Opinion ID: 2982422
Heading Depth: 3
Heading Rank: 1

Heading: Unauthorized Possession of Trade Secrets

Text: 18 U.S.C. § 1832(a) provides: Whoever, with intent to convert a trade 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 thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly— ... 3 The government argues that the “manifest miscarriage of justice” standard applies to Defendants’ challenges on the obstruction of justice and wire fraud counts because they failed to raise these arguments in their motions for judgment of acquittal. However, if a defendant’s challenge to the sufficiency of the evidence in his Rule 29 motion is general in nature, then unarticulated grounds are preserved on appeal. See United States v. Chance, 306 F.3d 356, 368– 71 (6th Cir. 2002). Based on the language of Defendants’ two Rule 29 motions, the colloquy, and the trial court’s rulings, it is unclear whether Defendants’ initial sufficiency challenge was general in nature. Thus, we decline to apply this more rigorous standard. See id. at 371; United States v. Gravely, 282 F. App’x 401, 404 (6th Cir. 2008). Page 10 of 27 United States v. Du, Qin, Case Nos. 13-1606/ 1607/ 1778/ 1781 (3) receives, buys, or possesses such information, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; ... shall . . . be fined under this title or imprisoned not more than 10 years, or both. 18 U.S.C.A. § 1832(a)(3) (2006). The indictment identified eighteen documents found in Defendants’ possession that related to GM’s hybrid motor technology and that government witnesses testified constituted trade secrets. Defendants make several arguments about the government’s failure to show sufficient evidence to meet this statutory definition: First, the documents did not contain trade secrets; second, Du had authorization to obtain the documents; and third, Defendants did not intend to convert the information.
Defendants first argue that the government failed to show that the documents actually contained trade secrets, rather than publicly accessible information. For information to qualify as a “trade secret” under the statute, its owner must have “taken reasonable measures to keep such information secret,” and “the information [must] derive[] 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)(A)–(B). In other words, there are three requirements: (1) the owner took “reasonable measures” to keep the information secret, (2) the information is not readily ascertainable by the public, and (3) the information derives economic value from its secrecy. Defendants dispute the first two of these elements. Reasonable measures. There is not a single definition for what constitutes “reasonable measures,” though this Court has looked to physical security measures at facilities and confidentiality agreements relating to sensitive information. See, e.g., United States v. Howley, Page 11 of 27 United States v. Du, Qin, Case Nos. 13-1606/ 1607/ 1778/ 1781 707 F.3d 575, 579 (6th Cir. 2013) (finding that a company took reasonable measures to keep its product design secret by fencing its plant, installing security checkpoints, prohibiting photography during plant visits, requiring advance permission to visit, and requiring suppliers to keep its proprietary information secret). The statute does not require a particular technology to be kept “under lock and key” if “other security measures make such a step unnecessary.” Id.; see United States v. Chung, 659 F.3d 815, 825–26 (9th Cir. 2011) (noting that “limiting access to a trade secret on a ‘need to know basis’ and controlling plant access” may constitute reasonable measures). Here, GM took similar overall physical security measures as the company in Howley. Du worked at a locked facility monitored at all times by security guards, who required employees to show a photo identification to enter. Among other tasks, these guards checked all bags and computer devices carried out of the building, patrolled the facility after hours, and escorted visitors within the facility. (R. 197 at 10–16, 23, 28–29, Page ID#3014-20, 3027, 3032-3033.) GM installed the digital equivalent of these physical security checkpoints on its computer network. For instance, the server at Du’s facility had a password-protected firewall preventing access from unauthorized users outside the facility. Use of GM computers within the network also required a unique user name and password. In addition, access to particular folders on the server containing information about the hybrid vehicle development required another password and permission from a manager, who authorized access only if an employee needed the files for work. (Id. at 35–41, 53, Page ID#3039–45, 3057.) GM also had formal policies and practices governing confidentiality and information security. These included non-disclosure agreements signed by employees and an information security policy requiring employees to protect the company’s proprietary information and Page 12 of 27 United States v. Du, Qin, Case Nos. 13-1606/ 1607/ 1778/ 1781 limiting their access to this information on a “need to know basis.” (R. 201 at 88–89, Page ID#3653–54; R. 205 at 38–41, Page ID#4185–87.) The security policy also included a classification system for marking documents “secret” or “confidential,” (R. 205 at 14–20, Page ID#4161-67) though none of the documents at issue here were so marked. Defendants argue GM’s policies “suffer[ed] from a lack of clarity and . . . a lack of enforcement,” making them unreasonable. (Du First Br. at 37.) Defendants make much of what they consider contradictory testimony by different GM employees about GM’s classification policy—specifically, differing testimony about when, whether, and by whom a document should be marked. (Du Br. 38–39; Qin Br. at 46.) However, the jury could have viewed these inconsistencies as irrelevant, given testimony that this policy was to a certain extent discretionary. As GM’s chief information security officer explained, marking a document increased the security protocols governing that document, making sharing between engineers more cumbersome. Thus, employees deciding whether to mark a document had to “balance . . . the risk of exposure of the document and the ability to effectively share that document.” (R. 205 at 19-26, 53-56, Page ID#4166-73, 4200-03.) Readily Ascertainable Information. As to the second element of the trade secret definition that the information not be “readily ascertainable” to the public, Defendants argue that the GM documents contained information available in textbooks and online. While some witnesses testified that motor control source codes in general can be found online, Defendants ignore testimony from multiple witnesses that the specific information in the documents was not in the public domain. The government’s expert found “no examples” of this information published with the level of detail included in the documents and testified that a few engineers could not independently come up with the technology, which appeared to him to be the Page 13 of 27 United States v. Du, Qin, Case Nos. 13-1606/ 1607/ 1778/ 1781 work of a team of engineers “working over many years.” (R. 204 at 107-09, Page ID#4061–63.) As to the source code specifically, he stated that “it is really frankly . . . inconceivable” that an automaker would distribute such “tightly controlled” information publicly. (Id. at 110.)
Defendants next argue that insufficient evidence supported a finding that Du and Qin “stole or appropriated, obtained, or converted without authorization” the trade secrets for which they were convicted. They argue that Du had access to the documents and needed them to catch up on motor control technology with which she was unfamiliar. While Defendants highlight some statements to this effect, they ignore the substantial evidence the government introduced showing otherwise. To begin, it is undisputed that Qin— who never worked for GM—did not have authorization to possess GM’s proprietary documents relating to hybrid vehicles. This was made explicit in testimony. (R. 202 at 54–55, Page ID#3743–44.) Sufficient evidence showed Du, too, did not have authorization to access the documents or to possess them after she left the company. Du’s supervisor, Hubbard, specifically identified at least half a dozen documents found in Defendants’ possession that he said Du did not need for her work. These included documents relating to hybrid technology for large-scale transit vehicles that Du never worked on. (R. 201 at 95–103, 108–11, 113–14.) As he explained, if Du did not need to know the information, she did not have authorization to access it or take it home. (See, e.g., R. 202 at 41.) Defendants argue that Hubbard broadly “assigned [Du] to learn about motor control” (R. 201 at 113), which gave her reason to access some of the files relating to motor control. However, enough evidence indicates this assignment would not mean she had authorization to dig through GM’s files. As Hubbard explained, he and his team of engineers did not have access Page 14 of 27 United States v. Du, Qin, Case Nos. 13-1606/ 1607/ 1778/ 1781 to the GM motor control codes, and the company’s “need to know” policy made even “peeking” into the files “out of bounds.” (Id. at 100–01.) Finally, even if Du had been authorized to review these documents, it is undisputed that she was not authorized to keep any GM information contained in the documents after her termination in 2005. (See e.g., Id. at 89; R. 202 at 45.)
Defendants next argue that the government failed to establish they had intent to convert trade secrets and injure GM, as required under the statute. Qin argues that he had no way of knowing the GM documents contained trade secrets and that he possessed them in order to help Du work through and understand the source code. (Qin First Br. at 53.) For her part, Du argues that her possession was innocent and she took no part in Qin’s venture with Chery. (Du First Br. at 53.) While Defendants raised these defenses at trial, the government for its part introduced evidence to the contrary from which the jury could have inferred intent. Its witnesses testified that Du had downloaded thousands of GM documents—including more than a dozen identified at trial as containing trade secrets—onto personal devices that she shared with her husband. Many of these did not relate to her work for GM. In addition, a government witness testified that Defendants’ company, MTI, had already used trade secrets information in the GM files for another MTI project relating to hybrid motor technology. (See R. 202 at 96–116, 3785-3805; R. 203 at 3934-38.) Emails, documents, and testimony also showed that—while Du was taking GM documents home with her—Defendants were putting together a joint venture to develop and manufacture hybrid motor control systems for Chery Automobile, and that they did not have the expertise or resources to do this without a head-start based on GM’s technology. For instance, a Page 15 of 27 United States v. Du, Qin, Case Nos. 13-1606/ 1607/ 1778/ 1781 business plan drafted by Defendants’ business partner in China explained that the joint venture aimed to “absorb the most advanced technologies in both China and the U.S.” and specifically discussed GM’s roll-out of a hybrid truck with similar motor technology. (Govt. Exhibits 76 & 77, R. 250-1 at 25–38, Page ID#5174–87.) He also drafted a white paper detailing the joint venture’s plan to roll out commercial production of the motor technology over the course of three years (Govt. Exhibit 46.4, R. 250-1 at 9–10, Page ID# 5158–59)—an aggressive timeframe that the government’s expert witness testified could not be met by the joint venture’s small group of engineers alone (R. 204 at 135–41, Page ID#4089–95). The expert witness also testified that Qin and his Chinese partner lacked the qualifications to develop the motor control program for the technology, which was similar to GM motor control technology, despite differences in the motors’ location. (Id.) As to Qin’s argument that he did not intend to convert the GM trade secrets because he could not have known the documents contained secret information, this is undermined by his experience as an engineer—experience that his own lawyer touted repeatedly at trial. Cf. United States v. Krumrei, 258 F.3d 535, 539 (6th Cir. 2001) (holding that a “defendant need not have been aware of the particular security measures taken” to secure trade secret information in order to meet the required knowledge “that the information was proprietary”). And while Du argues she was an innocent bystander to Qin’s scheme, sufficient evidence existed of her involvement. The original business plan for the joint venture—drafted while she worked at GM—named her as one of three company officers. (Id. at 33–35.) In addition, the government showed evidence that she was involved in MTI’s work and was its president during the time she took control of the GM information. Page 16 of 27 United States v. Du, Qin, Case Nos. 13-1606/ 1607/ 1778/ 1781 Ultimately, sufficient evidence supported Defendants’ convictions on the theft of trade secrets charges.