United States v. Kai-Lo Hsu

185 F.R.D. 192, 50 U.S.P.Q. 2d (BNA) 1650, 1999 U.S. Dist. LEXIS 1512, 1999 WL 80952
CourtDistrict Court, E.D. Pennsylvania
DecidedFebruary 16, 1999
DocketNo. Crim.A. 97-323-01
StatusPublished
Cited by1 cases

This text of 185 F.R.D. 192 (United States v. Kai-Lo Hsu) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Kai-Lo Hsu, 185 F.R.D. 192, 50 U.S.P.Q. 2d (BNA) 1650, 1999 U.S. Dist. LEXIS 1512, 1999 WL 80952 (E.D. Pa. 1999).

Opinion

MEMORANDUM

DALZELL, District Judge.

From the inception of this prosecution under the new Economic Espionage Act of 1996, we and the parties have been vexed by the problem of balancing a defendant’s rights to pretrial discovery with the understandable concerns of the owner of putative trade secrets that are at the heart of the Government’s case. On return from the Government’s interlocutory appeal which dealt with this issue,2 we have sought to fulfill the desires of the parties and the expectations of our Court of Appeals by conducting an in camera review of the redactions made to three hundred and three pages of documents the Government used in a “sting” operation at the Four Seasons Hotel in Philadelphia on June 14, 1997 (hereinafter “the June 14th documents”). See United States v. Hsu, 155 F.3d 189 (3d Cir.1998).

This memorandum will address the two issues our Court of Appeals raised at the end of its August, 1998 Opinion: first, whether the redacted information in the June 14th documents should be disclosed to the defendant because they are “material” to the defense and, second, whether the June 14th documents “have been properly redacted to exclude only confidential information.” See id. at 205.

Procedural History3

The day after the mandate of our Court of Appeals issued, we ordered the parties to [194]*194submit a “joint case management proposal” to address the issues our Court of Appeals raised and to establish a timetable for the handling of pretrial motions and trial. On October 30, 1998, the parties submitted a joint proposal whereby: (1) by November 13, 1998, the Government would submit an affidavit from a representative of Bristol-Myers Squibb (“BMS”) that would describe whether the redacted information in the June 14th documents constitutes a trade secret of BMS and explain the reasons for the particular redactions; (2) by November 18, 1998, the defendants would submit a memorandum that addresses the materiality of the redacted information to their defense; and (3) on November 24, 1998, we would conduct a hearing on the issues of materiality and confidentiality that our Court of Appeals identified.4

On November 6, 1998, after a hearing on the parties’ joint case management proposal, we issued an Order establishing the deadlines for this case that largely adopted the parties’ proposed deadlines. See United States v. Hsu, Crim. No. 97-323 (E.D.Pa. Nov. 6, 1998). As so often has happened in this case, what seemed straightforward soon derailed into a bog of more complexity.

On November 13, 1998, the date that the Government was supposed to submit an affidavit from a representative of BMS addressing the confidentiality of the redactions to the June 14th documents, we instead received a letter from the Government informing us that “it is possible that some portion of the redacted information can now be released to the defendants” because some of the redacted information in the June 14th documents became publicly available through the filing of an international patent application by Phyton Catalytic, Inc. (“Phyton”)5 in November, 1997.6 See Letter from Louis Lappen and Joseph Dominguez, Assistant United States Attorneys, to the Court, at 1 (Nov. 13, 1998) (on file with Court). In this letter the Government also requested an additional six weeks to have BMS “conduct a complete re-analysis of the documents to ensure that, in light of the patent application, only those portions of the materials which remain confidential be redacted.” Id. The Government accompanied the letter with a motion for extension of time.7

On November 24, 1998 we held a hearing on the Government’s motion for extension of time. At that hearing we expressed our concern about the Government’s request for more time to re-evaluate the redactions to the June 14th documents, particularly in view of the fact that the Government had represented to us (and again to our Court of Appeals) that only trade secret information had been redacted from the June 14th documents in the first place. See Government’s Motion for Protective Order, August 12,1997 at 9 (explaining that “only the most valuable and confidential .trade secret information” had been redacted); see also, United States v. Hsu, 155 F.3d at 197-98 n. 11 (“We have been advised by counsel for the government that the redactions consist of technical information that constitutes trade secrets under any definition”).

At that hearing we heard the testimony of Dr. Nikhil Mehta, a BMS scientist, who BMS assigned in August, 1997 to redact all confi[195]*195dential information from the June 14th documents. Dr. Mehta testified that he spent one or two days in August, 1997 redacting what he believed to be “confidential” information from the June 14th documents, until he got sick and was unable to complete the project.8

On cross-examination, Dr. Mehta admitted that in making the redactions to the June 14th documents he never consulted with any attorneys (either from BMS or the Government), was never provided with legal definitions for the terms “confidential” or “trade secret”, and was never told to do any additional research beyond reviewing the June 14th documents themselves. During that hearing the defendants also illustrated nine different examples in the redacted June 14th documents where there were inconsistencies in the redactions, e.g. where the same document appeared twice in the collection and was redacted on one page but was unredact-ed on the other page.9

In view of the inconsistencies in the redac-tions to the June 14th documents, it became clear to us during the November 24, 1998 hearing that the Government had made no independent review of the redactions. In view also of the existence of patents and other public materials, a thorough re-evaluation of the redactions to the June 14th documents was doubly called for. At this point, we heard the testimony of Dr. Pallaiah Thammana, the Associate Director of Bio-technical Development at BMS, who BMS offered as an expert to undertake a complete re-evaluation of the redactions to the June 14th documents. In his testimony, Dr. Thammana explained the steps that BMS would need to take to re-evaluate the redac-tions and how long it would take to complete the project.

After Dr. Thammana testified, we recessed the hearing to allow the parties to create an agreed-upon protocol to govern Dr. Thamma-na’s review of the June 14th documents, as well as to discuss a timetable for this task.

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Related

United States v. Hsu
40 F. Supp. 2d 623 (E.D. Pennsylvania, 1999)

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Bluebook (online)
185 F.R.D. 192, 50 U.S.P.Q. 2d (BNA) 1650, 1999 U.S. Dist. LEXIS 1512, 1999 WL 80952, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-kai-lo-hsu-paed-1999.