In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 00-1681

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

MATTHEW R. LANGE,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 99-CR-174—J.P. Stadtmueller, Judge.

____________

ARGUED SEPTEMBER 14, 2000—DECIDED NOVEMBER 26, 2002

____________

Before CUDAHY, EASTERBROOK, and RIPPLE, Circuit

Judges.

EASTERBROOK, Circuit Judge. Matthew Lange has been

convicted of violating 18 U.S.C. §1832, part of the Economic Espionage Act of 1996. This statute makes it a felony to sell, disseminate, or otherwise deal in trade secrets,

or attempt to do so, without the owner’s consent. Lange

stole computer data from Replacement Aircraft Parts Co.

(RAPCO), his former employer, and attempted to sell the

data to one of RAPCO’s competitors. He allows that his acts

violated §1832, if the data contained “trade secrets,” but

denies that the data met the statutory definition:

the term “trade secret” means all forms and types

of financial, business, scientific, technical, econom-
2 No. 00-1681

ic, or engineering information, including patterns,

plans, compilations, program devices, formulas,

designs, prototypes, methods, techniques, processes,

procedures, programs, or codes, whether tangible

or intangible, and whether or how stored, compiled,

or memorialized physically, electronically, graphically, photographically, or in writing if—(A) the

owner thereof has taken reasonable measures to

keep such information secret; and (B) the information derives independent economic value, actual or

potential, from not being generally known to, and

not being readily ascertainable through proper

means by, the public[.]

18 U.S.C. §1839(3). Lange’s appeal requires us to apply

this definition.

RAPCO is in the business of making aircraft parts for

the aftermarket. It buys original equipment parts, then

disassembles them to identify (and measure) each component. This initial step of reverse engineering, usually

performed by a drafter such as Lange, produces a set

of measurements and drawings. See generally Pamela

Samuelson & Suzanne Scotchmer, The Law and Economics

of Reverse Engineering, 111 Yale L.J. 1575, 1582-94 (2002).

Because this case involves an effort to sell the intellectual property used to make a brake assembly, we use

brakes as an illustration.

Knowing exactly what a brake assembly looks like

does not enable RAPCO to make a copy. It must figure out

how to make a substitute with the same (or better) technical specifications. Brakes rely on friction to slow the

airplane’s speed by converting kinetic energy to heat.

Surfaces that do this job well are made by sintering—the

forming of solid metal, usually from a powder, without

melting. Aftermarket manufacturers must experiment with

different alloys and compositions until they achieve a
No. 00-1681 3

process and product that fulfils requirements set by the

Federal Aviation Administration for each brake assembly.

Completed assemblies must be exhaustively tested to

demonstrate, to the FAA’s satisfaction, that all requirements have been met; only then does the FAA certify the

part for sale. For brakes this entails 100 destructive

tests on prototypes, bringing a spinning 60-ton wheel to

a halt at a specified deceleration measured by a dynamometer. Further testing of finished assemblies is required.

It takes RAPCO a year or two to design, and obtain approval for, a complex part; the dynamometer testing alone

can cost $75,000. But the process of experimenting and

testing can be avoided if the manufacturer demonstrates

that its parts are identical (in composition and manufacturing processes) to parts that have already been certified. What Lange, a disgruntled former employee, offered

for sale was all the information required to obtain certification of several components as identical to parts for

which RAPCO held certification. Lange included with the

package—which he offered via the Internet to anyone

willing to pay his price of $100,000—a pirated copy of

AutoCAD®, the computer-assisted drawing software that

RAPCO uses to maintain its drawings and specifications

data. One person to whom Lange tried to peddle the data

informed RAPCO, which turned to the FBI. Lange was arrested following taped negotiations that supply all the

evidence necessary for conviction—if the data satisfy the

statutory definition of trade secrets.

One ingredient of a trade secret is that “the owner thereof has taken reasonable measures to keep such information secret”. Lange contends that the proof fell short, but

a sensible trier of fact (in this bench trial, the district

judge) could have concluded that RAPCO took “reasonable

measures to keep [the] information secret”. RAPCO stores

all of its drawings and manufacturing data in its CAD room,

which is protected by a special lock, an alarm system, and
4 No. 00-1681

a motion detector. The number of copies of sensitive

information is kept to a minimum; surplus copies are

shredded. Some information in the plans is coded, and

few people know the keys to these codes. Drawings and

other manufacturing information contain warnings of

RAPCO’s intellectual-property rights; every employee receives a notice that the information with which he works

is confidential. None of RAPCO’s subcontractors receives

full copies of the schematics; by dividing the work among

vendors, RAPCO ensures that none can replicate the product. This makes it irrelevant that RAPCO does not require vendors to sign confidentiality agreements; it relies

on deeds (the splitting of tasks) rather than promises to

maintain confidentiality. Although, as Lange says, engineers and drafters knew where to get the key to the CAD

room door, keeping these employees out can’t be an ingredient of “reasonable measures to keep [the] information

secret”; then no one could do any work. So too with plans

sent to subcontractors, which is why dissemination to

suppliers does not undermine a claim of trade secret. See

Rockwell Graphic Systems, Inc. v. DEV Industries, Inc.,

925 F.2d 174, 177 (7th Cir. 1991).

The second ingredient is that “the information derives

independent economic value, actual or potential, from

not being generally known to, and not being readily ascertainable through proper means by, the public[.]” According to Lange, all data obtained by reverse engineering

some other product are “readily ascertainable . . . by

the public” because everyone can do what RAPCO did: buy

an original part, disassemble and measure it, and make

a copy. The prosecutor responds to this contention by observing that “the public” is unable to reverse engineer

an aircraft brake assembly.

The prosecutor’s assumption is that the statutory reference in §1839(3) to “the public” means the general

public—the man in the street. Ordinary people don’t
No. 00-1681 5

have AutoCAD and 60-ton flywheels ready to hand. But

is the general public the right benchmark? The statute

itself does not give an answer: the word “public” could

be preceded implicitly by “general” as the prosecutor

supposes, but it also could be preceded implicitly by “educated” or “economically important” or any of many

other qualifiers. Once we enter the business of adding

words to flesh out the statute—and even the addition of

“general” to “public” does this—it usually is best to ask

what function the law serves. In criminal cases it also is

important to inquire whether the unelaborated text is

ambiguous, because if it is the language should be read

to prevent surprises. That’s the function of the Rule of

Lenity. See Staples v. United States, 511 U.S. 600, 619

(1994). Some elaboration is needed. Although the third

circuit assumed in United States v. Hsu, 155 F.3d 189, 196

(3d Cir. 1998), that “general” belongs in front of “public,” it

did not explain why (nor was this important to, or a part

of, Hsu’s holding). Commentators disagree about who

“the public” includes. Compare Geraldine Szott Moohr,

The Problematic Role of Criminal Law in Regulating the

Use of Information: The Case of the Economic Espionage

Act, 80 N.C. L. Rev. 853, 878-79 (2002), with Arthur J.

Schwab & David J. Porter, Guarding the Crown Jewels:

A Guide to Protecting Your Trade Secrets 85-86 (2002). It

is therefore worth a look—though it turns out not to be

dispositive here, any more than it was in Hsu.

A problem with using the general public as the reference group for identifying a trade secret is that many

things unknown to the public at large are well known to

engineers, scientists, and others whose intellectual property the Economic Espionage Act was enacted to protect.

This makes the general public a poor benchmark for separating commercially valuable secrets from obscure (but

generally known) information. Suppose that Lange had

offered to sell Avogadro’s number for $1. Avogadro’s

number, 6.02 × 1023, is the number of molecules per mole
6 No. 00-1681

of gas. It is an important constant, known to chemists

since 1909 but not to the general public (or even to all

recent graduates of a chemistry class). We can’t believe

that Avogadro’s number could be called a trade secret.

Other principles are known without being comprehended.

Most people know that E = mc2, but a pop quiz of the

general public would reveal that they do not understand

what this means or how it can be used productively.

One might respond that the context of the word “public”

addresses this concern. The full text of §1839(3)(B) is: “the

information derives independent economic value, actual

or potential, from not being generally known to, and not

being readily ascertainable through proper means by, the

public”. Avogadro’s number and other obscure knowledge is not “generally known to” the man in the street

but might be deemed “readily ascertainable to” this hypothetical person. It appears in any number of scientific

handbooks. Similarly one can visit a library and read

Einstein’s own discussion of his famous equation. See

Albert Einstein, Relativity: The Special and General Theory

(1920). Members of the general public can ascertain even

abstruse information, such as Schrödinger’s quantum

field equation, by consulting people in the know—as members high school dropouts can take advantage of obscure

legal rules by hiring lawyers. But this approach uses the

phrase “readily available” to treat the “general public” as

if it were more technically competent, which poses the

question whether it would be better to use a qualifier

other than “general” in the first place.

Section 1839(3) was derived from the definition of a

trade secret in the Uniform Trade Secrets Act, which

many states have adopted. Section 1(4) of the Uniform

Act provides:

“Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
No. 00-1681 7

(i) derives independent economic value, actual or

potential, from not being generally known to, and

not being readily ascertainable by proper means

by, other persons who can obtain economic value

from its disclosure or use, and

(ii) is the subject of efforts that are reasonable

under the circumstances to maintain its secrecy.

Section 1839(3)(B) replaces “persons who can obtain economic value from its disclosure or use” with “the public”.

The prosecutor believes that the substitution supports

the conclusion that Congress referred to the general public. Yet one could say instead that “the public” is shorthand for the longer phrase, which then would be read as

“the economically relevant public”—that is, the persons

whose ignorance of the information is the source of its

economic value. Let us recur to the statutory context of

“the public”:

the information derives independent economic

value, actual or potential, from not being generally

known to, and not being readily ascertainable

through proper means by, the public[.]

Section 1839(3)(B) as a whole refers to the source of economic value—that the information is not known to or

easily discoverable by persons who could use it productively. To make this work, either the phrase “readily

ascertainable” or the phrase “the public” must be understood to concentrate attention on either potential users

of the information, or proxies for them (which is to say,

persons who have the same ability to “ascertain” the

information). And for purposes of this case those people

would be engineers and manufacturers of aircraft parts,

who have ample means to reverse engineer their competitors’ products. It is by keeping secrets from its rivals that

RAPCO captures the returns of its design and testing

work. Thus it is unnecessary here to decide whether “gen-
8 No. 00-1681

eral” belongs in front of “public”—for even if it does, the

economically valuable information is not “readily ascertainable” to the general public, the educated public, the

economically relevant public, or any sensible proxy for

these groups.

Another line of prosecutorial argument starts with the

fact that §1832(a)(4) makes it a crime to attempt to sell

trade secrets without the owner’s permission. Even if

Lange did not have real trade secrets in his possession,

the argument goes, he thought he did and therefore

may be penalized for an attempted sale. The argument

finds support in Hsu, which held that in order to avoid

graymail—the threat that to obtain a conviction the

prosecutor must disclose the secret by putting it in the

trial record—a case may be based on §1832(a)(4) without

disclosing all details of the trade secret. Accord, United

States v. Pin Yen Yang, 281 F.3d 534, 543-44 (6th Cir.

2002). We agree with the general approach of these decisions. Hsu analogized the attempted sale of information

believed to be a trade secret to an attempt such as shooting a corpse, believing it to be alive, or selling sugar,

believing it to be cocaine. Events of this sort underlie

the maxim that factual impossibility is no defense to a

prosecution for attempt. See United States v. Bailey,

227 F.3d 792, 797 (7th Cir. 2000); United States v.

Saunders, 166 F.3d 907, 916 (7th Cir. 1999); United States

v. Cotts, 14 F.3d 300, 307 (7th Cir. 1994). This does not

mean, however, that the defendant’s belief alone can

support a conviction. All attempt prosecutions depend on

demonstrating that the defendant took a substantial

step toward completion of the offense, which could have

been carried out unless thwarted. Braxton v. United States,

500 U.S. 344 (1991). Although the American Law Institute recommends a definition of attempt linked closely to

intent, Model Penal Code §5.01(1)(c), the Supreme Court

has not embraced this view and demands in cases under
No. 00-1681 9

federal law that the prosecutor establish a probability

of success. See, e.g., Spectrum Sports, Inc. v. McQuillan,

506 U.S. 447 (1993) (“dangerous probability” of success is

an ingredient of attempted monopolization).

An attempted murder may be thwarted by substituting

a sack of flour for the intended victim; a sale of drugs

may be thwarted by substituting sugar for cocaine, or rock

candy for crack. These situations present a good chance

of success, but for the intervention. So does “the disgruntled former employee who walks out of his former company with a computer diskette full of engineering schematics” (Hsu, 155 F.3d at 201)—a fair description of

Lange’s conduct (though diskettes are obsolete). See also

United States v. Martin, 228 F.3d 1, 10-12 (1st Cir. 2000).

A sale of trade secrets may be thwarted by substituting

a disk with the collected works of Shakespeare for the

disk that the defendant believed contained the plans

for brake assemblies, or by an inadvertent failure to

download the proper file. The attempted sale of the disk

is a culpable substantial step. But it is far less clear

that sale of information already known to the public

could be deemed a substantial step toward the offense,

just because the defendant is deluded and does not understand what a trade secret is. Selling a copy of Zen and

the Art of Motorcycle Maintenance is not attempted economic espionage, even if the defendant thinks that the

tips in the book are trade secrets; nor is sticking pins in

voodoo dolls attempted murder. Booksellers and practitioners of the occult pose no social dangers, certainly

none of the magnitude of those who are tricked into shooting bags of sand that have been substituted for targets

of assassination. Lange was more dangerous than our

bookseller but much less dangerous than our hypothetical

assassin. Perhaps data purloined from an ex-employer is

sufficiently likely to contain trade secrets to justify calling the preparation for sale a substantial step toward
10 No. 00-1681

completion of the offense, and thus a culpable attempt,

even if the employee stole the wrong data file and did

not get his hands on the commercially valuable information. We need not pursue the subject beyond noting the

plausibility of the claim and its sensitivity to the

facts—what kind of data did the employee think he

stole, and so on. For it is not necessary to announce a

definitive rule about how dangerous the completed acts

must be in trade secret cases: the judge was entitled to

(and did) find that Lange had real trade secrets in his

possession.

Lange wants us to proceed as if all he tried to sell

were measurements that anyone could have taken with

calipers after disassembling an original-equipment part.

Such measurements could not be called trade secrets if,

as Lange asserts, the assemblies in question were easy

to take apart and measure. But no one would have paid

$100,000 for metes and bounds, while Lange told his

customers that the data on offer were worth more than

that asking price. Which they were. What Lange had,

and tried to sell, were the completed specifications and

engineering diagrams that reflected all the work completed after the measurements had been taken: the metallurgical data, details of the sintering, the results of the

tests, the plans needed to produce the finished goods,

everything required to get FAA certification of a part supposedly identical to one that had been approved. Those

details “derive[d] independent economic value, actual or

potential, from not being generally known to, and not

being readily ascertainable through proper means by,

the public[.]” Every firm other than the original equipment manufacturer and RAPCO had to pay dearly to devise, test, and win approval of similar parts; the details unknown to the rivals, and not discoverable with

tape measures, had considerable “independent economic

value . . . from not being generally known”. A sensible trier
No. 00-1681 11

† This opinion, the circuit’s first encounter with the Economic

Espionage Act of 1996, was circulated before release to all active

judges under Circuit Rule 40(e). Circuit Judge Ripple favored a

hearing en banc.

of fact could determine that Lange tried to sell trade

secrets. It was his customer’s cooperation with the FBI, and

not public access to the data, that prevented closing of

the sale.†

Thirty months’ imprisonment is the sentence Lange

is serving. Not much, as sentences go these days, but

Lange says it is too high. He protests two decisions that

influenced its length: first, the district judge’s conclusion that he used special skill, which adds two levels

under U.S.S.G. §3B1.3; second, the judge’s refusal to deduct two levels for acceptance of responsibility under

U.S.S.G. §3E1.1. Appellate review of these contentions is

deferential, see 18 U.S.C. §3742(e); Buford v. United

States, 532 U.S. 59 (2001); United States v. Gomez, 24 F.3d

924, 926 (7th Cir. 1994), and the district judge did not

abuse his discretion.

The judge concluded that Lange’s knowledge as a drafter

(he has an associate’s degree in graphic design) and his

ability to manipulate drawings in AutoCAD were special skills that facilitated the offense. The former enabled

Lange to select and lay his hands on commercially valuable data; the latter helped facilitate its sale and concealment. When negotiating for the sale, Lange used AutoCAD

to remove all of RAPCO’s identifying marks and replace

them with the logos and other details of the potential

customer, so that the buyer could submit the drawings

to the FAA as its own. That manipulation would have

made the package more attractive to any buyer and thus

facilitated the offense.
12 No. 00-1681

Lange relies on Application Note 3 to §3B1.3:

“Special skill” refers to a skill not possessed by

members of the general public and usually requiring substantial education, training or licensing.

Examples would include pilots, lawyers, doctors,

accountants, chemists, and demolition experts.

Sure he had training, Lange concedes, but not as extensive as a chemist’s. That cannot be denied; an associate’s

degree (and knowledge of even so complex a software

package as AutoCAD) can be obtained in less time than

a college degree. But the district court did not commit a

clear error in finding that Lange had skills “not possessed

by members of the general public” (this time “public” does

mean “general public”!). United States v. Lewis, 41 F.3d

1209 (7th Cir. 1994), makes the point. Lewis holds that

an enhancement under §3B1.3 may be proper for someone

whose special skill is ability to drive an 18-wheel truck,

making off with the load with which he had been entrusted. Drafting skills, including the use of AutoCAD, are

“not possessed by members of the general public”, require

time to master, and played a central role in the offense. A

mechanical drafter is in the same category as a pilot

or demolition expert—for those skills, too, may be learned

outside the academy. The enhancement was proper.

As for acceptance of responsibility: this reduction usually rewards a guilty plea, but Lange went to trial. Even

on appeal Lange contends that he is not guilty and asks

us to reverse his conviction. That does not qualify as

acceptance of responsibility. Nor does it fall within the

special case, see §3E1.1 Application Note 2, of pleading

not guilty only to obtain a ruling on a contested legal

issue. Lange argued (and still argues) factual as well as

legal innocence. His legal points could have been preserved

with a conditional guilty plea on stipulated facts, but instead Lange chose to put the prosecution to its proof.
No. 00-1681 13

What is more, he hardly fits the profile of one who has

learned his lesson. Lange consulted an attorney before offering RAPCO’s data for sale. Counsel told him that

he absolutely should not sell the data; armed with that

knowledge, Lange went ahead and tried to complete the

sale. After being caught, Lange committed new offenses. He

was directed by a grand jury subpoena (and required by

the civil law) to return the stolen data. He feigned compliance while retaining an electronic copy. Then he tried

to persuade a friend who knew the truth to lie to the

grand jury. Only when this effort was revealed (the friend

turned a damning voice mail message over to the FBI) did

Lange finally clean his hard drive of RAPCO’s intellectual

property. For this escapade Lange received a two-level

enhancement for obstructing justice. U.S.S.G. §3C1.1. An

obstruction-of-justice enhancement generally, and here,

is incompatible with an acceptance-of-responsibility reduction. U.S.S.G. §3E1.1 Application Note 4.

AFFIRMED

RIPPLE, Circuit Judge, concurring. I concur in the

judgment of the court. I write separately because the

panel majority’s opinion deals with several matters that

are not necessarily raised by this case, and, in my view, it

is imprudent to confront these issues prematurely.

The panel majority notes that the Economic Espionage

Act, in defining “trade secret,” includes as an ingredient

that

the information derives independent economic value,

actual or potential, from not being generally known
14 No. 00-1681

to, and not being readily ascertainable through proper means by, the public[.]

18 U.S.C. § 1839(3)(B). This portion of the definition of a

trade secret differs markedly from the definition found

in the Uniform Trade Secrets Act. The analogous language,

found at section 1(4) of the Uniform Act, provides that

the information must

derive[] independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other

persons who can obtain economic value from its disclosure or use[.]

Unif. Trade Secrets Act, § 1(4) (amended 1985), 14 U.L.A.

438 (1979).

The panel majority declares that this textual difference

is of no significance because the phrase “the public” in the

federal statute is simply shorthand for the longer phrase

of the Uniform Act. Therefore, the panel majority concludes, “the public” ought to be read “the economically

relevant public.” (Slip Op. at 7). Because Mr. Lange offered

information that was unknown to both competitors and

to the general public, there is no reason to confront this

issue in this case, and, because the correctness of the

panel majority’s reading of the evidence is not self-evident,

we ought not to reject out-of-hand the position of the

United States when there is no necessity to do so.

The panel majority bases its reading of the federal statute on its conclusion that “[s]ection 1839(3) was derived

from the definition of a trade secret in the Uniform Trade

Secrets Act.” (Slip Op. at 6). An examination of the House

Report accompanying the statute describes, however, a

somewhat more nuanced relationship between the two

definitions. Notably, the Report states that the definition

of “trade secret” in the federal statute is “based largely”

on the definition of that term in the Uniform Trade Se-
No. 00-1681 15

1

 I note that legislative history is employed here merely to confirm the plain wording of the statutory language in the face of a

reading that can find no justification in the plain wording, the

legislative history or any other recognized tool of statutory construction.

crets Act. H.R. Rep. No. 104-788, at 12 (1996). The report

goes on to say in the paragraphs immediately following

that “information which is generally known to the public,

or which the public can readily ascertain through proper

means, does not satisfy the definition of trade secret under this section.” Id. at 13.

Our normal approach to statutory interpretation is to

assume that Congress intended what it wrote. Here, the

words of the statute are clear on their face. Moreover,

the pertinent legislative history supports reliance on the

plain wording. Cf. Griffin v. Oceanic Contractors, Inc., 458

U.S. 564, 574 (1982) (“Resort to the legislative history,

therefore, merely confirms that Congress intended the

statute to mean exactly what its plain language says.”).

Congress used the Uniform Act’s definition of “trade secret” as a guide, but it did not adopt it. Instead, Congress

made its own choices as to those aspects of the Uniform

Act’s definition that ought to be adopted and those that

needed alteration before incorporation into the federal

statute. I see no reason to reject so swiftly and gratuitously

the plain wording of the statute, the supportive legislative history,1

 the interpretation of the Court of Appeals

for the Third Circuit in United States v. Hsu, 155 F.3d 189,

196-97 (3d Cir. 1998), and the interpretation of the Executive Branch set forth in the Government’s brief.

I would also defer announcing any limitations on the law

of attempt as it applies to the Economic Espionage Act

in advance of the necessity of doing so. The considered

judgment of another circuit to the contrary particularly
16 No. 00-1681

counsels restraint in this respect. See Hsu, 155 F.3d at 198-

203. In this case, there is no question that the information Mr. Lange offered for sale was a trade secret. We

therefore need not decide whether a defendant can be

found guilty of an attempt when no such secret exists.

For these reasons, I concur in the judgment, but must

respectfully decline from joining the panel discussion of

matters not necessary for decision today, especially when

the correctness of those pronouncements is questionable.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—11-26-02