NOT RECOMMENDED F OR FUL L -TEXT PUB L I CATI ON File Na me: 12a0789n.06
No. 12-1015
UNI TED STATES COURT OF A PPEAL S FOR THE SI XTH CI RCUI T

UNI TED STATES OF AMERI CA, Plaintiff-Appellant,

v. YU QI N and SHANSHAN DU, Def endants-A

ppellees. )

) ) ) ) ) ) ) ) ) ON APPEAL FROM THE UNI TED STATES DI STRI CT COU RT FOR THE EASTERN DI STRI CT OF MI CHI GAN

Before: COLE and DONALD, Circ uit Jud ges, and S ARG US, District Judge

. *

BERNIC E B O UI E DO NALD, Circuit Judge

. On J uly 21, 2010, Yu Qin and his wife Shanshan Du ( c o ll e c ti v e ly , “ D e f endants” ) wer e indicted for, among other rela ted char g es, conspiring

to possess and possessing stolen trade secr ets and wire fra ud. Upon rec eiving notice of the
g overn m en t ’s intent to introduce evidenc e under Rule 404(b) of the Fe dera l Rules of Evidence , De fe n d an ts moved to exclude the evidenc e. On Dec ember 9, 2011, the district court g rante d the motion. The g overnme nt timely appea led. For

the re asons assig ned her ein, we a ffirm.
I. BACK GR OUND
Fr om 1985 to 2005, Yu Qin (pronounc ed “Chin”) worke d as an elec trical eng ineer in Troy , Michig an, for Controll ed P o wer Company (“CPC”), a company that desig ns and manufa cture s

T h e Ho n o rable Edmund A. Sarg us, J r., United States District Court for the Souther n * District of Ohio, sitting by desig nation.No. 12-1015

United States v. Qin, e t al. elec trical power equipment and sy stems. Fr om 1997 until his termination on Aug ust 30, 2005, Qin held the position of Vice Pre sident of Eng ineer ing and Resear ch and De velopment at CPC. Qin’s wife, Shanshan Du, also worke d as an elec trical eng ineer for CPC until some time in 2000. There afte r, Du beg an working for Gene ral Mot o rs (“G M”) as an eng ineer in its Advanc ed
Tec hnology Vehicle s Group. At GM, Du worke d on various softwar e eng ineer ing projec ts rela ted

to hy brid vehicle technolog y and was responsible for some of the motor control code used in GM’s hy brid elec tric mo to r c o n tr o ll e r c a r d s . These car ds constitute proprieta ry information owned by GM. During the course of their employ ment, both Qin and Du signe d documents in which they ag ree d to protec t the confide ntial and/or proprieta ry information belong ing to their respe ctive employ ers. Du further ag ree d to return “all documents and other materia ls containing any GM business or technica l information or other proprieta ry information cre ated or obtained in the course of [her] service [] ” at GM.
On J anuar y 3 0 , 2005, Du’s supervisor at GM, appar ently dissatisfied with Du’s job perf ormanc e, offe red Du a sever ance ag ree ment in return for her resig nation. Du acc epted the offe r in writing on Marc h 14, 2005. During Du’s exit interview on Marc h 17, 2005, Du cer tified in writing that she had “re turned all GM Records in printed (copie s or repr oductions), elec tronic or other tang ible form including secr et and confide ntial information in [her] possession or under [her] control, located in [her] office , home or any other off- site location.” Du also acknow ledg ed that her “oblig at io n n o t to d is c lo s e secr et or confide ntial information [would] continue[] afte r the termination of [her] employ

ment.”

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United States v. Qin, e t al. By summer 2005, CPC ’s Vice Presi d en t o f Oper ations, Christian Tazzi a, had become suspicious that Qin was eng ag ing in outside b u s i n es s activities. Tazzi a soon discovere d throug h another CPC employ ee that Qin owned and opera ted a business known as Millennium Tec hnologie s I nterna tional, I nc. (“MTI ”). Qin had been opera ting this business unbeknownst to CPC since at least
2000. Ba sed on MTI ’s website, the business appea red to b e i n d i rect competition with CPC , promoting products that CPC ’s own Resear ch and Deve lopment De p ar t m ent—of which Qin was Vice Pre sident—had bee n developing for y ear s. On Aug ust 30, 2005, CPC confr onted Qin about these activities, and Qin initially denied any involvement in MTI business. L ater that day , CPC employ ees discovere d a bag b el o ng ing to Qin hidden in a co-w orker ’s office

. The bag contained a larg e quantity of elec trical components later identified as CPC proper

ty and a larg e external hard drive deter mined to be Qin’s persona l proper ty

. Taz z ia revie wed the contents of the hard drive and discovere d a direc tory titled “Shanshan” that contained ma

ny elec tronic docume nts that appea red to be the prope rty

of GM. C PC subs equently

a dvised GM of its discovery of these documents, wher eupon GM conducte d its own fore nsic ana ly s is of the hard drive. GM’s analy sis reve aled that the “Shanshan” direc tory contained 16,262 individual files, the majority of which we re confirme d to be the proper ty of GM. The fore nsic analy sis also indicated that all 16,262 files had been copied to the hard drive on Fe bruar y 2, 2005, three day s afte r GM offe red Du a severanc e packag e. The files contained numerous confidential GM documents, including at least four piece s of GM intellectual proper ty essential to GM’s hy

brid motor controller

car d. Most of this intellectual proper ty was information that Du would have had no leg itimate rea son
to possess during the ordinary course of her employ ment with GM. I n fact , ev en Du’s former - 3 -No. 12-1015

United States v. Qin, e t al.

s u p er v isor did not have acc ess t o some of t his information, nor would he have had any leg itimat e need to acc ess it. Other confide ntial information located in t h e “S h anshan” direc tory included d etailed specific ations for the power transistors used by GM in its hy brid motor inverte rs ; GM ’s require ments for its hy

brid elec tric vehicle drive train, including the motor, inverter , and controller

car d; a co m p l et e user manual for GM’s proprieta ry suite of engine ering and design software used in the development of its hy brid elec tric vehicles; and d o cu m ents that detailed GM’s E67 eng ine controller mecha

nization. Acc ording to GM, there was no leg itimate need for Du in her capa city as a GM e mploy ee to a cce ss or possess the vast majority of this information. This discovery prompted further investiga tion into MTI ’s business activities, which showed that MTI had bee n marke ting power control products for the hy brid elec tric vehicle marke t. CPC

uncover ed evidenc e that Qin had direc ted subordinate CPC employ ees to perf orm eng ineer ing work for MTI on CPC company time as well as evidence that MTI was eng ag ed in a project to dev elop

a hy brid elec tric vehicle with Chinese automobile manufa cture r Chery Automobile. Qin’s hard d rive also contained evidenc e indicating that he had misappropriate d CPC resour ces and inform a ti o n and us ed t h em t o fu rther his MTI business. I n particula r, CPC found documents rela ted to its development of a three -phase uninterruptib l e power sy stem, including source code, circ uit board schema tic draw ings, and marke ting materia ls. All of these materia ls ha d been modified, howeve r, such that “CPC” had be en re place d with “MTI ” as the owner of the intellec tual proper ty

. On J uly 22, 2010, Def

endants wer e ch arge d with one count of conspiring to obtain trade

s ec rets from GM perta ining to motor controls for hy brid vehicles, two counts of unlawf u l l y possessing those trade secr ets with intent to pr ovide them to third parties, one count of wire fra ud, - 4 -No. 12-1015

United States v. Qin, e t al. and, as to Qin only , one count of obstruction of j u s t i ce . No n e o f the conduct char g ed in the indictment rela ted to Qin’s possession of parts, resour ces, intellectual proper ty , or other confide ntial information belong ing to CPC. 1
O n N o v e mb e r 1, 2011, the g overnme nt provided Def endants’ counsel with notice of its inten t
to offe r evidence at trial p u rs u an t to Fe dera l Rule of Evidence 404(b). The evidence consisted of “proof that defe ndant Qin appropr iated re source s of his employ er . . . f or the be nefit of MTI .” On November 15, 2011, Def

endants filed a joint motion to exclude the 404(b) evidenc e. They arg ued that Qin had many

defe nses to CPC ’s alleg ations and, there fore , that introducing those alleg ations in the criminal proce edi n gs would not only be inappropria te, but would be unduly burdensome, essentially resulting in a trial within a trial. Def endants also arg ued that the evidenc e would be more prejudicia l than probative under Rule 403, particula rly as to Du, to whom CPC did not attribute any of the underlying conduct forming the basis of CPC ’s civil complaint. The g overnme nt responde d

on November 29, 2011, arg uing that the evidenc e was rele vant to show Def endants’ specific intent

to commit the char g ed offe nses, their participa tion in a common scheme or plan, and the absenc e of mistake, all of which a

re a t issue by

virtue of the e lements of the c riminal char g es.

CPC initiated a civil la

wsuit in Oakland County Circuit Court that lists s ever al ca uses of 1 action ag ainst Def

endants. Whil e one of those claims alleg es a trade secr et violation, the sear ch of Def endants’ homes pursuant to t h e wa rr ant i n this case did not uncover any trade secr ets of C PC, and Def endants have never been indicted for possessin g an y t rade secr ets of CPC

. Rather, the principal basis of CPC ’s civil suit is that Qin unfairly competed ag ainst CPC by forming a separ ate company and making products that competed with CPC

. Du i s named in that case beca use of her owner ship interest in MTI

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United States v. Qin, e t al. On De ce m ber 6, 2011, the district court held a hear ing in which it g rante d Def endant s ’ motion to ex clude the pr offe red e vidence . I n support of this ruling, the court stated: [W hat] y ou are talking about here [i s] stealing trade secr ets.

. . . When I look at what the Gover nment has outlined here , . . . it shows that Def endant – at least Def

endant Qin is setting up this business, working this business. They obv i o u s l y have a business. I don’t think that’s an issue that they have a business. Using CPC documents, I mean, they substitut ed

. . . MTI into wher ever it said CPC , this is something, I don’t know wh et h er i t is more of a g ener ic form as . . . the defe nse is try ing to say or a form that is used that could be modified, but i s t h at stealing ? I mean, I don’t see it. I don’t see it as a substantially simil ar circ umstance. I think what it g oes to show is that these individuals or at least Mr. Qin is setting up this business. Was he doing it while he was working at CPC ? Clearly he was doing it while he was working at CPC , but d o es that show that he was stealing things outside of per

haps time, which I

don’t think is necessar ily rele vant. . . .
I simply don’t think there is

. . . substantially enoug h re l ev an ce to this and that it could be way more prejudicia l than probative beca use to me its weig ht only g oes to showing that they wer e, in f act, setting up a business and doing so on CPC time, so the Court is not going to allow [t he evide nce]. This interlocutory appea l followed, and proce eding s in the district court wer e stay ed pending resolution of the issue now be fore us. II. ANALYSIS
A. Standard of

revie w We revie w a district court’s ruling on the admissibili ty of evidenc e for abuse of discretion. United States v. Haywood , 280 F.3d 715, 720 (6th Cir. 2002). We will find that a district court has abused its discre tion when we are “lef t with the definite and firm c onviction that the district court committed a clea

r err or of judgme nt in the conclus i o n i t re ached upon a weig hing of the rele vant

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United States v. Qin, e t al. fac tors.” United S t a t es v. Jenk ins , 345 F.3d 928, 936 (6th Cir. 2003) (quoting United States v. Copeland , 321 F.3d 582, 595 ( 6th Cir. 2003)).
B. Pr ior bad acts
A trial judge is acc orded broad discretion in deter mining the admissibili ty of bad acts evidenc e under Rule 404(b). United States v. Stout , 509 F.3d 796, 799 (6th Cir. 2007)

. The Rule provides, in rele vant part: “Evidenc e of other crimes, wrong s, or acts is not admissible to prove the char acte r of a person in order to show action i n co n fo rm i ty there with. I t may , howeve r, be admissible for other purposes, such as proof of motiv e, o pportunity , intent, prepa ration, plan, knowledg e, identity , or absenc e of mistake or acc ident

. . . . ” Fe d

. R. Evid. 404(b). This circ uit employ s a three -step proc ess for de termining the admissibilit y of such e vidence : First, the district court must decide whether there is sufficie nt evidenc e that the other act in question actua lly occur red. Second , if so, the district court must decide wh ether the evidenc e of the other act is probative of a materia l issue o t h er t h an char acte r. Third , if the evidenc e is probative of a materia l issue other than char acte r, the district court must decide whether the probative value of the evidence is substantially

outweig hed by

its potential prejudicial ef fec t.” Jenk ins , 345 F.3d at 937(citing Haywood , 280 F.3d at 719-20). Apply ing this standard, we are not left with a “def

inite and firm conviction that the district court committed a clea r err or of judgme nt” in excluding the evide nce. Id. at 936. Acc ording ly , the district court’s r uling is af

firmed.
1. Evid ence t hat the act occurr ed As to the first prong , the rele vant inquiry is whether “ther e is sufficie nt evidenc e to support

a finding by the jury that the defe ndant committed the simil ar act.” Huddleston v. United States , 485
U.S. 681, 685 (1988). As Def endants point out, this test is often met by the acc used’s admission that

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United States v. Qin, e t al. the prior act or conviction occu rr ed

. See, e.g., United States v. Clay , 667 F.3d 689, 694 (6th Cir. 2012) (“The [prior bad act] is undisputed, so no discussion is neede d as to step one.”) ; Jenk ins, 345 F.3d a t 937 (“[T]here is no doubt that the bad a ct occ urre d; [ the def endant] fre ely

admitted [i t] .”); Haywood , 280 F.3d at 720 (“H ay wood conce des that the other act at issue

. . . actua lly occur red.” ).
I n the i nstant case , by contra st, Qin vigor ously denies eng ag ing in any improper conduct at CPC

. Thus, while the g overnme nt c ontends that its proof would be rela tively straig htforwa rd and would likely require only a few hours, Qin would have ever y incentive to ref

ute the go v er n m ent’s alleg ations with proof of his own, attempting to establish for the jury that the alleg ations are unfounded. Whil e the rec ord does not establish that the district court made a definitive finding as to the first prong , i t d o es show that the court considere d the evidence and—at l east im plicitly —found i t lacking

. Given the parties’ positions, the evidenc e could rea sonably support a finding on either side of this contentious issue, and we are inclined to ag ree that its resolution could easily become a trial

unto itself. For the purposes of this appea l, howeve r, we will assume without deciding that there is sufficie nt evidenc e to support a jury finding that Qin appropr iated CPC resour ces for the benef it of
MTI

. 2. P robative of issu e other than characte r We turn, then, to whether the evidenc e is probative of a materia l issue other than char acte r. “Evidenc e of other acts is probative of a materia l issue other than char acte r i f (1 ) the evidenc e is offe red f or an admissibl e purpose, (2) the purpose for which the evidence is offe red is materia l or

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United States v. Qin, e t al. ‘in issue,’ and (3) the evidenc e is probative wi t h re g ard to the purpose for which it is offe red.” Haywood , 280 F.3d a t 720. Although the district court did not addre ss the first part of this inquiry direc t l y , the
g overnme nt clea

rly purported to offe r t h e 404(b) evidenc e for an admissible purpose: to show Def endants’ specific intent, participa tion in a common scheme or plan, a nd absenc e of mist ake or

acc ident. See, e.g., United States v. Blankenship , 775 F.2d 735, 739 (6th Cir. 1985) (noting other

2 permissible uses of 404(b) evidenc e, including its use to show a common s cheme or plan). The district court was likewise silent on the second prong , but we ag ree with the g overnme nt’s arg ument that its proffer ed purpose s are materia l by virtue of the mens rea elements of the char g ed offenses and Du’s defe nse that she only reta ined possession of the GM files inadver tently

. Thus, our inquiry

turns to whether evidenc e of Qin’s alleg ed misappropriation of CPC parts, information, and time is probative of

Def endants’ spe cific intent to steal tra de sec rets fr om GM. Id.
“To deter mine if evidenc e of other acts is probative of intent, we look to whe t h er t he evidenc e rela tes to conduct that is ‘substantially simil ar and rea sonably near in time’ to the specific intent offe nse at issue.” Haywood , 280 F. 3 d at 7 2 1 (quoting Blankenship , 775 F.2d at 739). The district court based its exclusion of the 404(b) evidenc e on this prong , rul i n g t h at the proff ere d

We note, howeve r, that it is a fine line the g overnme nt attempts to draw betwee n conduct 2 that is part of a common scheme or plan and conduct that is in confor mity with char acte r. The g overnme n t arg ues that “[a]ll owing the jury to see the full picture in the context of the common scheme of st ealing from employ er s t o b en ef it their private company makes it more li kely the j ury will understand that Du’s possession of GM trade secret s wa s for the benef it of MTI and not a mistake.” I n essenc e, the g overnme nt w ould be asking the jury to f ind that Qin and Du stole fr om h er em p loy er by introducing evidenc e that Qin (possibly ) stole from his. This sounds perilously close to the de finition of improper cha rac ter e vidence

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United States v. Qin, e t al. evidenc e wa s not probative of D efe ndants’ criminal intent be cause it wa s not substantially simil ar to the char g ed off

enses. We ag ree . The g overnme nt proff

ere d evidenc e that Qin misappropriate d CPC elec trical parts for use in MTI products, that he use d CPC forms and doc uments for the be nefit of MTI , and that Qin and his subordinates conducte d MTI business during CPC work time. The char g ed offe nses, in contra st,

wer e conspirac y to possess and unauthorized possession of trade secr ets. These char g es require the
g overnme nt to prove that Def endants stole information that GM had taken rea sonable measure s to keep confide ntial an d that the stolen information “der ives independe nt economic value, actua l or potential, from not being g ener ally known to, and not being read i l y asce rtainable throug h proper

means by , the public[.] ” 18 U.S.C. § 1839(3). Moreove r, t h e governme nt must prove that Def endants stol e thi s information wit h the s pecif ic i ntent to conver

t it for the ec onomic benef it of

someone other than GM. Id. at § 1832(a)

. Whil e it is possible to g ener alize Qin’s alleg ed conduct in such a way as to make it sound substantially simil ar to the conduct char g ed in the indictment (e.g ., Qin stealing from CPC is substantially simil ar to Qin and Du stealing from GM), that would be an

over- simpli fica tion. Pilfering offi ce s upplies—or discarde d elec trical parts, for that matter—a nd conducting p er s o n al business on company time may well constitute theft, but they are of a fundame ntally differ ent char acte r than stealing trade secr ets, which involves g aining unauthorized

acc ess to highly confide ntial and valuable intellectual proper ty and conver

ting that information for
one’s own e conomic bene fit. We find no err or i n the di strict court’s determination t hat t hese a cts

wer e not substantially

simil ar.

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United States v. Qin, e t al.

3. P robative value vs. prej udi cial eff ect Third, we consider the district court’s Rule 403 deter mination. United States v. Johnson , 458
F. App’x 464, 470 (6th Cir. 2012.) W h ere rele vant evidenc e car ries with it the risk of unfair prejudice , confusion of the issues, mis l ea d i n g the jury , or undue delay , and that risk substantially outweig hs the probative value of the proff ere d evidenc e, Rule 403 provides tha t the evidenc e may be excluded. The district court found that, in addition to lacking p ro b ati ve value, the proff ere d 404(b) evidenc e would be highly prejudicia l to Def endants and, thus, that it should be excluded. We find that this determination was we ll within t he bounds of the district c ourt’s discre tion.
We have alre ady touched briefly on the issue of undue delay , and reiter ate here our conce rn that deter mining whether the alleg ations of Qin’s misconduct at CPC are with or without merit could result i n a trial within a trial

. I n fa ct, the risk of undue delay is substantial enoug h that it is likely sufficie nt in itself to justify exclusion of t he evidence under Rul e 403. I n addition t o l engthening the time neede d for trial, prese ntation of the p ro ff ere d evidenc e car

ries with it a high risk of confusing and/or misleading the jury

. Unlike a prior conviction, which is a discree t act or event that the prosecution could call to the j ury ’s attention, the gover nment seeks to introduce evidenc e of a varie ty o f al l eged misconduct that occur red over the course of sever al y ear s during Qin’s employ ment at CPC

. The amount of time and the number of witnesses neede d to prese nt and rebut these alleg ations would almost cer tainly influence the jury ’s perc eption of its r e la ti v e impor tance and could cause confusion that this alleg ed conduct is part of the criminal char g es for which Def endants

are on trial. This is especia lly true whe re the g overnme nt continually ref ers to the conduct as part of Def endants’ common scheme or plan. I n rea lity , t h e o n l y s ch em e or plan char g ed in the - 11 -No. 12-1015

United States v. Qin, e t al. indictment is Def

endants’ scheme to steal GM trade secr ets, and the g overnme nt has not established how Qin’s use or

misuse of C PC time and resource s is part of Qin and Du’s scheme to steal trade

secr ets from GM. The g overnme nt arg ues g ener ally that this conduct makes it “more probable that the def endants we re e ng ag ed tog ether in a common sche me or plan to de fra ud their employ ers for
MTI ’s benef

it.” But the char g es ag ainst Def endants are not so b ro ad; they encompa ss only the alleg ed theft of GM trade secr ets. By g ener alizing in this manner , the g overnme nt incre ases the risk that the jury wil l interpre t the 404(b) evidenc e in prec isely the manner that the rule is intended to prohibit—namely , that Def enda n t s ar e thieves who routinely steal from their employ ers for the benef it of their own company . Thus, prese nted in this manner , the evidenc e is not only likely to mislead the jury

but also to unfairly

prejudice Def

endants. 3 Finally , in response to the g overnme nt’s arg ument that the proffere d evidenc e is probative of the absenc e of mistake, we note that “[o] ne fac tor in balanc ing unfair prejudice ag ainst probative value under Rule 403 is the availability of other means of proof.” Johnson , 458 F. App’x at 470-71 (quotin g United States v. Merriweather , 78 F.3d 1070, 1077 (6th Cir. 1996)). There is other evidenc e in the rec ord that, in our view, is far more probative on this point than the proff ere d 404(b)

ev i d en ce . For instance, Du cer tified in writing that she had returne d all GM documents in her possession, there by seriously undermining any arg ument that she simply “for g ot” that she had the obliga tion to do so. The manner in which the information was copied to the hard drive is also highly

This is espec ially true as to Du, who did not eng ag e in any of the alleg ed misconduct at 3 CPC that is the subject of the proff er. The g overnmen t woul d be arg uing that Qin’s alleg ed misconduct at CPC i s evidenc e of D u’s cr iminal intent to s teal fr om GM. - 12 -No. 12-1015

United States v. Qin, e t al. probative. These wer e not simply many y ear s’ worth of work files that Du acc umulated on her hard drive over the course of her employ ment; r ather , all 16,262 files wer e copie d to D u’s hard drive at the same time. A jury will likely be skeptical that this occur red “ac cidentally ,” particula rly in light of t he fact t hat the fil es were copied three days after Du was asked to resig n. Finally , the content of the files is also highly sug g estive of the absenc e of mistake, as, acc ording to the g overnme nt, Du would never have had any leg itimate rea son to acc ess most of the information contained in the files.
I n other words, her retention of the fil es after h er t ermination can hardly be “innocent” if she was

never authorized to possess them in the first place

. III. CONCLUSION Upon consideration of all rele vant fa ct o rs , we find that the district court did not abuse its discretion in excluding the 404( b) evide nce. A ccor dingly , we AF F IRM

.

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