Opinion ID: 3010675
Heading Depth: 2
Heading Rank: 1

Heading: The Government's Sting Operation

Text: 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 conspiracy to steal corporate trade secrets from Bristol-Myers Squibb. The indictment alleges that the defendants sought to obtain the processes, methods, and formulas for manufacturing Taxol, an anti-cancer drug produced by Bristol-Myers and regarded by the company as a highly valuable trade secret.1 According to the indictment, the defendants' conspiracy began on June 7, 1995, when Chou, the Manager of Business Development for Yuen Foong Paper Company in Taiwan (YFP), requested information about Taxol from John Hartmann, an undercover FBI agent whom Chou mistakenly believed to be a technological information broker in the United States. From August 28, 1995, until January 12, 1996, Chou allegedly contacted Hartmann repeatedly to obtain information about Taxol manufacturing techniques and distribution. These contacts led to a meeting in Los Angeles on February 27, 1996, between Hartmann and Hsu, the Technical Director for YFP's operations. Hsu purportedly told Hartmann at that meeting that YFP wanted to diversify into biotechnology and to _________________________________________________________________ 1. The factual summary that follows is based entirely on the as yet unproven allegations in the July 1997 indictment. Because this is an interlocutory appeal, the record is not complete, discovery has not concluded, and no determination of the facts has yet occurred. Therefore, we offer these facts as averred to provide a context for the issues on appeal, without vouching for the truth of any of the facts we recite. 3 introduce technology from advanced countries into Taiwan. When Hartmann responded that Bristol-Myers would be unlikely to share its secret technology with YFP, Hsu allegedly responded, We'll get [it] another way, and told Hartmann to pursue paying Bristol-Myers employees for the confidential Taxol formulas. The indictment asserts that Hsu and Chou then communicated many times with Hartmann over the next fourteen months to discuss the transfer of Taxol technology and to negotiate a specific price for the acquisition of Bristol-Myers's trade secrets. In response, Hartmann told the defendants that a corrupt Bristol-Myers scientist would be willing to sell Taxol information to YFP. Thecorrupt scientist was actually a Bristol-Myers employee cooperating with the FBI. Intrigued by such a prospect, Chou allegedly sent an e-mail to Hartmann on March 13, 1997, outlining the core technology that YFP would need to complete a deal, including:
agreed scale

continuous
constitution

applicable to the bioreactor.
Chou also allegedly told Hartmann that she would offer $400,000 in cash, stock, and royalties to the Bristol-Myers scientist in exchange for his disclosure of the Taxol 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 authenticity of the corrupt scientist and to determine whether Hartmann really could produce the Taxol trade secrets 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 4 representatives from YFP, including Hsu, Ho, and another unidentified scientist, at the Four Seasons Hotel in Philadelphia. Ho was a professor of biotechnology and the Director of the Biotechnology Innovation Center at the National Chiao Tung University in Taiwan, and he had apparently been asked to evaluate the Taxol technology 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-Myers scientist explained the background and history of Taxol production, and displayed copies of Bristol-Myers documents outlining specific technological processes and scientific data pertaining to the manufacture of the drug. According to the indictment, these documents contained trade secrets and were clearly marked with Bristol-Myers identification as well as the block stamped word `CONFIDENTIAL.'  Hsu, Ho, and the other YFP employee reviewed the documents during the meeting and purportedly asked the Bristol-Myers scientist numerous questions regarding specific areas of Taxol technology. Finally, after Hartmann and the Bristol-Myers scientist left the room, the FBI rushed in and arrested Hsu and Ho at the hotel.2 The indictment returned by the grand jury charged Hsu, Ho, and Chou with six counts of wire fraud in violation of 18 U.S.C. S 1343, one count of general federal conspiracy 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 importantly for our purposes, two counts of criminal activity under the Economic Espionage Act of 1996 (the EEA), including attempted theft of trade secrets, and a conspiracy to steal trade secrets, in violation of 18 U.S.C. SS 1832 (a)(4) and
_________________________________________________________________ 2. An arrest warrant has since been issued for Chou, but she lives in Taiwan, which has no extradition treaty with the United States. 5