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7th Cir. Affirms Trade Secrets Theft Conviction and Sentence

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By Gabriella Khorasanee, JD on October 02, 2013 3:54 PM

Hanjuan Hin was charged with economic espionage and theft of trade secrets under the Economic Espionage Act. After a bench trial, she was convicted of theft of trade secrets and acquitted of the economic espionage charge.

On appeal, Hin challenged her conviction and sentence.

Factual Background

Hin was a software engineer for Motorola from 1998 t0 2007, where she worked on a proprietary system of communications developed by Motorola called iDEN (short for Integrated Digital Enhanced Network). In 2006, she went to China while on medical leave, and sought a job at Sun Kaisens, a Chinese telecommunications firms that develops technology for the Chinese military.

In 2007 she returned to the U.S., and a short while later, she bought a one-way ticket to China. In the interim, she downloaded thousands of proprietary documents, all stamped as such, relating to the iDEN technology. At the airport Hin was stopped by customs officials where she was found to be carrying $31,000 and stated that she intended to live in China and work for Sun Kaisens. She claimed she needed to download all the iDEN documents to "refresh her knowledge of it."

Theft of Trade Secrets

The U.S. Code defines trade secret as: "information [that] derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public." To prove theft of a trade secret, the government must prove that Hin stole the trade secret "to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret."

Hin argued that since iDEN was losing popularity that there was no economic harm, but the Seventh Circuit disagreed. Judge Posner noted research and development costs, security risks and the economic benefit she and Sun Kaisens would receive from this information.

Sentence Enhancement

Believing that she committed economic espionage, but finding that the government did not meet its burden of proof, the court was unable to convict Hin of economic espionage. However, the district court applied a sentence enhancement for trade secrets meant to benefit a foreign entity, which only need to be proved by a preponderance of the evidence. Furthermore, the sentencing guidelines range was 78 to 97 months, and she only received 48 months.

This case illustrates the concept of "value" -- and the distinction of lost profits, which is not a necessary element of the crime. That a technology may be losing popularity, does not render it valueless. Especially now where technology almost instantaneously becomes obsolete, there is value to be found in the development costs, and the benefit it can confer to other companies who don't yet have that technology.

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