Trade Cases

USS Complaint Says Chinese Stole Secrets and Should be Banned from U.S. Market

April 28, 2016

US Steel claims trade secrets involved in creating Advanced High Strength Steel (AHSS) were stolen in a Chinese cyber-attack in January 2011. Information acquired included the particular chemistry for Dual Phase steel (grades 590, 780 and 980) and its coating; critical temperatures and holding times for heating, cooling, and coating the steel; and the capabilities and layout of the intended production line.

US Steel maintains the attack was similar to one made to their network in 2010 in which a grand jury concluded it was perpetrated by Chinese military personnel. The FBI determined in that attack the Chinese government “blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries.”

Chinese steelmakers were having difficulty manufacturing the AHSS grades demanded by automakers to reduce weight of vehicles while maintaining the strength necessary for safety. The companies named in the US steel trade action were working on developing the required capabilities in 2010 and by January 2011 still had not been able to commercially produce the Dual-Phase steels that US Steel was producing.

According to the USS Section 337 Complaint documents, In January 2011 there was a cyber-attack against Eduardo Silva who was a “well-known senior researcher in AHSS at US Steel.” The attack was similar to previous Chinese government led attacks and was able to circumvent the technological safeguards used by US Steel. The attack managed to steal “…several gigabytes of valuable research data on advanced steels, including Dual-Phase 590, 780, and 980. Forensic analysis of the malware identified the Internet addresses it contacted to exfiltrate U.S. Steel’s trade secrets, and those Internet addresses have been linked to Chinese hackers.”

The USS complaint goes on to state that once the Chinese had control of Ed Silva’s company computer they used it to infiltrate the US Steel network specifically targeting files for the hot-dipped simulator developed by US Steel and used to improve production techniques for its Dual-Phase 590, 780 and 980 product lines.

Following the cyber-attack, which US Steel blames on the Chinese government, steel producers in China were finally able to commercialize the highest strength 980 Dual-Phase steel. US Steel maintains that the China Iron and Steel Association (CISA) distributed the trade secrets to the state-owned mills enabling them to manufacture AHSS that could compete with US Steel’s product.

Baosteel, in particular, was singled out and documentary evidence shows that the company’s current product catalog lists Dual Phase steels ranging from 450-1180.

US Steel maintains that it took more than ten years to develop the Dual-Phase products. Baosteel introduced their own Dual-Phase by 2013, developing them in the short period following the cyber-attack.

All of the Proposed Manufacturer Respondents in the Section 337 complaint are state-owned industries which share confidential information through an agreement with CISA said US Steel.

In the Section 337 Complaint, US Steel is asking for the ITC, through the U.S. court system, to block any and all carbon and alloy steels from China from entering the United States.