Arguably Obsolete Trade Secrets Still Protected By Economic Espionage Act

Hanjuan Jin is a naturalized U.S. citizen of Chinese origin.  She earned a degree in physics from a Chinese university and master’s degrees in physics and computer science from American universities.  She worked as a software engineer at Motorola from 1998 to 2007.  Jin was chiefly involved in working on Motorola’s Integrated Digital Enhanced Network (iDEN).  iDEN technology allows cell phone handsets to also work as walkie-talkies. While on a prolonged trip to China, Jin solicited employment with Sun Kaisens, a Chinese company that develops telecommunications technology for the Chinese military.  After returning to the U.S., Jin bought a one-way plane ticket to China, downloaded thousands of internal, proprietary Motorola documents regarding iDEN and obtained $31,000 in U.S. currency.  She was intercepted by Customs agents at the Chicago airport while attempting to leave the country with the Motorola documents and the cash.

Jin was convicted at a bench trial of theft of trade secrets, under the Economic Espionage Act, 18 U.S.C. §1982.  The trial judge thought that Jin was guilty of economic espionage (§1831), with which she was also charged, but that her guilt had not been proven beyond a reasonable doubt at trial.  Jin was sentenced to 48 months in prison.  She appealed her conviction and sentence to the Seventh Circuit Court of Appeals, arguing that what she took was not a trade secret and that she neither intended nor knew that the theft would harm Motorola.  The Seventh Circuit affirmed the trial court’s decision.

iDEN is reaching the end of its relevance as a technology, being replaced by current technology.  The Seventh Circuit did not see the decline of the iDEN technology as a reason to refuse to protect it.  When the thefts occurred in 2007, about 20 million Motorola customers in 22 countries were still using the technology.  Had Jin’s scheme succeeded, once it discovered the thefts, Motorola would have had to warn customers of the risk of compromised iDEN networks, would have had to take its own countermeasures and would have faced competition on a technology that it took elaborate precautions to protect.  The statute requires the government to show potential loss to the trade secret owner, not actual loss.

The Seventh Circuit did not buy Jin’s argument that she only intended to use the Motorola documents as study aids:

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.

(Opinion pdf page 5).

The Seventh Circuit also affirmed the trial court’s sentence:

Given her egregious conduct, which included repeatedly lying to federal agents (for which she could have been prosecuted but was not), she was fortunate to be the recipient of discretionary sentencing lenity based on her ill health and inability to join her family, now in China. The judge gave her a further, surprising break by reducing her offense level (by two levels) for acceptance of responsibility, U.S.S.G. § 3E1.1(a), despite her having pleaded not guilty and gone to trial.

(Opinion pdf page 8).

This case is U.S. v. Hanjuan Jin, No. 12-3013, Seventh Circuit Court of Appeals.

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