United States v. Jin
733 F.3d 718 (2013)
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Rule of Law:
Information qualifies as a trade secret under the Economic Espionage Act if its secrecy confers potential, not necessarily actual, economic value, even if the technology is aging. The statutory requirement that the thief know the act will injure the owner can be satisfied by the foreseeable harm that disclosure would cause, such as forcing the owner to incur costs for countermeasures or eroding a temporary monopoly.
Facts:
- The defendant, a software engineer, was employed by Motorola from 1998 to 2007, working primarily on its iDEN cellular telecommunications system.
- While on extended medical leave in China in 2006-2007, she sought a job with Sun Kaisens, a company that develops telecommunications technology for the Chinese armed forces.
- Shortly after returning to the United States in February 2007, the defendant downloaded thousands of internal Motorola documents detailing the iDEN technology, all of which were marked as proprietary.
- A few days later, she purchased a one-way ticket to China scheduled for imminent departure.
- Customs agents stopped her at the airport before she could depart, finding her in possession of the Motorola documents and over $30,000 in cash.
- At the time of the theft, the iDEN system was becoming obsolete but was still used by approximately 20 million customers worldwide.
- Motorola had implemented elaborate precautions to maintain the secrecy of its iDEN technology.
Procedural Posture:
- The defendant was charged in the U.S. District Court with theft of trade secrets under 18 U.S.C. § 1832 and economic espionage under 18 U.S.C. § 1831.
- Following a bench trial, the district court judge found the defendant guilty of theft of trade secrets but acquitted her of economic espionage.
- The district court sentenced the defendant to 48 months in prison.
- The defendant appealed her conviction and sentence to the United States Court of Appeals for the Seventh Circuit.
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Issue:
Does the theft of proprietary documents describing an aging but still commercially-used technology satisfy the requirements of the Economic Espionage Act that the information have 'independent economic value' from its secrecy and that the thief know the act will 'injure' the owner?
Opinions:
Majority - Posner, Circuit Judge
Yes, the theft of proprietary documents concerning an aging but still commercially viable technology satisfies the requirements of the Economic Espionage Act. The statute requires only that the information derive 'potential' economic value from its secrecy, and the defendant must have known that the theft would injure the owner. Even though iDEN technology was aging, its secrecy gave Motorola a temporary monopoly with 20 million customers, which provided potential economic value. The injury to Motorola was foreseeable, as the company would have to incur costs to warn customers of security risks and take countermeasures. Furthermore, the theft would enable a competitor to duplicate the system without research and development costs, eroding Motorola's customer base and supracompetitive profits. The defendant's claim that she downloaded the documents merely to 'refresh her knowledge' is unpersuasive, as that knowledge would directly benefit her and her prospective employer, Sun Kaisens, at Motorola's expense.
Analysis:
This decision clarifies that the scope of the Economic Espionage Act is broad enough to protect aging or even near-obsolete technology, so long as its secrecy continues to provide some potential economic advantage. The court's interpretation of 'injury' to include indirect costs, such as implementing security countermeasures or reputational harm, lowers the burden for prosecutors, who do not need to prove direct or immediate financial loss. This ruling is significant for technology industries with rapid innovation cycles, as it affirms that older intellectual property remains legally protected from theft even as it is being supplanted by newer products. It establishes that the value of a trade secret and the injury from its theft can be established through circumstantial evidence of potential harm and competitive disadvantage.
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