Seed World

IP Espionage

Espionage within the seed industry is making intellectual property protection more important than ever for seed companies.

It reads like a script for a Hollywood crime thriller. Corporate spies from China steal biological secrets they intend to send back home to give their country a technological edge in the international marketplace.
It’s not a screenplay, though. Court documents allege this is what happened in Kansas in 2013 when an employee of a biotech firm and a research geneticist for the U.S. Department of Agriculture — Zhang Weiqiang and Yan Wengui — allegedly gave patented rice seeds to a Chinese delegation visiting the United States. The seeds were found in the delegation’s luggage by border guards at the airport when they attempted to fly back to China.
In another case reported widely in recent months, DuPont Pioneer was the victim of seed theft in an intricate case that first started in 2011, when a field manager in Iowa noticed an Asian man on his knees in a field of a new corn variety not yet released publicly by the company. The field manager confronted the suspicious man, who said he was from the University of Iowa on his way to an agricultural conference. He was accompanied by another man sitting in a parked car nearby.
Mike Rankin, crops and soils agent for the University of Wisconsin Extension, shares his experience in a blog post on the university’s website:
At that point, the Pioneer employee’s cell phone rang and as he conversed with the caller, the two Chinese men hightailed it out of the field in their car by driving into and out of a ditch. The Pioneer employee was able to get the license plate number and later reported it to the FBI.
The rented car belonged to a man named Mo Hailong, a permanent resident of Florida who worked for the Kings Nower Seed Company of China. He was now on the FBI’s watch list and sure enough showed up again in the fall. This time it was a Monsanto inbred cornfield with two other employees of Kings Nower Seed.
The FBI began a physical surveillance of Mo and his counterparts in April 2012. This is where the fun really begins with GPS tracking devices placed in rental vehicles along with the ability to monitor conversations. It was soon learned that Kings Nower Seed had purchased a 40-acre farm near Monee, Illinois, for $600,000. Mo and his partners bought seed corn at various locations in the Midwest and rented storage units to stash both their purchases and field-pilfered inbred seed. Eventually the corn would be shipped or driven to their Illinois farm or back to China.
Mo Hailong was arrested in December of 2013 and five other Chinese citizens have been indicted on charges of stealing trade secrets. Although the story might be an entertaining one with all the makings of a bestselling crime novel, it represents a serious reality in the American seed industry — espionage.

Stealing Seed Secrets

According to Paul Heald, a law professor at the University of Illinois at Urbana in Champaign and an expert on intellectual property law, old-fashioned espionage tactics are employed in the seed industry for a simple reason — it’s the only way for thieves to actually get their hands on another seed company’s product and make serious profits.
“As long as one can keep parent lines secret, then a hybrid can be usually be kept exclusive to the developer,” Heald says. “My understanding, however, is that technology has made it much easier to reverse engineer — which is totally permissible from a legal perspective — a hybrid and puzzle out what the parent lines must be.”
That ability to figure out the genetic puzzle makes espionage appealing to those who wish to steal the secrets of their competitors.
“Like any area of the economy where there is rapid innovation, there are times when people will look for shortcuts. Unfortunately, that’s what we’re seeing,” says Andy LaVigne, president of the American Seed Trade Association. “As our members invest more in research and development, other companies will naturally try to take advantage of that in order to get ahead because it’s the easy way, in some cases.”
According to authorities, the defendants in the Mo case visited seed testing plots in Iowa and Illinois used by Monsanto and Pioneer, to name just two seed companies they stole from. According to court documents, they hid their stolen seeds in common everyday containers like restaurant napkins and popcorn bags. The seeds that they stole were from inbred lines, which in the right hands could be crossed to create hybrid seeds that could be sold to farmers.
According to an affidavit filed by FBI special agent Mark Betten in the Mo case, one inbred line of the seed the defendants were after takes five to eight years of research and can cost $30 million to $40 million to develop — a significant investment for a seed company. To have that investment misappropriated represents an opportunity for another seed company to use that technology to its own advantage, saving money on research and taking a shortcut to the profit stage.

“International relationships are developing rapidly for all sizes of seed companies, and that’s exciting — but it’s also an area of caution …”
— Andy LaVigne

In the Mo case and those of its ilk, “The development of that seed over in China would likely lend itself to copying and intellectual property infringement maybe even more so than it would here in the United States,” says David Miller, Iowa Farm Bureau research director.
That’s because other parts of the world often don’t enjoy the robust intellectual property law that the United States does, or don’t feel it’s necessary. “We have a lot of understanding and respect for that in the United States, whereas in other parts of the world where the innovation hasn’t been as strong as it has in the United States, there’s a different comfort level when it comes to borrowing or sharing of technology that others have created and invested in,” LaVigne notes.


Espionage in the seed industry is becoming a hotter topic as time goes on. “It’s on the agenda more often, because as technology continues to change rapidly in the industry both domestically and globally, companies sometimes find it challenging to keep up,” LaVigne explains.
Although espionage is a serious concern for seed companies, preventing it isn’t easily done. Miller notes that farmers typically don’t erect security fences around their fields, and he doesn’t think that’s about to happen anytime soon.
“Most of the research companies I know of, their early development is almost all done behind chain link fences at a research facility that has security around it. At the last stage of commercial development, you can’t do that, though. Once the variety goes into the expansion mode, you need acres,” Miller says.
Often, the only security that exists around a field of seed is a few “No Trespassing” signs, he notes. A seed company’s best defense, at the end of the day, is the law.
“If you catch someone in your field, you can prosecute them for trespassing,” Miller adds. “If they’ve stolen technology, you can prosecute them for theft. It becomes a matter of double legal enforcement.”
Muddying the waters, though, is the fact that seed is among a slate of technologies that can be considered self-replicating, according to Heald. Seed companies don’t simply have to worry about a few seeds being stolen — their concern is that those few seeds can then be essentially copied and used to grow infinitely more.
“If a parent line is appropriated through espionage then the person responsible can be successfully sued,” Heald notes. “Of course, if [that person] has made the parent lines public, the secret — and protection — is lost, and third party observers can use the secret.”
By law, only the person or company that committed the espionage is on the hook for damages. As a result, Heald believes trade secrecy is less effective than it used to be. “It’s quite easy to obtain protection under the U.S. Plant Variety Protection Act and in the many countries that have enacted some version of UPOV, the International Plant Protection Treaty,” Heald says. “In the U.S., plant developers can also seek utility patent protection. Espionage should only be a problem, therefore, when a company decides not to get a PVPA certificate or a patent and seeks to employ state trade secret law instead.”

Collaboration Is Key

Trust and collaboration are often the best remedy for preventing espionage in the first place, Heald says.
LaVigne agrees. “You see collaboration across the board — European companies are doing business here in the United States selling seed into South America, for example,” LaVigne adds. “Those relationships are happening more frequently and the industry is becoming more global, because of the need to find varieties that might be more resistant to weather occurrences and things like that.”
But it’s important, LaVigne adds, that seed companies recognize that not all parts of the world have as much appreciation for intellectual property as the United States does. Knowing that is key when doing business abroad.
“International relationships are developing rapidly for all sizes of seed companies, and that’s exciting — but it’s also an area of caution for companies to try and understand what intellectual property protection looks like in other parts of the world — be it China, Brazil, India or wherever,” LaVigne says. “While our system of intellectual property protection might be strong here in the United States, it’s not necessarily as strong in other parts of the world.”