JHL Biotech Co-Founders Sentenced to Jail for Theft of Trade Secrets

The U.S. Attorney’s Office for the Northern District of California has announced that Racho Jordanov, a co-founder and former Chief Executive Officer of JHL Biotech, and Rose Lin, a co-founder and former Chief Operating Officer of JHL, plead guilty to conspiracy to commit theft of trade secrets and wire fraud, and were sentenced a term of imprisonment of twelve months and one day, followed by thirty-six months of supervised release, with several other charges dismissed at sentencing.  The charges stemmed from allegations of theft of trade secrets from Genentech and an investigation on-going since 2018, based on which Jordanov and Lin were convicted of conspiring to steal trade secrets.  JHL previously settled with Genentech in relation to the trade secret misappropriation charges.

The announcement states that, among other things, Jordanov (1) hired former Genentech employees to work at JHL and tolerated the use of confidential and proprietary Genentech documents that the employees brought with them, and (2) personally used and instructed others to use confidential, proprietary, trade secret Genentech tech transfer documents to develop, construct and operate new facilities for JHL.  According to the Justice Department, “[b]etween 2011 and 2019, Jordanov, as President and CEO of JHL Biotech, obtained and possessed confidential, proprietary, and trade secret information from Genentech, and used it to accelerate the timeline for and to reduce the costs of JHL Biotech’s development and production of Genentech biosimilars and to enhance JHL Biotech’s ability to meet various regulatory requirements related to the same.”

The announcement states that, among other things, Lin (1) arranged for a Genentech employee to secretly consult with JHL as head of formulation, while still employed at Genentech, and (2) learned that JHL employees used confidential and proprietary Genentech documents to generate 90-100 SOPs (standard operating procedures) to help JHL apply for certification of its manufacturing facility by the Taiwan Food and Drug Administration and did not stop the employees from doing so.

The announcement further states that during discussions regarding a partnership between JHL and Sanofi, “Jordanov and Lin did not disclose their possession and use of stolen Genentech documents to Sanofi” and “knew that if they had not concealed these facts, Sanofi would not have agreed to the corporate transaction and invest approximately $80 million in JHL Biotech securities pursuant to the subscription agreement and approximately $21 million pursuant to Biologics Products Options Agreement (BPOA) for a total investment by Sanofi in JHL Biotech of approximately $101 million.”