The espionage convictions of the former Google engineer have been overturned, although the theft convictions remain intact.

      A federal judge has dismissed seven economic espionage convictions against former Google engineer Linwei Ding, citing that prosecutors failed to substantiate that he was acting on behalf of China. However, seven counts related to trade secret theft remain in place. Judge Vince Chhabria determined that while there was adequate evidence showing Ding took proprietary information, there was insufficient proof that he intended or knew his actions would benefit the Chinese government. This distinction is crucial to the two sets of charges.

      Under U.S. law, economic espionage necessitates a link to a foreign state, making it the preferred charge during a time when Washington is labeling AI-related theft as a national security issue. In contrast, theft of trade secrets does not require such a connection, leading to the collapse of the case with respect to economic espionage after conviction rather than before.

      In January, a jury found Ding guilty on all 14 counts after an 11-day trial. The counts of economic espionage carried maximum sentences of up to 15 years each, while the theft counts could lead to sentences of up to 10 years, effectively eliminating the more severe potential sentences.

      There is no dispute regarding what Ding was convicted for taking. Prosecutors alleged he removed thousands of pages of sensitive information related to Google’s AI systems, including hardware designs and software platforms utilized for training large language models within the company's data centers.

      The material in question includes the tensor processing unit stack, a part of Google that is particularly challenging to duplicate, which is why the case received significant attention. The Justice Department framed it as a prime example of the technology transfer issues they have been highlighting.

      Concerns regarding industrial espionage have been intensifying. The White House has accused China of large-scale model distillation and has committed to sharing intelligence with OpenAI, Anthropic, and Google in an atypical arrangement involving a government and private companies.

      Enforcement efforts have focused mainly on hardware. Taiwanese prosecutors have detained an Nvidia employee as part of a chip-smuggling investigation, while the co-founder of Super Micro faces charges related to server exports to China.

      Ding’s case represents an intellectual property variant of the same concerns, and the aspect that has now been dismissed is the very factor that gave it a geopolitical context. Without the espionage charges, it is simply a case of theft, serious yet more mundane.

      Ding's attorney welcomed the decision. Neither the Justice Department nor Google provided immediate comments, and it's unclear if an appeal is forthcoming. Prosecutors have the option to appeal this type of post-verdict acquittal, though the criteria for success are stringent, as the judge concluded that no reasonable jury could have arrived at a different outcome based on the evidence.

      Sentencing is scheduled for September 1, but Ding could face up to 10 years for each of the seven theft counts, which will depend on how the sentencing guidelines assess the value of the stolen materials and whether the court finds he intended to use them commercially.

      The ruling does not acquit Ding, nor does it absolve Google’s security practices. It only indicates that the government established a theft occurred but failed to demonstrate a connection to a state.

      The case also highlights the manner in which these prosecutions are constructed. Usually, intent to serve a foreign government is established through communications, payments, or documented relationships, but the jury rendered a guilty verdict without the judge being convinced that any such connections existed.

      Ding was accused of ties to Chinese tech companies rather than the government itself, which is the critical issue upon which the ruling hinges. A commercial entity in China does not equate to the Chinese government, regardless of how uncomfortable this distinction may be for prosecutors.

      Google's stance remains unchanged; the company detected the data breach, reported it, and provided testimony, and the sensitive material is still unaccounted for, regardless of which law applies.

      For the Justice Department, the timing is problematic. It has been publicly asserting that the theft of AI trade secrets constitutes a national security issue rather than merely a commercial dispute, and now a judge has positioned that delineation in a way the department had not anticipated.