856 F.3d 585
9th Cir.2017Background
- Liew and his company USAPTI were convicted under the Economic Espionage Act (EEA) and related statutes for conspiring and attempting to steal and convey DuPont chloride-route titanium dioxide (TiO2) trade secrets, possession of trade secrets, and for obstruction/witness-tampering related to a DuPont civil suit. Several counts also involved bankruptcy-related false statements (not challenged on appeal).
- DuPont’s chloride-route TiO2 technology (especially methods enabling use of lower-grade ore) was alleged to be uniquely valuable and protected as trade secrets (five trade-secret items were identified, including plant drawings and a comprehensive Basic Data document).
- Evidence included: contracts between Liew/USAPTI and Chinese firms, payments to former DuPont employees (Maegerle and Spitler) who consulted for Liew, recovered DuPont documents in Liew’s and Maegerle’s possession, and efforts by Liew to influence/coaching a potential witness (Liu) during the DuPont civil investigation.
- At trial the district court gave a compilation/combination instruction (allowing compilations of public info to be trade secrets when combined in a novel way) and declined several defense-proposed instructions (on public disclosure, reverse-engineering, and use of general skill/knowledge). The jury convicted on all counts.
- On appeal the Ninth Circuit affirmed most convictions (including substantive trade-secret convictions and EEA conspiracy/attempt instructions), reversed convictions for conspiracy to obstruct (Count 10) and witness tampering (Count 11), vacated sentencing and remanded for in camera review of potentially undisclosed FBI rough notes (Brady issue) and resentencing.
Issues
| Issue | Government's Argument | Liew/USAPTI's Argument | Held |
|---|---|---|---|
| Validity of compilation instruction | Proper: compilations of public info can be trade secrets if novel combination meets statutory definition | Instruction allowed jury to treat anything as a trade secret; missing limiting principle | Affirmed: instruction correct and not misleading because it required meeting trade-secret definition |
| Exclusion of defense instructions (public disclosure, reverse engineering, general skill) | Given instructions already covered those defenses adequately | Court improperly refused requested instructions that would have clarified defenses | Affirmed: rejection not erroneous; the jury instructions as a whole encompassed defense theory |
| Conspiracy/attempt instructions (whether actual trade-secret status must be proved) | Circuit precedent permits conviction where defendants reasonably and firmly believed information was trade secret for conspiracy/attempt | Constructive amendment of indictment by not requiring proof that information actually was trade secret | Affirmed: Nosal controls — for conspiracy/attempt the government need only prove defendants’ firm belief; any instructional error harmless because jury found substantive trade secrets proved |
| Sufficiency of evidence that listed documents were trade secrets | Evidence showed DuPont took reasonable measures and the materials (esp. beyond Ashtabula) contained nonpublic, valuable compilation data | DuPont’s sale/disclosure (Ashtabula) and public patents/texts destroyed secrecy; government failed to prove nondisclosure | Affirmed: ample evidence supports trade-secret status for Trade Secrets 2–5 and that Ashtabula technology differed from protected low-grade-ore technology |
| Obstruction conspiracy (Count 10) and witness tampering (Count 11) | Filing a false civil answer and advising a witness not to speak can obstruct official proceedings / corruptly persuade | Civil answer was a general legal denial; Liew’s advice to Liu was ordinary counsel-like caution, not corrupt persuasion | Reversed: statements at issue were at or near general legal denials / ordinary counsel-like advice and insufficient to sustain convictions |
| Brady / nondisclosure of FBI rough notes of Spitler interviews | Prosecution did not possess disclosable favorable material in rough notes | Defense produced declaration suggesting rough notes contained exculpatory/impeaching statements (Brady/Giglio material) | Vacated/Remanded: district court erred by denying production; remand for in camera review to determine materiality and potential effect on verdict |
Key Cases Cited
- Peralta v. Dillard, 744 F.3d 1076 (9th Cir.) (standard for jury-instruction review and defendant-entitled-to-instruction principles)
- Whittemore v. United States, 776 F.3d 1074 (9th Cir.) (instructional error and coverage of defense theory)
- Nosal, 844 F.3d 1024 (9th Cir.) (EEA conspiracy/attempt instructions: firm belief standard suffices)
- Hsu v. (Third Cir.), 155 F.3d 189 (3d Cir.) (background on EEA and distinctions between §1831 and §1832)
- Jackson v. Virginia, 443 U.S. 307 (constitutional standard for sufficiency of evidence)
- Brady v. Maryland, 373 U.S. 83 (obligation to disclose exculpatory/impeaching evidence)
- Burge v. (Seventh Cir.), 711 F.3d 803 (false statements in civil discovery can constitute obstruction under §1512 in some contexts)
- Wearry v. Cain, 136 S. Ct. 1002 (U.S.) (Brady material may undermine confidence in verdict and require relief)
- Hofus, 598 F.3d 1171 (9th Cir.) (instructions as a whole must not mislead jurors)