the foreign executive. Other lower employees received lesser sentences that are currently being appealed.

Unfortunately for those in the international intellectual property community, this case did not answer many questions. While many believed that this case would clarify China’s opaque trade secret laws, the focus of the verdict and international media coverage centered on the massive bribery element. Meanwhile, the case serves as a stern warning to western companies to carefully observe all trade secret regulations while operating in China, or face serious consequences.

By Eric Perrott

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