United States v. Wen Chyu Liu

716 F.3d 159, 91 Fed. R. Serv. 421, 106 U.S.P.Q. 2d (BNA) 2014, 2013 WL 1875810, 2013 U.S. App. LEXIS 9194
CourtCourt of Appeals for the Fifth Circuit
DecidedMay 6, 2013
Docket12-30105
StatusPublished
Cited by66 cases

This text of 716 F.3d 159 (United States v. Wen Chyu Liu) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Wen Chyu Liu, 716 F.3d 159, 91 Fed. R. Serv. 421, 106 U.S.P.Q. 2d (BNA) 2014, 2013 WL 1875810, 2013 U.S. App. LEXIS 9194 (5th Cir. 2013).

Opinion

W. EUGENE DAVIS, Circuit Judge:

Appellant, Wen Chyu Liu, also known as David W. Liou (“Liou”), challenges his conviction for conspiracy to steal trade secrets and perjury. The principal issue on appeal concerns the propriety of the court’s ruling excluding the testimony of defendant’s engineering expert. We conclude that the district court erred in ex-eluding the testimony but that the error did not affect the outcome of the trial. We AFFIRM.

I.

Liou was convicted after an eleven-day jury trial for conspiring to steal trade secrets in violation of 18 U.S.C. § 1832(a)(5) (Count 1) and perjury in violation of 18 U.S.C. § 1623 (Count 2). Liou moved for a new trial, which the district court denied. The district court sentenced Liou to 60 months’ imprisonment on each count (to run concurrently).

A.

This case, more than some cases, is record driven, requiring us to report the facts in more detail than usual. The Dow Chemical Company (“Dow”) is a chemical company that developed and manufactured a type of chlorinated polyethylene (“CPE”) which it marketed globally as “Tyrin CPE.” CPE is a white, powdery substance that tolerates extreme pressures and temperatures. CPE is used in hydraulic hoses, electrical cable jackets, and building and construction materials such as vinyl siding. Dow manufactured CPE at two facilities: ■ one in Plaquemine, Louisiana, and one in Stade, Germany. The Government’s witnesses testified that Dow invested millions into designing and improving the CPE manufacturing process and its end product. They asserted that Dow’s investment and research resulted in the development of important refinements in operating conditions for CPE manufacturing as well as the technical design specifications of certain vessels and equipment used in the process. The Government contended that Liou conspired to steal Dow’s trade secrets and sell that information to Chinese companies for his own profit. 1

*162 According to the Government’s witnesses, because Dow considered the manufacturing process and the equipment it designed for the process to be a trade secret 2 that gave it a “competitive edge,” it took extensive physical and legal security precautions to protect its technology and the processes used in CPE manufacture. Such measures included restricted access to Dow facilities and confidentiality and non-disclosure agreements with employees, including Liou.

Liou worked for Dow from 1965 until his retirement in 1992. Liou worked in research and development on various aspects of the development and manufacture of Dow’s products, including CPE. Liou signed a confidentiality agreement when he began working in which he promised not to disclose confidential and trade secret information to third parties. Upon Liou’s retirement, Dow sent a letter to Liou reminding him of this agreement.

In the early 1990s, prior to his retirement, Liou and his wife formed a company in Baton Rouge, Louisiana, called Pacific Richland. Soon thereafter, Chinese companies expressed an interest in making chlorinated polyvinyl chlorides (CSM or CPVC). Though Dow never made CSM, CPE is used as an ingredient in the production of CSM. Liou recruited a number of former and then-current Dow employees to assist him in developing the CPE process including the following: John Wheeler — an engineer who had worked as project manager to modernize the Plaque-mine CPE plant and who was still working as a consultant for Dow when Liou recruited him; Hein Meyer — an engineer who helped construct the Dow Stade plant and was working for Dow in Germany until 1997; and Keith Stoecker — the senior engineer responsible for coordinating day-today CPE production who worked for Dow until 1999 and was the author of substantial portions of the Dow CPE process manual. 3

In summary, the Government witnesses testified that after forming Pacific Rich-land, Liou asked Wheeler to provide a CPE process design that Pacific Richland could sell to Chinese companies. Wheeler testified that he created an engineering flow diagram for the CPE manufacturing process based on his knowledge of the Dow CPE plants. Liou and Wheeler then made multiple trips to China to market the CPE process to Chinese customers and Liou funded these trips. The Chinese companies Qingdao Chemical Works (“Qingdao”) and Hubei Shaunghuang Chemical Group Company (“Hubei”) expressed interest in building plants in China. According to trial testimony, the companies were specifically interested in obtaining “Dow technology.” Liou signed contracts to sell both companies a CPE *163 design engineering package and stood to gain almost two million dollars from the CPE portions of these contracts. Stoecker subsequently provided a process manual for Liou’s CPE, project. Stoecker testified that he plagiarized large sections of this manual from the Dow CPE process manual.

Liou ultimately shipped the CPE process manual and design package — which included numerous engineering documents such as reactor and fluid bed dryer equipment specifications, process flow sheets, and piping and instrumentation diagrams (“P & IDs”) to Hubei. The process flow sheets depict the entire process of making CPE from beginning to end. They show the equipment, including size and materials of construction, the way the equipment parts are connected by pipelines, and for each line, the kind and amount of material that will flow through it and at what temperature. P & IDs show an additional level of detail regarding each stage of the manufacturing process. Liou shipped the equipment specifications, P & IDs, and CPE process manual to Qingdao as well. The testimony of Wheeler, Stoecker, Meyer, and James Akers (a current Dow engineer) highlighted some of the numerous similarities between the Dow CPE process and the contents of the Pacific Richland materials Liou shipped to China.

Specifically, Wheeler testified that Liou “recruited [him] to steal proprietary information from Dow chemical to build a CPE plant in China” and Wheeler admitted that he personally stole Dow CPE trade secrets along with Stoecker, Meyer, and Liou. Wheeler then compared the process flow diagram for the Stade Dow plant to the process flow diagram sent to the Chinese and characterized the stages of the process as depicted in the two diagrams as “essentially the same.” 4 He also testified that Liou paid him around $196,000 over the course of two and a half years. Wheeler claimed that Stoecker was brought on to assist with the CPE project specifically because he was then-employed by Dow with access to Dow technology. Wheeler stated that Qingdao requested the “Dow process,” and asserted that Liou promised that “he would provide the CPE process from Dow Chemical”; he also stated that Hubei was interested in Dow technology. Wheeler also examined and compared drawings of the Dow Stade fluid bed dryer and the fluid bed dryer Liou submitted to the Chinese 5

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716 F.3d 159, 91 Fed. R. Serv. 421, 106 U.S.P.Q. 2d (BNA) 2014, 2013 WL 1875810, 2013 U.S. App. LEXIS 9194, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-wen-chyu-liu-ca5-2013.