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. e du/thir dc ir c uit_1998/205Filed August 26, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-1965

UNITED STATES OF AMERICA

v.

KAI-LO HSU, a/k/a JAMES HSU

UNITED STATES OF AMERICA

v.

CHESTER S. HO

United States of America, Appellant

ON APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Criminal Nos. 97-cr-323-1 and 97-cr-323-2)

Argued: June 10, 1998

Before: STAPLETON, COWEN, and RENDELL, Circuit Judges

(Opinion Filed: August 26, 1998)Michael R. Stiles

Walter S. Batty, Jr. Richard W. Goldberg (ARGUED) Louis D. Lappen Office of the United States Attorney 615 Chestnut Street, Suite 1250 Philadelphia, PA 19106 Attorneys for Appellant

William E. McDaniels (ARGUED) Paul Mogin Williams & Connolly 725 Twelfth Street, N.W. Washington, DC 20005

Thomas H. Suddath, Jr. Montgomery, McCracken, Walker & Rhoads, LLP
123 South Broad Street Philadelphia, PA 19109 Attorneys for Appellee,

Chester S. Ho

Norman E. Greenspan Ian M. Comisky Blank Rome Comisky & McCauley LLP One Logan Square Philadelphia, PA 19103 Attorneys for Appellee,
Kai-Lo Hsu

OPINION OF THE COURT

RENDELL, Circuit Judge:

In this appeal we explore for the first time the relationship between the confidentiality provisions of the newly-enacted Economic Espionage Act of 1996, 18 U. S.C. S 1831, et seq., and principles of criminal law reg arding discovery and disclosure of material evidence. The district court ordered the government to disclose alleged co rporate trade secrets based upon a theory that we find does not

2apply. It also held that the defense of legal impos sibility

does not pertain to the attempt and conspiracy crim es with which the defendants are charged. We will affirm th e court's holding regarding the applicability of the defense of legal impossibility, but will reverse its discovery order and
remand for a review of other asserted defenses to t he
crimes in the indictment.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Government's Sting Operation

On July 10, 1997, a federal grand jury indicted Kai -Lo Hsu, Chester S. Ho, and Jessica Chou (collectively, "the defendants") for their involvement in an alleged co nspiracy to steal corporate trade secrets from Bristol-Myers Squibb. The indictment alleges that the defendants sought t o obtain the processes, methods, and formulas for manufactur ing Taxol, an anti-cancer drug produced by Bristol-Myer s and regarded by the company as a highly valuable trade secret.1

According to the indictment, the defendants' conspi racy began on June 7, 1995, when Chou, the Manager of Business Development for Yuen Foong Paper Company i n Taiwan ("YFP"), requested information about Taxol f rom John Hartmann, an undercover FBI agent whom Chou mistakenly believed to be a technological informati on broker in the United States. From August 28, 1995, until January 12, 1996, Chou allegedly contacted Hartmann repeatedly to obtain information about Taxol manufa cturing techniques and distribution. These contacts led to a meeting in Los Angeles on February 27, 1996, betwee n Hartmann and Hsu, the Technical Director for YFP's operations. Hsu purportedly told Hartmann at that m eeting that YFP wanted to diversify into biotechnology and to

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1. The factual summary that follows is based entire ly on the as yet unproven allegations in the July 1997 indictment. B ecause this is an interlocutory appeal, the record is not complete, d iscovery has not concluded, and no determination of the facts has ye t occurred. Therefore, we offer these facts as averred to provi de a context for the issues on appeal, without vouching for the truth of any of the facts we
recite.

3introduce technology from advanced countries into T aiwan.

When Hartmann responded that Bristol-Myers would be unlikely to share its secret technology with YFP, H su allegedly responded, "We'll get [it] another way," and told Hartmann to pursue paying Bristol-Myers employees f or the
confidential Taxol formulas.

The indictment asserts that Hsu and Chou then "communicated many times" with Hartmann over the ne xt
fourteen months to discuss the transfer of Taxol te chnology and to negotiate a specific price for the acquisiti on of Bristol-Myers's trade secrets. In response, Hartman n told the defendants that a corrupt Bristol-Myers scienti st would be willing to sell Taxol information to YFP. The"co rrupt" scientist was actually a Bristol-Myers employee coo perating with the FBI. Intrigued by such a prospect, Chou al legedly sent an e-mail to Hartmann on March 13, 1997, outli ning the "core technology" that YFP would need to comple te a deal, including:

"1. The design and assembly of bioreactor wi th an agreed scale 2. Light requirement 3. Media requirement for growth and producti on 4. Operating mode for the process, such as b atch or
continuous 5. Yield, such as cell density, titers, taxa ne constitution
6. Duration of culture to reach the maximal yield 7. Scientific names of yew species which are applicable to the bioreactor.
8. Cell lines excluded!!!"

Chou also allegedly told Hartmann that she would of fer $400,000 in cash, stock, and royalties to the Brist ol-Myers scientist in exchange for his disclosure of the Tax ol secrets. In addition, Chou and Hsu purportedly began making arrangements for a 1997 meeting between the parties , the purpose of which was for YFP to establish the authe nticity of the "corrupt" scientist and to determine whether Hartmann really could produce the Taxol trade secre ts that Chou and Hsu had requested.

Hartmann agreed to a meeting, and on June 14, 1997, he and the Bristol-Myers scientist met with three

4representatives from YFP, including Hsu, Ho, and an other

unidentified scientist, at the Four Seasons Hotel i n Philadelphia. Ho was a professor of biotechnology a nd the Director of the Biotechnology Innovation Center at the National Chiao Tung University in Taiwan, and he ha d apparently been asked to evaluate the Taxol technol ogy at the meeting as a favor to YFP.

The indictment alleges that the bulk of the June 14 meeting consisted of detailed discussions regarding the manufacturing processes for Taxol. The Bristol-Myer s scientist explained the background and history of T axol production, and displayed copies of Bristol-Myers documents outlining specific technological processe s and scientific data pertaining to the manufacture of th e drug. According to the indictment, these documents contai ned trade secrets and were "clearly marked with Bristol -Myers identification as well as the block stamped word `CONFIDENTIAL.' " Hsu, Ho, and the other YFP employ ee reviewed the documents during the meeting and purportedly asked the Bristol-Myers scientist "nume rous" questions regarding specific areas of Taxol technol ogy. Finally, after Hartmann and the Bristol-Myers scien tist left the room, the FBI rushed in and arrested Hsu and Ho at
the hotel.2

The indictment returned by the grand jury charged H su, Ho, and Chou with six counts of wire fraud in viola tion of 18 U.S.C. S 1343, one count of general federal cons piracy in violation of 18 U.S.C. S 371, two counts of foreign and interstate travel to facilitate commercial bribery in violation of 18 U.S.C. S 1952(a)(3), one count of aiding and abetting in violation of 18 U.S.C. S 2, and, most importantl y for our purposes, two counts of criminal activity under the Economic Espionage Act of 1996 ("the EEA"), includi ng attempted theft of trade secrets, and a conspiracy to steal trade secrets, in violation of 18 U.S.C. SS 1832 (a )(4) and (a)(5).

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2. An arrest warrant has since been issued for Chou , but she lives in Taiwan, which has no extradition treaty with the Un ited States.

5B. The Government's Motion to Maintain the

Confidentiality of the Bristol-Myers Trade Secrets

Shortly after the indictment was returned, the defe nse requested in discovery a copy of the Bristol-Myers
documents disclosed to Hsu and Ho at the June 14 meeting. However, on August 12, 1997, the governmen t filed a motion pursuant to 18 U.S.C. S 1835 and Fed . R. Crim. P. 16(d)(1) for a protective order to prevent the disclosure of the Bristol-Myers trade secrets alleg edly contained in those documents.3 The government propo sed
that the district court enter an order under which the trial judge would review the documents and the proposed redactions by Bristol-Myers in camera, and would th en permit redactions of proprietary secret information . The
documents as redacted would be used at trial. The gravamen of the government's contention was that th e defendants had no need for the actual trade secrets themselves, because they had been charged only with attempt and conspiracy to steal trade secrets, rath er than with the actual theft of trade secrets, under the E EA.

The defendants maintained, though, that unique constitutional and procedural requirements of crimi nal prosecutions dictated full access to the documents shown to them during the investigation. The defendants al so contended that they needed the documents to establi sh the defense of legal impossibility, arguing that they c ould not be convicted of attempting to steal trade secrets i f the documents did not actually contain trade secrets. Therefore, they proposed an order under which the proprietary information in the Bristol-Myers docume nts would be disclosed, but only to select members of t he

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3. Section 1835 is part of the EEA and provides, in ter alia, that "[i]n

any prosecution or other proceeding under this chapter, the court shall enter such orders and take such other action as may be ne cessary and appropriate to preserve the confidentiality of trad e secrets, consistent with the requirements of the Federal Rules of Crimi nal and Civil Procedure, the Federal Rules of Evidence, and all o ther applicable laws." Rule 16(d)(1) provides in relevant part that "[u]po n a sufficient showing the court may at any time order that the discovery or inspection be denied, restricted, or deferred, or make such other order as is appropriate."

6defense team, such as the defendants' attorneys and trial

experts, and under which the documents would befile d under seal and returned or destroyed at the end of the

case.

The district court agreed with the defendants and adopted their version of the proposed protective or der. See United States v. Hsu, 982 F. Supp. 1022 (E.D. Pa. 1 997). The court held that legal impossibility is not a vi able defense to the crime of attempted theft of trade se crets under the EEA, and it thus rejected the defendants' argument that they needed the documents to establis h that claim. Id. at 1028-29. Nevertheless, it ordered the government to divulge the alleged trade secrets, be cause it
found that the existence of a trade secret is an es sential element of the crime of the theft of trade secrets, and that the existence of a trade secret in that prosecution is "a question of fact which the defendants have the righ t to have a jury decide." Id. at 1024. Believing the defendan ts to be charged both with actual theft and attempted theft of trade secrets, the court concluded that "if during discov ery we deny to the defendants complete access to the Taxol technology, we inhibit their constitutional right t o effective cross-examination as well as their right to have a jury, rather than a judge, determine whether a `trade sec ret' exists." Id. at 1025. Therefore, the court held, th e defendants "are entitled to review the June 14th do cuments to the extent of their constitutional rights." Id. at 1029.

The district court's opinion "encourage[d]" the government to file an interlocutory appeal to clari fy the "unsettled and important questions of law" raised b y this case. Id. at 1022 n.1. Accordingly, the government appealed the district court's Order on November 25, 1997, pu rsuant to a section in the EEA providing that "[a]n interl ocutory appeal by the United States shall lie from a decisi on or order of a district court authorizing or directing the disclosure of any trade secret." 18 U.S.C. S 1835. We now have jurisdiction under that section, and we exerci se plenary review over the novel legal questions prese nted by

7the government's appeal. In re Grand Jury, 111 F.3d 1066,

1069 n.4 (3d Cir. 1997).4

We note at the outset that we disagree with the dis trict court as to the offenses charged. The indictment is limited to charging the defendants with attempt and conspir acy and contains no charge of actual theft of trade sec rets. As we will discuss below, we believe this changes the analysis greatly. We begin, though, with an overview of the EEA and an analysis of the relevant statutory provisions.

II. THE ECONOMIC ESPIONAGE ACT OF 1996

The EEA became law in October 1996 against a backdr op of increasing threats to corporate security and a r ising tide of international and domestic economic espionage. T he end of the Cold War sent government spies scurrying to the private sector to perform illicit work for business es and corporations, S. Rep. No. 104-359, at 7 (1996), and by 1996, studies revealed that nearly $24 billion of c orporate intellectual property was being stolen each year. R ichard J. Heffernan & Dan T. Swartwood, Trends in Intellectua l Property Loss 4, 15 (1996).

The problem was augmented by the absence of any comprehensive federal remedy targeting the theft of trade secrets, compelling prosecutors to shoehorn economi c espionage crimes into statutes directed at other of fenses.5

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4. The issues are "novel" in part because this is a matter of first impression in the federal courts. Only five EEA pro secutions were publicly announced in the first eighteen months of the statute's existence, and none had proceeded to trial as of Ma rch 1998. See Lorin L. Reisner, Criminal Prosecution of Trade Secret Th eft, N.Y.L.J., March 30, 1998, at 1. Furthermore, EEA prosecutions are l ikely to remain infrequent in the near future, because the Attorney General of the United States has pledged that the government will not, un til October 2001, pursue charges under the EEA "without the personal approval of the Attorney General, the Deputy Attorney General, or t he Assistant Attorney General for the Criminal Division (or the acting of ficial in each of these positions if a position is filled by an acting offi cial)." 142 Cong. Rec. S12,214 (daily ed. Oct. 2, 1996) (letter of Janet R eno).

5. Prior to the passage of the EEA, the only federa l statute directly prohibiting economic espionage was the Trade Secret s Act, 18 U.S.C.

8For example, the government often sought conviction s

under the National Stolen Property Act ("NSPA"), 18 U.S.C. S 2314, or the mail and wire fraud statutes, 18 U.S .C. SS 1341 and 1343. However, the NSPA "was drafted at a time when computers, biotechnology, and copy machin es did not even exist," S. Rep. No. 104-359, at 10, 6 and industrial espionage often occurred without the use of mail or wire.7 Consequently, it soon became clear to leg islators and commentators alike that a new federal strategy was

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S 1905, which forbids the unauthorized disclosure o f confidential government information, including trade secrets, by a government employee. See, e.g., United States v. Wallington, 8 89 F.2d 573 (5th Cir. 1989) (upholding a defendant's conviction under S 1 905 for running background checks on persons whom the defendant's f riend suspected of trafficking in narcotics). However, the Trade Secre ts Act was of limited value, because it did not apply to private sector e mployees and it provided only minor criminal sanctions of a fine an d not more than one year in prison.

6. In fact, several cases cast serious doubt as to whether the NSPA even applies to the type of intangible information invol ved in modern schemes of corporate espionage. See, e.g., Dowling v. Unite d States, 473 U.S. 214, 216 (1985) (stating that the NSPA "seems clearly to contemplate a physical identity between the items unlawfully obta ined and those eventually transported, and hence some prior physic al taking of the subject goods"); United States v. Brown, 925 F.2d 1 301, 1307-08 (10th Cir. 1991) (holding that the theft of purely intell ectual property is not punishable by the NSPA because it is not physical p roperty within the meaning of the statute).

7. State remedies were also of little assistance. A s of 1996, at least twenty-four states had criminal statutes directed a t the theft of trade secrets, James H.A. Pooley, et al., Understanding t he Economic Espionage Act of 1996, 5 Tex. Intell. Prop. L.J. 177, 186 (19 97), and forty-four states and the District of Columbia had adopted som e form of the Uniform Trade Secrets Act, which permits civil acti ons to enjoin and obtain damages for actual and attempted misappropri ation of trade secrets. Victoria A. Cundiff, The Economic Espionag e Act and You, 490 PLI/Pat 9, 27 (1997). Yet the states often lacked s ufficient resources to pursue espionage prosecutions, see Pooley, supra, a t 186, and corporations eschewed bringing civil lawsuits, beca use they had to shoulder their own litigation costs, individual def endants were frequently judgment proof, and it proved difficult for the sta te courts to exercise jurisdiction over lawsuits involving out-of-state d efendants. See Cundiff, supra, at 27.

9needed to combat the increasing prevalence of espio nage in

corporate America. Congress recognized "the importa nce of developing a systematic approach to the problem of economic espionage," H. Rep. No. 104-788, at 7 (199 6), reprinted in 1996 U.S.C.C.A.N. 4021, 4025, and stre ssed that "[o]nly by adopting a national scheme to prote ct U.S. proprietary economic information can we hope to mai ntain our industrial and economic edge and thus safeguard our national security." S. Rep. No. 104-359, at 11. The House and Senate thus passed the Economic Espionage Act, and the President signed the bill into law on October 1 1, 1996.

The EEA consists of nine sections which protect proprietary information from misappropriation. Thre e sections are of particular import to our analysis: what acts are penalized by the statute, how the law defines a "trade secret," and when trade secrets are to remain confi dential.

A. Criminal activities

The EEA criminalizes two principal categories of corporate espionage, including "Economic espionage" as defined by 18 U.S.C. S 1831, and the "Theft of trad e secrets" as defined by S 1832.8 The former provisi on punishes those who knowingly misappropriate, or att empt or conspire to misappropriate, trade secrets with t he intent or knowledge that their offense will benefit a fore ign government, foreign instrumentality, or foreign age nt. The legislative history indicates that S 1831 is design ed to apply only when there is "evidence of foreign government sponsored or coordinated intelligence activity." 14 2 Cong. Rec. S12,212 (daily ed. Oct. 2, 1996) (Managers' St atement for H.R. 3723). By contrast, S 1832, the section un der which the defendants are charged, is a general crim inal trade secrets provision. It applies to anyone who k nowingly engages in the theft of trade secrets, or an attemp t or conspiracy to do so, "with intent to convert a trad e secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner the reof,

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8. The EEA also permits parallel civil actions to " obtain appropriate injunctive relief against any violation" of the sta tute. 18 U.S.C. S 1836(a).

10and intending or knowing that the offense will, inj ure any

owner of that trade secret." Section 1832(a) makes clear that attempt and conspiracy are distinct offenses, and it lists them separately from those acts that constitu te completed crimes under the statute.

Section 1832 also contains at least three additiona l limitations not found in S 1831. First, a defendant charged
under S 1832 must intend to convert a trade secret "to the economic benefit of anyone other than the owner the reof," including the defendant himself. This "economic ben efit" requirement differs from S 1831, which states merel y that the offense "benefit," in any manner, a foreign gov ernment, instrumentality, or agent. Therefore, prosecutions under S 1832 uniquely require that the defendant intend t o confer an economic benefit on the defendant or another per son or entity. Second, S 1832 states that the defendant mu st intend or know that the offense will injure an owne r of the trade secret, a restriction not found in S 1831. Th e legislative history indicates that this requires "t hat the actor knew or was aware to a practical certainty th at his conduct would cause such a result." S. Rep. No. 104 -359, at 15. Finally, unlike S 1831, S 1832 also requires that the trade secret be "related to or included in a produc t that is produced for or placed in interstate or foreign com merce."9

B. What constitutes a "trade secret"

The EEA defines a "trade secret" to expressly exten d protection to the misappropriation of intangible in formation
for the first time under federal law. 18 U.S.C. S 1 839(3) provides that a "trade secret" means:

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9. Section 1832 also imposes more lenient punishmen ts than S 1831. Under S 1832, individuals can be sentenced to ten y ears in prison and/or fined $250,000, and organizations can befine d up to $5 million. Section 1831, however, provides that individuals ca n be imprisoned for fifteen years and/or fined $500,000, and organizati ons can be fined a maximum of $10 million. Moreover, under both sectio ns, defendants are subject to criminal forfeiture pursuant to 18 U.S.C .S 1834, which states that a person or entity shall forfeit any property constituting, or
derived from, the proceeds of an EEA crime, and, if the sen tencing court "in its discretion so determines," any property used, or in tended to be used, to
commit or facilitate an EEA offense.

11all forms and types of financial, business, scientific,

technical, economic, or engineering informat ion, including patterns, plans, compilations, pro gram devices, formulas, designs, prototypes, meth ods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically
, electronically, graphically, photographicall y, or in writing if --

(A) the owner thereof has taken reasonable m easures to keep such information secret; and

(B) the information derives independent econ omic value, actual or potential, from not being g enerally known to, and not being readily ascertainabl e through proper means by, the public.

The EEA's definition of a "trade secret" is similar to that
found in a number of state civil statutes and the U niform Trade Secrets Act ("UTSA"), a model ordinance which permits civil actions for the misappropriation of t rade secrets.10 There are, though, several critical diff erences which serve to broaden the EEA's scope. First, and most importantly, the EEA protects a wider variety of technological and intangible information than curre nt civil laws. Trade secrets are no longer restricted to for mulas, patterns, and compilations, but now include program s and codes, "whether tangible or intangible, and whether or how stored." Second, the EEA alters the relevant party from whom proprietary information must be kept confident ial. Under the UTSA, information classified as a "trade secret" cannot be generally known by businesspersons or

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10. For example, S 1(4) of the UTSA states that a " trade secret" includes:

information, including a formula, pattern, c ompilation, program, device, method, technique, or process, that:

(i) derives independent economic value, actu al or potential, from

not being generally known to, and not being read ily ascertainable by proper means by, other persons who can obtai n economic value from its disclosure or use, and

(ii) is the subject of efforts that are reas onable under the circumstances to maintain its secrecy.

12competitors of the trade secret owner. UTSA S 1(4). The

EEA, however, indicates that a trade secret must no t be generally known to, or readily ascertainable by, th e general public, rather than simply those who can obtain eco nomic value from the secret's disclosure or use. Finally, the EEA contains a definition crafted to reach only illicit behavior. Although legislators eliminated language providing that general knowledge, skills, and experience are not"t rade secrets," 142 Cong. Rec. S12,213 (daily ed. Oct. 2, 1996) (Managers' Statement), it is clear that Congress di d not
intend the definition of a trade secret to be so br oad as to prohibit lawful competition such as the use of gene ral skills or parallel development of a similar product. See, e.g., id. at S12,212 (noting that "[t]his legislation does not i n any way prohibit companies, manufacturers, or inventors fro m using their skills, knowledge and experience to solve a p roblem or invent a product that they know someone else is wor king
on").

C. Preservation of confidentiality

The EEA also contains a provision designed to prese rve the confidentiality of trade secrets during crimina l prosecutions. 18 U.S.C. S 1835 states that a court:

shall enter such orders and take such other action as may be necessary and appropriate to preserve the confidentiality of trade secrets, consistent with the requirements of the Federal Rules of Crimina l and Civil Procedure, the Federal Rules of Evidence, an d all other applicable laws. An interlocutory appeal by the United
States shall lie from a decision or order of a district court authorizing or directing the disclosur e of any trade secret. (emphasis added).

This section does not, of course, abrogate existing constitutional and statutory protections for crimin al defendants. It does, however, represent a clear ind ication from Congress that trade secrets are to be protecte d to the fullest extent during EEA litigation. Moreover, it further encourages enforcement actions by protecting owners who might otherwise "be reluctant to cooperate in prose cutions for fear of further exposing their trade secrets to public

13view, thus further devaluing or even destroying the ir

worth." H.R. Rep. No. 104-788, at 13, 1996 U.S.C.C. A.N. at 4032. Therefore, as with the definition of trade se crets, the confidentiality provision aims to strike a balance between the protection of proprietary information and the u nique considerations inherent in criminal prosecutions.

III. DISCUSSION

With this statutory framework in mind, we turn our attention to determining whether the district court properly ordered the government to disclose the alleged trad e secrets in this case. We begin by recognizing that the defe ndants are charged only with attempting to steal, and cons piring to steal, trade secrets under S 1832. The district cou rt believed that the defendants were charged with both attempte d theft of trade secrets as well as with "the completed off ense of unauthorized conveyance of a trade secret under 18 U.S.C. S 1832(2)." 982 F. Supp. at 1023 (emphasis added). It thus found that the defendants' constitutional rights to crossexamination and a fair trial would be violated abse nt full disclosure of the Bristol-Myers documents.

However, the district court's analysis represents a n incorrect reading of the indictment and a mistaken view of the charges lodged under the EEA. For one thing, th ere is no S 1832(2) in the statute. More importantly, the defendants are not charged with the completed offen se of theft of trade secrets. They have been indicted onl y for attempting to steal, and conspiring to steal, trade secrets pursuant to SS 1832(a)(4) and (a)(5). Therefore, ou r task is
to examine the defendants' entitlement to the infor mation they seek, as defending against the attempt and con spiracy provisions of the EEA, rather than the completed th eft provisions. We need not decide, as the district cou rt did,
whether a failure to disclose trade secrets would u ndermine the constitutional rights of defendants charged wit h a completed offense under the statute.

The defendants argue that unfettered access to confidential documents is required even in EEA prosecutions for attempt and conspiracy. They asser t that documents containing trade secrets are "material to the

14preparation of the defendant's defense," and theref ore, that

they must be disclosed consistent with the terms of Fed. R. Crim. P. 16(a)(1)(C).11 In particular, they contend that disclosure is warranted by (1) the availability of a legal impossibility defense, and (2) their need for acces s to the proprietary information as it relates to their defe nse of the allegations of the indictment and other defenses to the crimes charged.12

A. Legal Impossibility: The Relationship of the Existence of Trade Secrets to the Crimes Charged

As previously mentioned, the district court believe d that the defendants had been charged with the substantiv e offense of theft of trade secrets, and, without add ressing in any detail the EEA's concern for confidentiality of trade secrets in prosecutions under the statute, conclude d that the defendants' constitutional rights required disc losure of the redacted material. The court premised its view on the
fact that the existence of a trade secret was an el ement of the offense, and that the defendants thus had a constitutional right to access the alleged secrets based on the due process and fair trial guarantees of the Fi fth and
Sixth Amendments.13 We need not determine whether t he

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11. It should be noted that the information sought to be disclosed here includes those portions of the documents used at th e June 14 meeting which Bristol-Myers redacted before providing them to anyone, including
their counsel. The district court did not examine t he redactions or assess their true materiality. We have been advised by cou nsel for the government that the redactions consist of technical information that constitutes trade secrets under any definition.

12. The defendants also argue that disclosure is wa rranted because the government has not met its burden of proving the ne ed for a protective order precluding discovery of the documents. Howeve r, their argument is based entirely on the language of Federal Rule of C ivil Procedure 26(c) and on the cases interpreting its requirements in c ivil actions. See,

e.g., Smith v. BIC Corp., 869 F.2d 194, 199 (3d Cir. 1989 ). No such burdenshifting or elements of proof exist under the facts of this case, where

the government seeks to protect trade secrets in a crim inal prosecution under the provisions of the EEA.

13. Although seeking to address the government's in terests in the confidentiality of trade secrets, the district cour t concentrated on the defendants' rights and did not engage in any discus sion of the relationship between the two.15district court was correct in its ruling, because t he crimes

actually charged do not include the substantive off ense of theft of trade secrets. Rather, the crimes charged- - attempt and conspiracy -- do not require proof of t he existence of an actual trade secret, but, rather, p roof only of one's attempt or conspiracy with intent to steal a trade secret. 18 U.S.C. S 1832(a).14 We must determine ho w and to what extent this alters the analytic landscape, including statutory and policy considerations regarding confi dentiality under the EEA, and principles of disclosure of mate rial
information under the federal criminal rules.

It should be noted at the outset that the confident iality provision of the EEA does not exist in a vacuum. As the EEA provides in S 1835, confidentiality must coexis t with or be tempered by other principles of the law, includi ng a defendant's constitutional rights and the Federal R ules of Criminal Procedure. Therefore, we must first ask wh ether
the non-disclosure of trade secret data does have implications if a defendant is defending against ch arges of attempt and conspiracy to steal trade secrets. The answer lies in the resolution of the question of whether t he nonexistence of a trade secret matters in defense of a n attempt or conspiracy crime. If the defense of legal imposs ibility is viable -- that is, if the defendants are not guilty of attempt if the material is not truly a trade secret -- then it could matter, and the defendants' constitutional or statu tory rights could be implicated. If the defense of legal impossibility is not cognizable, then the existence or nonexistence of an actual trade secret is of little co nsequence for an attempt or conspiracy crime. Thus, we willfi rst

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14. See, e.g., Model Penal Code S 5.01(1)(c) (decla ring a defendant guilty of attempt when, "acting with the kind of culpabili ty otherwise required for commission of the crime, he ... purposely does or omits to do anything that, under the circumstances as he believ es them to be, is an act or omission constituting a substantial step in a course of conduct planned to culminate in his commission of the crime "); id. at S 5.02(1)(a) (stating that a defendant is guilty of conspiracy w ith other persons if, "with the purpose of promoting or facilitating[the crime's] commission he agrees with such other person or persons that th ey or one or more of them will engage in conduct which constitutes such crime or an attempt or solicitation to commit such crime").

16address the threshold question of whether legal

impossibility is a defense to crimes of attempt and conspiracy, as this discussion frames the remainder of our analysis.15

1. Attempt

The defendants' primary contention in the district court, and one of their principal arguments on appeal, is that they need to view the unredacted Taxol documents to prov e their defense of legal impossibility. They assert that th ey can successfully defend against a charge of attempt to steal trade secrets if the documents used at the June 14, 1997, meeting did not actually contain trade secrets. Onl y by disclosure can they determine whether the materials did, in fact, contain proprietary information, and therefor e mount
their defense.

The law of impossible attempts has received much scholarly attention, but remains a murky area of th e law. The common law distinguishes between two types of impossibilities -- legal and factual -- and provide s that the
former is a defense while the latter is not. In thi s regard, "[l]egal impossibility is said to occur where the i ntended acts, even if completed, would not amount to a crim e." United States v. Berrigan, 482 F.2d 171, 188 (3d Ci r. 1973).16

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15. We emphasize that we need not reach, and are no t determining, the issue addressed by the district court of whether th e disclosure of trade secrets is mandated by the Constitution or the Fede ral Rules of Criminal Procedure if a defendant is charged with the actual theft of trade

secrets. This is a complex issue. For one thing, whether inf ormation qualifies as an actual "trade secret" is precisely defined by th e EEA, and centers on such factual questions as how the information has b een guarded by its owner and whether it is ascertainable by the public , rather than on the content of the secret or the defendant's requests a s such. This raises an
issue as to whether the information or formula itse lf is in fact material to the existence of the trade secret. In addition, the other elements of

the offense, and the available defenses, may differ sig nificantly if the defendant is accused of a completed crime rather th an a crime of attempt or conspiracy.

16. This type of legal impossibility is actually wh at some commentators have termed "hybrid" legal impossibility, because t he actor's goal is

17By contrast, "factual impossibility is said to occu r when

extraneous circumstances unknown to the actor or be yond his control prevent consummation of the intended cr ime." Id. For example, legal impossibility occurs when A shoots a corpse believing it to be alive and intending to co mmit murder; the attempt does not amount to murder even if completed. Factual impossibility occurs when A fire s a gun at a bed intending to kill V, and V is not on the b ed; the crime cannot be completed because of extraneous fac tors beyond A's control.

The difficulty, of course, is that the distinction between factual and legal impossibility is essentially a ma tter of semantics, for every case of legal impossibility ca n reasonably be characterized as a factual impossibil ity. For instance, the fact that A shoots a corpse, rather t han a person, is also a product of circumstances beyond A 's control; A did not commit murder because the person he intended to kill was already dead. Likewise, in the case at bar, the defendants argue that their crimes would h ave been legally impossible if the redacted portions of the June
14 documents did not contain trade secrets. Yet thi s could just as easily be characterized as a factual imposs ibility,
because extraneous circumstances unknown to the defendants, i.e., that documents they believed to c ontain trade secrets really did not, would have prevented the
consummation of their crime.

As a result, the great majority of jurisdictions ha ve now recognized that legal and factual impossibility are "logically indistinguishable," United States v. Darnell, 545 F .2d 595,

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illegal, but commission of the offense is somehow r endered impossible by attendant circumstances. See, e.g., Joshua Dressler , Understanding Criminal Law, S 27.07[D], at 372 (2d ed. 1995). Ano ther type of legal impossibility -- "pure" legal impossibility-- occur s when the law does not even "proscribe the goal that the defendant sou ght to achieve." Ira P. Robbins, Attempting the Impossible: The Emerging Co nsensus, 23 Harv. J. on Legis. 377, 389 (1986). Pure legal impossibil ity is always a

defense. For example, a hunter cannot be convicted of attemp ting to shoot a deer if the law does not prohibit shooting deer in thefi rst place. Therefore,

we make clear that our discussion refers only to "hybr id" legal impossibility
as we have defined it.

18597 (8th Cir. 1976), and have abolished impossibili ty as a

defense. See, e.g., United States v. Quijada, 588 F .2d 1253, 1255 (9th Cir. 1978) (eschewing any effort to disti nguish between the two concepts); United States v. Duran, 884 F. Supp. 577, 580 n.5 (D.D.C. 1995) (noting that "cate gorizing a case as involving legal versus factual impossibil ity is difficult, if not pointless."), aff'd , 96 F.3d 149 5 (D.C. Cir. 1996).

In fact, we are the only circuit which continues to recognize a common law defense of legal impossibili ty. We established its validity in United States v. Berrig an, 482 F.2d at 190, where we held that legal impossibility is a defense to certain crimes of attempt. Berrigan invo lved a federal prisoner convicted of attempting to smuggle letters in and out of a federal prison without the knowledg e and consent of the warden, in violation of 18 U.S.C.S 1 791 and
28 C.F.R. S 6.1. The evidence showed that the defen dant used another prisoner on study-release as a courier for his mail, believing all along that the warden was not a ware of the duo's scheme. However, the warden had learned o f the defendant's first correspondence, and, working with the police, he allowed the courier to carry all subsequ ent letters with his knowledge and consent. Thus, the defendant argued that his crime was legally impossible; he ha d been charged with attempt to smuggle letters without the warden's knowledge and consent, and yet the warden both
knew and consented to the crime.

On appeal, we agreed with the defendant and held th at his crime was legally impossible. We recognized tha t "elimination of impossibility as a defense . . . is consistent with the overwhelming modern view," 482 F.2d at 186 (quotation omitted), but we concluded that legal impossibility remains a valid defense to common law crimes of attempt in this circuit. Emphasizing that "[f]ed eral criminal law is purely statutory," id. at 185, we w rote that we had no choice but to recognize a defense of lega l impossibility in the absence of a federal statute p roviding otherwise. Id. at 190. Therefore, we stated,"attemp ting to do that which is not a crime is not attempting to c ommit a
crime." Id.

19In subsequent years, however, we have explored and

defined Berrigan's reach and have recognized except ions to the Berrigan rule. In United States v. Everett, we held that legal impossibility was "no defense to the charge o f attempted distribution of a controlled substance un der 21 U.S.C. S 846 (1976)." 700 F.2d 900, 908 (3d Cir. 19 83). In that case, a jury convicted the defendant of attemp ting to distribute the drug phenyl-2-propanone in violation of the Comprehensive Drug Abuse Prevention and Control Act ("the Drug Control Act"). However, the liquid Evere tt gave to an undercover agent was not, in fact, a controlled substance. Relying on Berrigan, Everett thus argued that his conviction should be set aside as having been l egally impossible; he was convicted of an attempt to distr ibute drugs, but the substance he distributed was not act ually a
narcotic.

We rejected Everett's argument and held that Berrig an did not apply to the Drug Control Act. We noted tha t Berrigan was a case of statutory interpretation, an d we found that we should limit its reasoning to the par ticular law in that case (18 U.S.C. S 1791). As our opinion stated, "[w]e cannot rest on Berrigan's interpretation of w hat Congress meant by the word `attempts' when it enact ed 18 U.S.C. S 1791. Instead we must examine legislative intent anew. If Congress chose in enacting [the Drug Contr ol Act] to define `attempt' to punish efforts to [distribut e narcotics] regardless of impossibility, that intent governs." 700 F.2d at 904. Therefore, we reviewed the legislative history of the Drug Control Act, and we concluded that "Congress intended to eliminate the defense of impossibility when it
enacted section 846." Id.

We agree with Everett's analysis and we believe it should be employed in this case. Consistent with Everett, we should resort to legislative intent to determine wh ether Congress meant to permit a defense of impossibility to an "attempt" crime under the EEA. When Congress uses a common law term such as "attempt," we generally pre sume that it intended to adopt the term's widely-accepte d common law meaning, including any common law defens es such as impossibility. United States v. Cicco, 10 F .3d 980, 984 (3d Cir. 1993). However, as Everett recognized, "the

20courts will not impose that meaning if there are `g rounds

for inferring an affirmative instruction from Congr ess' to define it otherwise." 700 F.2d at 904 (quoting Mori ssette v. United States, 342 U.S. 246, 273 (1952)).

After reviewing the legislative history of the EEA, we conclude that Congress did not intend to allow lega l impossibility to be asserted as a defense to attemp t crimes created by its terms. Congress never spoke directly as to why it used the term "attempt," or as to the issue of legal impossibility, in any of the reports or debates on the statute. We find, however, that, as we held in Ever ett, the underlying purposes of the law provide substantial evidence of a congressional intent that the defense of legal impossibility should not apply.

One of the key findings in Everett was that the Dru g Control Act was designed to offer a "comprehensive"
solution to narcotics offenses. 700 F.2d at 906-07. We concluded from this that Congress could not have in tended to adopt the impossibility defense, "whose viabilit y at common law was questionable at best," because doing so would only "hamper federal efforts to enforce the d rug laws." Id. at 907.

Here, the very same goals, and the very same langua ge, appear throughout the legislative history of the EE A. Just as the Drug Control Act embraced a "comprehensive" solution for drug trafficking, so too does the EEA attempt to provide a "comprehensive" mechanism for curtailing the escalating threat of corporate espionage. The Senat e Report
includes an entire section entitled "Need for a Comprehensive Federal Law," and "underscore[s] the importance of developing a systematic approach to t he problem of economic espionage." S. Rep. No. 104-359 , at 11. The Report notes that "a Federal criminal statu te will provide a comprehensive approach to [the theft of t rade secrets] -- with clear extraterritoriality, crimina l forfeiture, and import-export sanction provisions." Id. at 12. Likewise, the House Report states that the EEA is designed to provide a "systematic approach" to trade secret theft, and asserts that "a comprehensive federal criminal statute will better facilitate the investigation and prosecution of thi s crime." H.R. Rep. No. 104-788, at 7, 1996 U.S.C.C.A.N. at 4 025.

21The House also explained that the EEA was crafted t o

punish virtually every form of illegal industrial e spionage, "from the foreign government that uses its classic espionage apparatus to spy on a company, to the two American companies that are attempting to uncover each other 's bid proposals, or to the disgruntled former employee wh o walks out of his former company with a computer diskette full of engineering schematics." Id. at 5, 1996 U.S.C.C.A.N . at
4024.17

In an effort to undermine this evidence of intent, the

defendants offer the statement of Senator Herbert K ohl, a co-sponsor of the trade secrets legislation, who co mmented that the EEA should "only be used in flagrant and egregious cases of information theft." 142 Cong. Re c. S12,212 (daily ed. Oct. 2, 1996). The defendants co ntend
that this demonstrates an intent to limit the statu te's reach. However, the Senator's remarks are taken out of context. His entire statement reads, in pertinent p art, as
follows:

[W]e have carefully drafted these measures t o ensure that they can only be used in flagrant and e gregious cases of information theft. Moreover, trade secrets are carefully defined so that the general knowle dge and experience that a person gains from working at a job is

not covered.

Mr. President, we do not want this law used to stifle the free flow of information or of people fr om job to job. But we built in a number of safeguards to pr event exactly these problems.

Id. Senator Kohl did not intend to limit the statut e's comprehensive scope. He meant merely to allay any f ears that the government would use the EEA to police cle arly

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17. Individual legislators echoed these goals as we ll, declaring that the EEA would serve as a "comprehensive statute" to com bat corporate espionage. 142 Cong. Rec. H10,461 (daily ed. Sept. 17, 1996) (statement of Rep. Hyde). Even the President himself stated up on signing the bill that "[t]his Act establishes a comprehensive and sy stematic approach to trade secret theft and economic espionage." Stateme nt by President William J. Clinton Upon Signing H.R. 3723, reprinte d in 1996 U.S.C.C.A.N. 4034, 4034.

22innocuous and otherwise lawful behavior, such as oc curs

when employees change jobs or start their own compa nies using general knowledge that they have acquired thr ough prior employment. See, e.g., Sen. Rep. No. 104-359, at 12 (clarifying that the EEA "does not apply to innocen t innovators or to individuals who seek to capitalize on their lawfully developed knowledge, skill or abilities"). We do not read Senator Kohl's comments as undermining the comprehensiveness of the statute as it pertains to the theft of trade secrets. We believe that the great weight of the EEA's legislative history evinces an intent to crea te a comprehensive solution to economic espionage, and w efind it highly unlikely that Congress would have wanted the courts to thwart that solution by permitting defend ants to assert the common law defense of legal impossibilit y.

We also find it significant, as Everett did, that t he statute we are considering was drafted at a time when "the doctrine of impossibility had become mired in fine distincti ons and had lost whatever acceptance at common law it may h ave possessed when the statute considered in Berrigan w as first
enacted in 1930." 700 F.2d at 905. The EEA was draf ted in 1996, more than twenty-five years after the Nationa l
Commission on Reform of the Federal Criminal Laws h ad concluded that the abolition of legal impossibility was already "the overwhelming modern position." Id. (qu otation omitted). In fact, to this day, "[a]side from the T hird Circuit in Berrigan, every Circuit that has considered the defense of impossibility has rejected it." Duran, 884 F. Su pp. at 580 (emphasis added). Thus, we doubt that Congress mean t to permit legal impossibility to be asserted as a defe nse to
EEA crimes.

Finally, we are mindful, as Everett was, 700 F.2d a t 907 n.16, of the potential damage that the defendants' position

could work on law enforcement under the statute. If we were to hold that legal impossibility is a defense to the attempted theft of trade secrets, the government wo uld be compelled to use actual trade secrets during underc over operations in order to obtain convictions underS 18 32(a)(4).18

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18. The government claims that it used documents co ntaining actual trade secrets in this case, only "because of the di fficulty in preparing

on short notice documents which appeared to be authent ic for presentation to the trained scientists brought to the meeting by Hsu." (Gov't. Reply Br. at 4 n.3.)

23Aside from the logistical difficulties this would c reate, it

would also have the bizarre effect of forcing the g overnment to disclose trade secrets to the very persons suspe cted of trying to steal them, thus gutting enforcement effo rts under the EEA. We believe Congress could not have intende d such a result, inasmuch as it was striving to prevent ec onomic espionage and to maintain the confidentiality of tr ade secrets. Therefore, given the strong indicia of leg islative intent, and given the practical import of a contrar y finding, we conclude that Congress could not have intended E EA attempt crimes to be subject to the somewhat obscur e and rarely used common law defense of legal impossibili ty.

Accordingly, we hold that legal impossibility is no t a defense to a charge of attempted misappropriation o f trade secrets in violation of 18 U.S.C. S 1832(a)(4). We agree with the district court's conclusion that a charge of "a ttempt" under the EEA requires proof of the same elements u sed in other modern attempt statutes, including the Model Penal Code. A defendant is guilty of attempting to misapp ropriate trade secrets if, "acting with the kind of culpabil ity otherwise required for commission of the crime, he

... purposely does or omits to do anything that, under the circumstances as he believes them to be, is an act or omission constituting a substantial step in a cours e of conduct planned to culminate in his commission of t he crime." Model Penal Code S 5.01(1)(c) (1985).19 Thu s, the defendant must (1) have the intent needed to commit a crime defined by the EEA, and must (2) perform an a ct amounting to a "substantial step" toward the commis sion of that crime. See Cicco, 10 F.3d at 984-85 (attempt c rimes

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19. We adopt the Model Penal Code ("MPC") test for attempt because it is consistent with our own caselaw and with the gre at weight of modern precedent. We have indicated that the MPC constitut es "well-settled principles of the law of attempt," United States v. Kikumura, 918 F.2d 1084, 1108 (3d Cir. 1990), we have found that it"is logical and in conformity with the purposes of the criminal law," United States v. CruzJimenz, 977 F.2d 95, 102 n.10 (3d Cir. 1992), and w e have employed its principles on several occasions. See, e.g., id.; Ci cco, 10 F.3d at 984-85; Everett, 700 F.2d at 908. Moreover, the majority of federal courts have now embraced the MPC test for attempts as well. See Cruz-Jimenz, 977 F.2d at 102 n.8 (citing cases); Dressler, supra, at S 27.09[A].

24require a showing of intent and "evidence of conduc t

constituting a substantial step toward commission o f the crime in pursuit of the culpable intent"); Everett, 700 F.2d at 908 (conviction for attempt requires proof of in tent and "some measure of objective evidence corroborating t he attempted" crime).

It naturally follows that the government need not p rove that an actual trade secret was used during an EEA investigation, because a defendant's culpability fo r a charge of attempt depends only on "the circumstances as he believes them to be," not as they really are. The g overnment can satisfy its burden under S 1832(a)(4) by provin g beyond a reasonable doubt that the defendant sought to acq uire
information which he or she believed to be a trade secret, regardless of whether the information actually qual ified as such. Consequently, in the instant case, the defend ants have no arguable constitutional or statutory right to view the unredacted portion of the Taxol documents in or der to defend against charges of attempt on the basis of l egal impossibility.

2. Conspiracy

We also hold that the defendants have no need for t he Taxol documents to defend against the government's charges of conspiracy, because we conclude that leg al impossibility is not a defense to conspiracy. Altho ugh we have stated that impossibility may be a valid defen se to attempt crimes, Berrigan, 482 F.2d at 190, we have never recognized the defense for conspiracy charges, and we are persuaded by the views of our district courts, and by the decisions of our sister circuits, that the impossib ility of achieving the goal of a conspiracy is irrelevant to the crime itself. See, e.g., United States v. Wallach, 935 F. 2d 445, 470 (2d Cir. 1991); United States v. LaBudda, 882 F.2d 244, 248 (7th Cir. 1989); United States v. Petit, 841 F. 2d 1546, 1550 (11th Cir. 1988); United States v. Everett, 69 2 F.2d 596, 599 (9th Cir. 1982); Yepes v. United States, C iv. A. No. 93-2310, 1993 WL 525578, at *4 (D.N.J. Dec. 15, 199 3).

It is well-settled that conspiracy and attempt serv e different roles in the criminal law. The law of att empts was

25traditionally viewed as a way "to deal with conduct which

create[d] a risk of immediate harmful consequences. " Wayne R. LaFave & Austin W. Scott, Jr., Substantive Criminal Law, S 6.5(b), at 91 (2d ed. 1986). Even u nder the modern view, attempt prosecutions generally proceed only against those who have taken a "substantial step" t oward
commission of a substantive crime. See Model Penal Code S 5.01(1)(c) (1985). However, the law of conspiracy is much more preventive, aiming to nip criminal conduct in the bud
before it has the chance to flourish into more omin ous behavior. See Wallach, 935 F.2d at 470 (noting that conspiracy serves to protect society and prevent cr iminal behavior "in its early stages"); LaFave & Scott, su pra, S 6.5(b), at 91 (stating that "[c]ourts have genera lly taken a broader view of the purposes of conspiracy"). As th e Supreme Court has written,

[t]he law of conspiracy identifies the agree ment to engage in a criminal venture as an event of sufficient threat to social order to permit the imposit ion of criminal sanctions for the agreement alone, plus an overt act in pursuit of it, regardless of wh ether the crime agreed upon actually is committed. Cri minal intent has crystallized, and the likelihood of actual, fulfilled commission warrants preventive act ion.

United States v. Feola, 420 U.S. 671, 694 (1975) (c itations omitted).

It is thus the conspiratorial agreement itself, and not the underlying substantive acts, that forms the basis f or conspiracy charges. United States v. Jannotti, 673 F.2d 578, 591 (3d Cir. 1982) (en banc). The "illegality of th e agreement does not depend on the achievement of its ends," and it is "irrelevant that the ends of the conspira cy were from the very inception of the agreement objectivel y unattainable." Id.; see also United States v. Olgin , 745 F.2d 263, 273 (3d Cir. 1984) (stating that "the objectiv e impossibility of attaining the goals of a conspirac y is irrelevant to the guilt of those who conspire"). Consequently, it is equally irrelevant that the com mission of a substantive offense may have been legally impo ssible for the conspiracy to achieve all along. We therefo re join our sister circuits, and the district courts in our own

26circuit, in squarely holding that legal impossibili ty is not a

defense to conspiracy.20

As a result, the Taxol trade secrets in the Bristol -Myers documents are not "material" to the preparation of the defendants' impossibility defense, because proof th at the defendants sought to steal actual trade secrets is not an element of the crimes of attempt or conspiracy unde r the EEA. A defendant can be convicted of attempt or con spiracy pursuant to 18 U.S.C. SS 1832(a)(4) or (a)(5) even if his intended acts were legally impossible.

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20. We are aware of only three federal appellate de cisions even implying that legal impossibility is a defense to conspiracy , but none of these cases is probative of the issue before us. First, i n Ventimiglia v. United States, the Fourth Circuit reversed the convictions of three defendants accused of conspiring to violate a Taft-Hartley Act provision forbidding the payment of money by an employer to "any represe ntative of any of his employees." 242 F.2d 620 (4th Cir. 1957). Becau se the defendants had paid a person who was not, in fact, a "represen tative of " their employees, the court held that the conviction for c onspiracy was legally impossible. However, the defendants in that case kn ew that the individual in question was not a "representative" w ithin the meaning of the statute. Id. at 266. Therefore, the court's com ments regarding legal impossibility were entirely in dicta; the convictio ns were reversed because the defendants did not even have the specif ic intent needed to sustain a charge of conspiracy.

Second, in O'Kelley v. United States, the Eighth Ci rcuit held that
several defendants could not be convicted of a cons piracy to steal goods in interstate commerce where the goods were not in interstate commerce. 116 F.2d 966, 968 (8th Cir. 1941). However, this st atement was also dicta, because there was no jurisdiction to prosecu te the defendants absent proof of an effect on interstate commerce, a nd, as in Ventimiglia, there was no showing that the defendants possessed the requisite
criminal intent.

Finally, in Woo Wai v. United States, the Ninth Cir cuit reversed a conviction for a conspiracy to smuggle aliens into the U.S., because,
inter alia, the act would not have been a crime even if c ompleted. 223 F. 412, 414-15 (9th Cir. 1915). Yet Woo Wai was an entrapme nt case, and any references to the impossibility of the crime were w holly extraneous to the holding. Moreover, to the extent that Woo Wai state s that impossibility is a defense to conspiracy in the Ninth Circuit, th e Ninth Circuit has since rejected that claim expressly. See, e.g., Eve rett, 692 F.2d at 599; United States v. Sanford, 547 F.2d 1085, 1091 (9th Cir. 1976).

27B. Relevance of Purported Secret Information to

Other Aspects of the Defense Strategy

Having concluded that the defendants' right to acce ss actual trade secrets is not required in order to de fend against an element of the government's case, the qu estion remains whether the defendants' right of access to the information as it relates to other defenses passes muster under the test of materiality. The defendants argue that the unredacted documents are also material to the prepa ration of the potential defenses of entrapment, outrageous government conduct, and jurisdiction, and contend t hat the documents are needed to defend against the elements of attempt and conspiracy, the allegations of the indi ctment, and the evidence that the government intends to int roduce
at trial.

As an initial matter, we note that we are skeptical of the materiality, let alone relevance, of the redacted t rade secret information to these issues. For example, the defen dants argue that they need the unredacted documents to di sprove the intent and "substantial step" elements of attem pt and the "overt act" requirement of conspiracy.21 Howeve r, proof of these factors is necessarily independent of any trade secrets contained in the Bristol-Myers documents, b ecause the defendants can be guilty of attempt and conspir acy to
steal trade secrets even if the documents contained no confidential information at all. See MPC S 5.01(1)( c) (attempt), S 5.02(1)(a) (conspiracy).22

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21. Conspiracy charges under S 1832 require both an agreement and an "overt act" in furtherance of the conspiratorial objective. See 18 U.S.C. S 1832(a)(5) (providing that a defendant is guilty of conspiracy if he "conspires with one or more other persons" to co mmit an offense proscribed by S 1832, and if "one or more of such p ersons do any act to effect the object of the conspiracy").

22. Moreover, the government has assured us that it has no intention to use or refer to the alleged trade secrets at tri al. The government intends to prove its allegations instead by using o ther materials that reflect an attempt and a conspiracy to violate the EEA. For example, the government has stated that it may offer the e-mail list that Chou allegedly sent to Hartmann on March 13, 1997, outli ning the "core technology" that YFP would need to complete a deal. By this list the government intends to prove that the defendants att empted to steal what they believed to be "trade secrets" without ever re vealing the actual

trade secrets themselves. The jury will thus never learn- - and will have no

reason to learn -- of the content of the redacted m aterial.

28However, we will not address defendants' claim of n eed

for the redactions as to any other defense or aspec t of the case for two reasons. First, the defendants never r aised the materiality of the redacted information as to any o ther defenses before the district court, and the court n ever addressed these other arguments in its opinion. The defendants' briefs to the district court argued onl y that the government must prove the existence of an actual tr ade secret in a prosecution for attempt and conspiracy and that legal impossibility remains a viable defense. We wi ll not examine other contentions as to the materiality or relevance of trade secret information that are being raised f or the first time on appeal. See Harris v. City of Philadelphia, 35 F.3d 840, 845 (3d Cir. 1994) ("This court has consistent ly held
that it will not consider issues that are raised fo r the first time on appeal.").23

Further, no one -- not this Court, not the district court, not even the parties themselves -- knows the conten t of the redacted Bristol-Myers documents at issue in this c ase. It was stated at oral argument that the documents have been reviewed and edited for trade secrets by Bristol-My ers employees alone, without any oversight by the court , the government, or the defense. Thus, while we might be skeptical of the defendants' asserted need for this information, we will not decide whether they have a right to access documents that could conceivably reveal info rmation needed to preserve their rights to a fair trial. On ly defense counsel know the precise contours of the defendants ' case, and we are not in a position to make judgments abou t the

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23. In some situations, we provide direction to the parties by addressing issues that are certain to arise upon a remand of the case, even if the issues were not discussed initially by the district court.
See, e.g., New Jersey Coalition of Rooming and Boarding House Owners v. Mayor of Asbury Park, ___ F.3d ___, No. 97-5483, 19 98 WL 427231, at *2 (3d Cir. July 30, 1998) (highlighting statutory and constitutional claims "that may require further consideration" upo n remand). Here, however, we are unable to offer informed guidance, because we are
without the benefit of a full review of the redacte d materials. The complete breadth of the defendants' arguments canno t be determined
unless and until this case is remanded and the dist rict court examines the potential defenses in light of the content of t he Bristol-Myers

documents.

29impact of the redacted material without having seen the

material ourselves.

Accordingly, we will remand this action to the dist rict
court. If the defendants raise before the district court the additional arguments that they have urged on appeal , we would expect the district court to conduct an in ca mera review to determine whether the documents have been properly redacted to exclude only confidential info rmation
and to assess whether what was redacted is "materia l" to

the defense.

In such event, because "public policy requires prot ection of portions of a document, . . . in camera inspecti on by the trial judge or magistrate is unavoidable." Bogosian v. Gulf Oil Corp., 738 F.2d 587, 596 (3d Cir. 1984). Even i f proof
of an actual trade secret is not an element of SS 1 832(a)(4) and (a)(5), an independent assessment of whether ma terials are nonetheless discoverable is anticipated in the language of S 1835, which provides that the district court " shall enter such orders and take such other action as may be necessary and appropriate to preserve the confident iality of trade secrets, consistent with the requirements of the Federal Rules of Criminal and Civil Procedure, the Federal Rules of Evidence, and all other applicable laws." Rule 16(a)(1)(C) of the Federal Rules of Criminal Proced ure enables the defendants to obtain documents in the government's possession that are material to the preparation of their defense, or are intended for u se by the government as evidence in chief at trial. These pri nciples suggest that the district court should examine the relevant portions of the Bristol-Myers documents to assess t he materiality of those portions of the documents soug ht to be withheld. See United States v. Bocra, 623 F.2d 281, 285 (3d Cir. 1980) ("The submission of discovery materials to the court for an in camera inspection and decision as t o which materials are discoverable is commonly used when th e Government's need for preserving confidentiality ov er the
materials must be balanced with the defendant's constitutional right to evidence material to his de fense.").
We leave to the district court the ultimate resolut ion of these issues if raised on remand by the defendants.

30IV. CONCLUSION

The district court's Order dated October 27, 1997, will be reversed, and the cause will be remanded for furthe r proceedings consistent with this opinion.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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