United States v. Hanjuan Jin

733 F.3d 718, 2013 WL 5356805, 2013 U.S. App. LEXIS 19767
Court of Appeals for the Seventh Circuit·Decided September 26, 2013·No. No. 12-3013·Published·Cited by 3 cases

Opinion

POSNER, Circuit Judge.

The defendant was charged with theft of trade secrets and economic espionage, both being offenses under the Economic Espionage Act. See 18 U.S.C. §§ 1831, 1832. A bench trial resulted in her conviction of theft of trade secrets but acquittal of economic espionage. The judge imposed a 48-month prison sentence. Her appeal challenges both her conviction and her sentence.

The defendant, a naturalized American citizen of Chinese origin who has a bachelor’s degree in physics from a Chinese university and master’s degrees in both physics and computer science from American universities, was employed by Motorola as a software engineer from 1998 to 2007 at the company’s global headquarters in a Chicago suburb. Her duties primarily involved a cellular telecommunications system manufactured and sold by Motorola called’ iDEN, an acronym for Integrated Digital Enhanced Network.

She spent a protracted period in China in 2006 and 2007 while on a year-long medical leave1 from Motorola, and while there sought a job with a Chinese company called Sun Kaisens, which develops telecommunications technology for the Chinese armed forces. Shortly after returning to the United States in February [720]*7202007 she bought a one-way ticket to China on a plane scheduled to leave Chicago a few days later. In the interval before her scheduled departure she downloaded thousands of internal Motorola documents, all stamped proprietary, disclosing details of the iDEN technology. The government based its prosecution on three of these documents.

As her purchase of a one-way ticket to China indicated, along with the large amount of currency ($31,000) that she was carrying when stopped by Customs agents at the airport, she intended to live in China and work there for Sun Kaisens. Asked by Customs and later the FBI what she was doing with thousands of Motorola documents relating to the iDEN system, she said she needed them in order to refresh her knowledge of it.

The documents contained trade secrets in the ordinary sense. But the statute that she was convicted of violating defines the term “trade secret” elaborately, and one of the elements in the definition — an element she challenges — is that “the information [claimed to be a trade secret] derives independent economic value, actual or potential, from not being generally known to ... the public.” 18 U.S.C. § 1839(3)(B). The statute also defines “theft of trade secret” elaborately: the defendant must (so far as relates to this case) steal the trade secret for the purpose of conferring an “economic benefit [on] anyone other than the owner thereof, ... intending or knowing that the offense will injure any owner of that trade secret.” 18 U.S.C. § 1832(a). The defendant argues that her conduct satisfied neither requirement — that what she stole was not a trade secret and she neither intended nor knew that the theft would harm Motorola.

iDEN is a mobile telecommunications system developed by Motorola in the early 1990s. It is on its way out, supplanted by more advanced systems. But in 2007, when the theft occurred, Motorola still had many customers for iDEN — indeed about 20 million, spread over 22 countries including China.

iDEN’s most notable feature is “push to talk,” which allows handsets to operate as walkie-talkies but provides conventional cellular phone capabilities as well, such as texting and Internet access. Push-to-talk made iDEN systems attractive to law enforcement, emergency responders, taxicab dispatchers, and the like; the Israeli and South Korean armed forces were among iDEN’s customers. Other manufacturers besides Motorola offered push-to-talk capability, but iDEN was a complete end-to-end system that one witness testified had the fastest push-to-talk capability. Because the technology was treated by Motorola as a trade secret, iDEN could be bought from and serviced only by Motorola or its licensees.

The defendant argues that because iDEN was rapidly losing its commercial cachet, the theft could not have harmed Motorola; no one would have tried to sell copies of iDEN, as keeping the iDEN technology secret conferred no economic benefit on Motorola. But as an engineer intimately familiar with iDEN, the defendant had to know that had she been able to fly to China with the iDEN documents in her luggage, Motorola, as soon as it discovered the theft, would have had to warn its customers of the risk that privacy of communications over the iDEN network had been or would be compromised. And it would have had to take counter-measures at some expense to itself. Moreover, once it learned that the defendant was going to work for a company that provides telecommunications services to the Chinese armed forces, it would have had to assume that there was a good chance that the defendant would show the stolen documents to [721]*721the company, which in turn might use them to help the Chinese government hack into iDEN networks. The danger might be illusory, but Motorola could not assume that. '

The defendant must also have -known that Sun Kaisens or some other Chinese company would discover in those thousands of documents that she had stolen information that would make it easier to duplicate the iDEN system and thus create new iDEN networks, to compete with Motorola’s network. Competitors could peel off some of those 20 million Motorola customers by offering a usable substitute at a lower price, being able to offer a lower price, yet still make a profit, by virtue of not having incurred costs of research and development.

Motorola had taken elaborate precautions, albeit skillfully circumvented by the defendant, to keep the iDEN technology secret. It wouldn’t have incurred the cost of those precautions had it not feared adverse consequences if the technology became public. The secrecy of the technology gave Motorola a monopoly. Maybe not a terribly valuable monopoly, in view of technological advances that would soon make iDEN obsolete, but a temporary monopoly generating supracompetitive profits that competition, enabled by the loss of secrecy, would erode.

The defendant denies any intention of showing any of the thousands of. documents about iDEN that she stole to anyone in China (or elsewhere); they were just study aids. And the judge made no contrary finding. But what she was studying — what she was refreshing her knowledge of — was iDEN. In China she would be a walking repository of knowledge about iDEN that she could communicate to any company or government agency interested in hacking or duplicating iDEN. Could and would, because it would enhance her career prospects; what other motive could she have had for refreshing her knowledge of iDEN? So had she not been stopped from boarding the plane to China, she would have succeeded in conferring an economic benefit on herself and Sun Kaisens, and quite possibly on the Chinese military as well.

The government doesn’t have to prove that the owner of the secret actually lost money as a result of the theft. For remember that the “independent economic value” attributable to the information’s remaining secret need only be “potential,” as distinct from “actual.” 18 U.S.C. § 1839(3)(B). We held in United States v. Lange,

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United States v. Hanjuan Jin, 733 F.3d 718, 2013 WL 5356805, 2013 U.S. App. LEXIS 19767 (7th Cir. 2013).

733 F.3d 718 (United States v. Hanjuan Jin) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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