United States v. Hsu
155 F.3d 189 (1998)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under the Economic Espionage Act of 1996, legal impossibility is not a valid defense to charges of attempted theft of trade secrets or conspiracy to steal trade secrets. The focus of these inchoate offenses is the defendant's criminal intent and the commission of a substantial step, regardless of whether the object of the crime was actually a trade secret.
Facts:
- Jessica Chou, an employee of Yuen Foong Paper Company (YFP) in Taiwan, contacted an undercover FBI agent, John Hartmann, seeking information about the manufacturing process for Taxol, an anti-cancer drug made by Bristol-Myers Squibb.
- Kai-Lo Hsu, a technical director for YFP, later met with Hartmann and allegedly stated YFP would acquire the technology "another way," suggesting they pay Bristol-Myers employees for the confidential formulas.
- Over the next 14 months, Hsu and Chou negotiated with Hartmann, who claimed a corrupt Bristol-Myers scientist was willing to sell the information.
- Chou sent Hartmann an email detailing the specific "core technology" YFP needed and offered $400,000 for the trade secrets.
- Hsu and another YFP representative, Chester S. Ho, met with Hartmann and a cooperating Bristol-Myers employee at a hotel in Philadelphia.
- At the meeting, the YFP representatives were shown documents marked "CONFIDENTIAL" that purportedly contained Bristol-Myers' trade secrets regarding Taxol.
- Hsu and Ho reviewed the documents and asked numerous specific questions about the technology contained within them.
- Immediately after the meeting, the FBI arrested Hsu and Ho.
Procedural Posture:
- A federal grand jury indicted Kai-Lo Hsu, Chester S. Ho, and Jessica Chou on charges including attempted theft of trade secrets and conspiracy under the Economic Espionage Act.
- In the U.S. District Court for the Eastern District of Pennsylvania, the defendants requested discovery of the unredacted documents shown to them during the government's sting operation.
- The government filed a motion for a protective order pursuant to 18 U.S.C. § 1835 to prevent disclosure of the alleged trade secrets contained in the documents.
- The district court, erroneously believing the defendants were charged with the completed offense of theft, ordered the government to disclose the unredacted documents to the defense.
- The United States filed an interlocutory appeal of the district court's discovery order to the U.S. Court of Appeals for the Third Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is legal impossibility a valid defense to charges of attempted theft of trade secrets and conspiracy to steal trade secrets under the Economic Espionage Act of 1996?
Opinions:
Majority - Rendell, Circuit Judge
No. Legal impossibility is not a defense to charges of attempt or conspiracy to steal trade secrets under the Economic Espionage Act (EEA). The court's reasoning rests on congressional intent and the nature of inchoate crimes. The legislative history of the EEA demonstrates that Congress intended to create a 'comprehensive' federal remedy for economic espionage, and allowing the archaic and disfavored defense of legal impossibility would undermine this goal. Such a defense would force the government to use actual trade secrets in sting operations, thereby risking their disclosure and gutting law enforcement efforts. For the crime of attempt, the court adopted the Model Penal Code's 'substantial step' test, which focuses on the defendant's culpability and intent 'under the circumstances as he believes them to be,' not as they actually are. For conspiracy, the crime is the agreement itself, making it irrelevant whether the conspiracy's objective was ultimately unattainable. Therefore, the government does not need to prove the existence of an actual trade secret to convict a defendant for attempting or conspiring to steal one.
Analysis:
This case establishes a significant precedent for prosecutions under the Economic Espionage Act by foreclosing the defense of legal impossibility for attempt and conspiracy charges. The decision aligns the EEA with modern criminal law trends that focus on a defendant's subjective intent rather than objective circumstances. This ruling greatly aids law enforcement by allowing the use of sham or non-secret information in undercover sting operations without jeopardizing the viability of a prosecution. Consequently, it strengthens the protection of intellectual property by enabling proactive enforcement against individuals who demonstrate a clear intent to misappropriate trade secrets, regardless of the success or factual possibility of their scheme.
