United States v. Du
570 F. App'x 490 (6th Cir.) (2014)
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Rule of Law:
Under the Economic Espionage Act, 18 U.S.C. § 1832, sufficient circumstantial evidence of intent to convert trade secrets exists when an employee without authorization downloads proprietary documents unrelated to her work, retains them after her employment ends, and concurrently develops a competing business venture that would benefit from the stolen information.
Facts:
- Shanshan Du began working as an engineer for General Motors (GM) on its hybrid vehicle development team in 2000 and was reassigned to the hybrid motor control group in 2003.
- While employed at GM, Du downloaded thousands of proprietary GM documents, including motor control source codes and schematics, onto personal storage devices.
- During this same period, Du and her husband, Yu Qin, co-founded a side business named Millennium Technologies International (MTI).
- Du and Qin began planning a joint venture with Chery Automobile, a Chinese carmaker, to develop and manufacture hybrid vehicle motor control systems using technology similar to GM's.
- Du left GM in March 2005, certifying in writing that she had returned all company property.
- In August 2005, Qin's employer, Controlled Power Company, fired him after discovering he was operating MTI as a competing business.
- Upon his termination, Controlled Power Company seized files from Qin's office and discovered a large number of the proprietary GM documents Du had downloaded.
- In a February 2006 interview with a GM attorney, both Qin and Du falsely denied still possessing any GM files.
Procedural Posture:
- A grand jury indicted Shanshan Du and Yu Qin in the United States District Court for the Eastern District of Michigan on charges including conspiracy and unauthorized possession of trade secrets.
- A jury convicted Qin on all counts (conspiracy, trade secrets, wire fraud, and obstruction of justice).
- The same jury convicted Du on the conspiracy and trade secrets counts but acquitted her of wire fraud.
- Defendants filed a renewed motion for judgment of acquittal and a new trial, which the district court denied.
- The district court sentenced Qin to thirty-six months' imprisonment and Du to twelve months and one day.
- Du and Qin, as Defendants-Appellants, appealed their convictions to the U.S. Court of Appeals for the Sixth Circuit, and the government, as Cross-Appellant, appealed their sentences as too lenient.
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Issue:
Does sufficient evidence exist to support convictions for unauthorized possession of trade secrets where the defendants argued the information was not secret, their access was authorized, and they lacked intent to convert the information?
Opinions:
Majority - Merritt, J.
Yes, sufficient evidence exists to support the convictions. The court found that the government successfully proved all elements of unauthorized possession of trade secrets. First, the information constituted 'trade secrets' because GM took reasonable measures to keep it secret through a combination of physical security, password-protected networks, and confidentiality policies, and the information was not readily ascertainable to the public. Second, the defendants possessed the information without authorization; Du's supervisor testified she did not need access to many of the documents for her work, and in any event, she was not authorized to retain any GM property after her employment ended. Finally, a rational jury could infer the defendants' intent to convert the trade secrets from the substantial circumstantial evidence, including the creation of a competing business venture with a Chinese automaker that had an aggressive timeline, Du's downloading of thousands of files unrelated to her job, and their subsequent lies and attempts to conceal their possession of the documents.
Analysis:
This decision reaffirms that under the Economic Espionage Act, the 'reasonable measures' requirement for protecting a trade secret does not demand perfect, infallible security but rather a combination of physical, digital, and policy-based safeguards. It highlights the power of circumstantial evidence in proving the crucial element of 'intent to convert,' demonstrating that a defendant's concurrent business activities can serve as compelling proof of a motive to misappropriate proprietary data. The case serves as a significant precedent for corporate data theft prosecutions, clarifying that an employee's initial authorized access does not create a defense for retaining or misusing proprietary information after that authorization ceases or for purposes outside the scope of employment.
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