In more detail

Background

Zhang Changjie is currently a director of Theme International Capital Pte. Ltd., Theme International Investment VCC and Theme International VCC (collectively, “Theme”).

As a trader at Genk at the time, Zhang Changjie returned to Genk’s office surreptitiously on a Sunday in March 2018 and secretly sent thousands of electronic files (worth 280 megabytes) from his work computer to his personal Gmail and Google Drive accounts. He then attempted to cover his tracks by deleting three zipped folders he had sent to himself from his work computer.

He resigned just one day later to join Theme, a direct competitor of Genk’s, trading in iron ore derivatives.

Despite attempts to cover his tracks, Zhang Changjie was eventually charged under Section 3(1) of the Computer Misuse and Cybersecurity Act (CMCA), which criminalizes unauthorized access to computer data. He was found guilty in June 2023 and sentenced to the maximum fine in October 2023.

The court’s findings

To convict under Section 3(1), the prosecution had to prove beyond a reasonable doubt that Zhang Changjie did the following:

• Knowingly caused a computer to perform a function to secure access to any program or data held in the computer.
• Secured such access without authority.
• Knowingly exceeded his authority.

While he contested liability until the very end, the court ultimately rejected Zhang Changjie’s defenses, finding him to be a prevaricating, uncooperative, untruthful and uncredible witness whose testimony was riddled with glaring inconsistencies and inexplicable gaps throughout the trial. The court also completely rejected Zhang Changjie’s testimony at trial, which sought to exculpate himself from the Charge.

The court also found the following:

• Zhang Changjie copied files to personal accounts, which constituted “securing access” under the Act.
• Zhang Changjie had no authority to do the above and knew this.
• Zhang Changjie’s NDA and repeated confidentiality reminders made the above clear.
• Even if Zhang Changjie created the files, they belonged to Genk, as he created them during the course of his employment.
• Zhang Changjie selectively, deliberately and purposefully copied Genk’s files because they contained commercially sensitive information that was commercially useful to Zhang Changjie for trading.

A more detailed summary of these findings and examples of some untruths by Zhang Changjie highlighted in the judgment are set out in the Appendix.

Key takeaways

Instances of employees leaving with company data are common in today’s digital world.

Most employers instinctively turn to civil claims for breaches of confidence or contract. This case shows there is another path available: private prosecution under the Act.

This matters because data is agnostic.

Unlike copyright claims, you do not need to prove that copyright subsists in the stolen material. Unlike breaches of confidence, you do not need to show the data had a quality of confidence. Under the Act, it does not matter whether the data is commercially valuable or took significant effort to create.

Depending on the facts and your objectives, private criminal actions can be a powerful tool against data thieves. Optically, it sends a strong message that your organization will not tolerate data theft — criminal penalties such as fines or jail terms carry real weight. Strategically, criminal proceedings also unlock tools like private search and seizure warrants to secure evidence.

Despite success in this case, some might also say it exposes a gap.

Singapore still lacks a dedicated criminal offense for trade secrets theft. While the Act was used successfully in this case, it was not designed for this purpose. The result is a sentencing framework that arguably does not fully reflect the harm caused by commercial data theft. The absence of dedicated legislation for trade secrets misappropriation creates challenges for businesses.

Trade secrets often encompass highly sensitive and valuable information, such as proprietary algorithms, client lists and strategic plans. Reliance on the Act, which primarily addresses unauthorized access to computer systems, means that the nuances of trade secrets protections are not adequately addressed or contemplated in the current sentencing framework for Act offences.

In this case, the court declined to take reference from the developments in civil breach of confidence cases, which addressed the advances in modern technology and the need for stronger measures to protect owners of confidential information from loss (see our client alert on the 2020 Court of Appeal decision in I-Admin (Singapore) Pte Ltd v. Hong Ying Ting [2020] SGCA 32 here), and lay down a nuanced sentencing framework under the Act for commercial employee data theft cases involving the copying of commercially valuable data. Arguably, this may leave businesses in a position where available legal remedies may not match the severity of the offense or damage to the company.

Advances in technology have made these acts of data theft easier to commit and harder to detect.

This case is a stark reminder that companies must stay vigilant and proactive in safeguarding their valuable data.

If you would like to discuss how we can assist you with tackling such scenarios, please contact us.

Appendix

Summary of findings

• By copying Genk’s files from Genk’s work computer to his personal Gmail and Google Drive account, Zhang Changjie had secured access to Genk’s data within the meaning of Section 2(2)(b) of the Act.
• Zhang Changjie did not have authority to secure access to Genk’s data in the manner he did. At trial, Zhang Changjie admitted that it was Genk’s CEO, Mr. Koh, who was entitled to grant such authority to employees to send work files to their personal accounts. At no point was Zhang Changjie granted such authority by Mr. Koh.
• At all material times, Zhang Changjie had knowledge that he had exceeded his authority by copying Genk’s data from Genk’s work computer to his personal Gmail and Google Drive accounts. Zhang Changjie received frequent reminders from Genk to treat all information he dealt with in the course of his employment as strictly confidential. Zhang Changjie also signed a non-disclosure agreement (NDA) with Genk, which should have been a red flag that he was not allowed to send Genk’s files to his personal accounts.
• Even if Zhang Changjie had created the files that he had copied, he still would not have the requisite authority to secure access to the files that he did. Zhang Changjie could not assume that everything created on Genk’s work computer on his own initiative, with or without Genk’s instructions, belonged to him, as they were created pursuant to his employment with Genk.
• After his crime, Zhang Changjie deliberately did not come clean about copying Genk’s files. Although Zhang Changjie claimed that informing Genk about his copying would be akin to informing Genk about the fact that he had taken his personal belongings (such as his Secret Lab chair) home, the court unequivocally rejected this excuse as not holding any water.
• Zhang Changjie selectively, intentionally, deliberately and purposefully copied Genk’s files because they contained information that was commercially sensitive to Genk and commercially useful to Zhang Changjie for the purposes of trading.
• The fact that the Singapore Police Force had issued an advisory letter to Zhang Changjie and decided not to take any further action against him in relation to the same acts had no bearing on the private prosecution against him or its merits.

Untruths by Zhang Changjie as set out in the judgment

• Zhang Changjie’s presentation of different opposing accounts of the events of the day of his crime in the space of just a few minutes during his cross-examination, which showed a readiness to lie on the stand when it suited him.
• Zhang Changjie’s persistent and incredulous claim that all trades he had executed for Genk belonged to him.
• Zhang Changjie’s claim that he was left to figure things out on his own at Genk, despite Genk putting in place an onsite training curriculum for new hires (including Zhang Changjie), hiring an external performance coach to equip Zhang Changjie with the necessary mental skills to enhance his trading ability and providing close supervision and advice to Zhang Changjie regarding his trading strategies — pertinently, Zhang Changjie’s abovementioned lie was also contradicted by his prior written admission that he had received valuable constructive criticism from Genk and was thankful for his supervisor at Genk as an excellent mentor.
• Zhang Changjie’s vastly inconsistent testimony in the criminal proceedings (in which he swore that he had left Genk because of remuneration issues), compared to Genk’s previous civil proceedings against him (in which he swore that he had left Genk because of his own suspicion that Genk no longer wanted him and had hired someone to replace him) — the court agreed that Zhang Changjie must have either lied in one proceeding or in both proceedings, all of which were equally reprehensible, as they demonstrated his clear disregard for the truth.

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