United States v. Hsu ( 1998 )

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
8-26-1998
United States v. Hsu
Precedential or Non-Precedential:
Docket 97-1965
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Filed August 26, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-1965
UNITED STATES OF AMERICA
v.
KAI-LO HSU, a/k/a JAMES HSU
UNITED STATES OF AMERICA
v.
CHESTER S. HO
United States of America,
Appellant
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
(D.C. Criminal Nos. 97-cr-323-1 and 97-cr-323-2)
Argued: June 10, 1998
Before: STAPLETON, COWEN, and RENDELL,
Circuit Judges
(Opinion Filed: August 26, 1998)
Michael R. Stiles
Walter S. Batty, Jr.
Richard W. Goldberg (ARGUED)
Louis D. Lappen
Office of the United States Attorney
615 Chestnut Street, Suite 1250
Philadelphia, PA 19106
Attorneys for Appellant
William E. McDaniels (ARGUED)
Paul Mogin
Williams & Connolly
725 Twelfth Street, N.W.
Washington, DC 20005
Thomas H. Suddath, Jr.
Montgomery, McCracken, Walker
& Rhoads, LLP
123 South Broad Street
Philadelphia, PA 19109
Attorneys for Appellee,
Chester S. Ho
Norman E. Greenspan
Ian M. Comisky
Blank Rome Comisky &
McCauley LLP
One Logan Square
Philadelphia, PA 19103
Attorneys for Appellee,
Kai-Lo Hsu
OPINION OF THE COURT
RENDELL, Circuit Judge:
In this appeal we explore for the first time the
relationship between the confidentiality provisions of the
newly-enacted Economic Espionage Act of 1996, 18 U.S.C.
S 1831, et seq., and principles of criminal law regarding
discovery and disclosure of material evidence. The district
court ordered the government to disclose alleged corporate
trade secrets based upon a theory that we find does not
2
apply. It also held that the defense of legal impossibility
does not pertain to the attempt and conspiracy crimes with
which the defendants are charged. We will affirm the
court's holding regarding the applicability of the defense of
legal impossibility, but will reverse its discovery order and
remand for a review of other asserted defenses to the
crimes in the indictment.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. The Government's Sting Operation
On July 10, 1997, a federal grand jury indicted Kai-Lo
Hsu, Chester S. Ho, and Jessica Chou (collectively,"the
defendants") for their involvement in an alleged conspiracy
to steal corporate trade secrets from Bristol-Myers Squibb.
The indictment alleges that the defendants sought to obtain
the processes, methods, and formulas for manufacturing
Taxol, an anti-cancer drug produced by Bristol-Myers and
regarded by the company as a highly valuable trade secret.1
According to the indictment, the defendants' conspiracy
began on June 7, 1995, when Chou, the Manager of
Business Development for Yuen Foong Paper Company in
Taiwan ("YFP"), requested information about Taxol from
John Hartmann, an undercover FBI agent whom Chou
mistakenly believed to be a technological information
broker in the United States. From August 28, 1995, until
January 12, 1996, Chou allegedly contacted Hartmann
repeatedly to obtain information about Taxol manufacturing
techniques and distribution. These contacts led to a
meeting in Los Angeles on February 27, 1996, between
Hartmann and Hsu, the Technical Director for YFP's
operations. Hsu purportedly told Hartmann at that meeting
that YFP wanted to diversify into biotechnology and to
_________________________________________________________________
1. The factual summary that follows is based entirely on the as yet
unproven allegations in the July 1997 indictment. Because this is an
interlocutory appeal, the record is not complete, discovery has not
concluded, and no determination of the facts has yet occurred.
Therefore, we offer these facts as averred to provide a context for the
issues on appeal, without vouching for the truth of any of the facts we
recite.
3
introduce technology from advanced countries into Taiwan.
When Hartmann responded that Bristol-Myers would be
unlikely to share its secret technology with YFP, Hsu
allegedly responded, "We'll get [it] another way," and told
Hartmann to pursue paying Bristol-Myers employees for the
confidential Taxol formulas.
The indictment asserts that Hsu and Chou then
"communicated many times" with Hartmann over the next
fourteen months to discuss the transfer of Taxol technology
and to negotiate a specific price for the acquisition of
Bristol-Myers's trade secrets. In response, Hartmann told
the defendants that a corrupt Bristol-Myers scientist would
be willing to sell Taxol information to YFP. The"corrupt"
scientist was actually a Bristol-Myers employee cooperating
with the FBI. Intrigued by such a prospect, Chou allegedly
sent an e-mail to Hartmann on March 13, 1997, outlining
the "core technology" that YFP would need to complete a
deal, including:
"1. The design and assembly of bioreactor with an
agreed scale
2. Light requirement
3. Media requirement for growth and production
4. Operating mode for the process, such as batch or
continuous
5. Yield, such as cell density, titers, taxane
constitution
6. Duration of culture to reach the maximal yield
7. Scientific names of yew species which are
applicable to the bioreactor.
8. Cell lines excluded!!!"
Chou also allegedly told Hartmann that she would offer
$400,000 in cash, stock, and royalties to the Bristol-Myers
scientist in exchange for his disclosure of the Taxol secrets.
In addition, Chou and Hsu purportedly began making
arrangements for a 1997 meeting between the parties, the
purpose of which was for YFP to establish the authenticity
of the "corrupt" scientist and to determine whether
Hartmann really could produce the Taxol trade secrets that
Chou and Hsu had requested.
Hartmann agreed to a meeting, and on June 14, 1997, he
and the Bristol-Myers scientist met with three
4
representatives from YFP, including Hsu, Ho, and another
unidentified scientist, at the Four Seasons Hotel in
Philadelphia. Ho was a professor of biotechnology and the
Director of the Biotechnology Innovation Center at the
National Chiao Tung University in Taiwan, and he had
apparently been asked to evaluate the Taxol technology at
the meeting as a favor to YFP.
The indictment alleges that the bulk of the June 14
meeting consisted of detailed discussions regarding the
manufacturing processes for Taxol. The Bristol-Myers
scientist explained the background and history of Taxol
production, and displayed copies of Bristol-Myers
documents outlining specific technological processes and
scientific data pertaining to the manufacture of the drug.
According to the indictment, these documents contained
trade secrets and were "clearly marked with Bristol-Myers
identification as well as the block stamped word
`CONFIDENTIAL.' " Hsu, Ho, and the other YFP employee
reviewed the documents during the meeting and
purportedly asked the Bristol-Myers scientist "numerous"
questions regarding specific areas of Taxol technology.
Finally, after Hartmann and the Bristol-Myers scientist left
the room, the FBI rushed in and arrested Hsu and Ho at
the hotel.2
The indictment returned by the grand jury charged Hsu,
Ho, and Chou with six counts of wire fraud in violation of
18 U.S.C. S 1343, one count of general federal conspiracy in
violation of 18 U.S.C. S 371, two counts of foreign and
interstate travel to facilitate commercial bribery in violation
of 18 U.S.C. S 1952(a)(3), one count of aiding and abetting
in violation of 18 U.S.C. S 2, and, most importantly for our
purposes, two counts of criminal activity under the
Economic Espionage Act of 1996 ("the EEA"), including
attempted theft of trade secrets, and a conspiracy to steal
trade secrets, in violation of 18 U.S.C. SS 1832 (a)(4) and
(a)(5).
_________________________________________________________________
2. An arrest warrant has since been issued for Chou, but she lives in
Taiwan, which has no extradition treaty with the United States.
5
B. The Government's Motion to Maintain the
Confidentiality of the Bristol-Myers Trade Secrets
Shortly after the indictment was returned, the defense
requested in discovery a copy of the Bristol-Myers
documents disclosed to Hsu and Ho at the June 14
meeting. However, on August 12, 1997, the government
filed a motion pursuant to 18 U.S.C. S 1835 and Fed. R.
Crim. P. 16(d)(1) for a protective order to prevent the
disclosure of the Bristol-Myers trade secrets allegedly
contained in those documents.3 The government proposed
that the district court enter an order under which the trial
judge would review the documents and the proposed
redactions by Bristol-Myers in camera, and would then
permit redactions of proprietary secret information. The
documents as redacted would be used at trial. The
gravamen of the government's contention was that the
defendants had no need for the actual trade secrets
themselves, because they had been charged only with
attempt and conspiracy to steal trade secrets, rather than
with the actual theft of trade secrets, under the EEA.
The defendants maintained, though, that unique
constitutional and procedural requirements of criminal
prosecutions dictated full access to the documents shown
to them during the investigation. The defendants also
contended that they needed the documents to establish the
defense of legal impossibility, arguing that they could not
be convicted of attempting to steal trade secrets if the
documents did not actually contain trade secrets.
Therefore, they proposed an order under which the
proprietary information in the Bristol-Myers documents
would be disclosed, but only to select members of the
_________________________________________________________________
3. Section 1835 is part of the EEA and provides, inter alia, that "[i]n
any
prosecution or other proceeding under this chapter, the court shall enter
such orders and take such other action as may be necessary and
appropriate to preserve the confidentiality of trade secrets, consistent
with the requirements of the Federal Rules of Criminal and Civil
Procedure, the Federal Rules of Evidence, and all other applicable laws."
Rule 16(d)(1) provides in relevant part that "[u]pon a sufficient showing
the court may at any time order that the discovery or inspection be
denied, restricted, or deferred, or make such other order as is
appropriate."
6
defense team, such as the defendants' attorneys and trial
experts, and under which the documents would befiled
under seal and returned or destroyed at the end of the
case.
The district court agreed with the defendants and
adopted their version of the proposed protective order. See
United States v. Hsu, 982 F. Supp. 1022 (E.D. Pa. 1997).
The court held that legal impossibility is not a viable
defense to the crime of attempted theft of trade secrets
under the EEA, and it thus rejected the defendants'
argument that they needed the documents to establish that
claim. Id. at 1028-29. Nevertheless, it ordered the
government to divulge the alleged trade secrets, because it
found that the existence of a trade secret is an essential
element of the crime of the theft of trade secrets, and that
the existence of a trade secret in that prosecution is "a
question of fact which the defendants have the right to have
a jury decide." Id. at 1024. Believing the defendants to be
charged both with actual theft and attempted theft of trade
secrets, the court concluded that "if during discovery we
deny to the defendants complete access to the Taxol
technology, we inhibit their constitutional right to effective
cross-examination as well as their right to have a jury,
rather than a judge, determine whether a `trade secret'
exists." Id. at 1025. Therefore, the court held, the
defendants "are entitled to review the June 14th documents
to the extent of their constitutional rights." Id. at 1029.
The district court's opinion "encourage[d]" the
government to file an interlocutory appeal to clarify the
"unsettled and important questions of law" raised by this
case. Id. at 1022 n.1. Accordingly, the government appealed
the district court's Order on November 25, 1997, pursuant
to a section in the EEA providing that "[a]n interlocutory
appeal by the United States shall lie from a decision or
order of a district court authorizing or directing the
disclosure of any trade secret." 18 U.S.C. S 1835. We now
have jurisdiction under that section, and we exercise
plenary review over the novel legal questions presented by
7
the government's appeal. In re Grand Jury, 111 F.3d 1066,
1069 n.4 (3d Cir. 1997).4
We note at the outset that we disagree with the district
court as to the offenses charged. The indictment is limited
to charging the defendants with attempt and conspiracy
and contains no charge of actual theft of trade secrets. As
we will discuss below, we believe this changes the analysis
greatly. We begin, though, with an overview of the EEA and
an analysis of the relevant statutory provisions.
II. THE ECONOMIC ESPIONAGE ACT OF 1996
The EEA became law in October 1996 against a backdrop
of increasing threats to corporate security and a rising tide
of international and domestic economic espionage. The end
of the Cold War sent government spies scurrying to the
private sector to perform illicit work for businesses and
corporations, S. Rep. No. 104-359, at 7 (1996), and by
1996, studies revealed that nearly $24 billion of corporate
intellectual property was being stolen each year. Richard J.
Heffernan & Dan T. Swartwood, Trends in Intellectual
Property Loss 4, 15 (1996).
The problem was augmented by the absence of any
comprehensive federal remedy targeting the theft of trade
secrets, compelling prosecutors to shoehorn economic
espionage crimes into statutes directed at other offenses.5
_________________________________________________________________
4. The issues are "novel" in part because this is a matter of first
impression in the federal courts. Only five EEA prosecutions were
publicly announced in the first eighteen months of the statute's
existence, and none had proceeded to trial as of March 1998. See Lorin
L. Reisner, Criminal Prosecution of Trade Secret Theft, N.Y.L.J., March
30, 1998, at 1. Furthermore, EEA prosecutions are likely to remain
infrequent in the near future, because the Attorney General of the United
States has pledged that the government will not, until October 2001,
pursue charges under the EEA "without the personal approval of the
Attorney General, the Deputy Attorney General, or the Assistant Attorney
General for the Criminal Division (or the acting official in each of these
positions if a position is filled by an acting official)." 142 Cong. Rec.
S12,214 (daily ed. Oct. 2, 1996) (letter of Janet Reno).
5. Prior to the passage of the EEA, the only federal statute directly
prohibiting economic espionage was the Trade Secrets Act, 18 U.S.C.
8
For example, the government often sought convictions
under the National Stolen Property Act ("NSPA"), 18 U.S.C.
S 2314, or the mail and wire fraud statutes, 18 U.S.C.
SS 1341 and 1343. However, the NSPA "was drafted at a
time when computers, biotechnology, and copy machines
did not even exist," S. Rep. No. 104-359, at 10, 6 and
industrial espionage often occurred without the use of mail
or wire.7 Consequently, it soon became clear to legislators
and commentators alike that a new federal strategy was
_________________________________________________________________
S 1905, which forbids the unauthorized disclosure of confidential
government information, including trade secrets, by a government
employee. See, e.g., United States v. Wallington, 889 F.2d 573 (5th Cir.
1989) (upholding a defendant's conviction under S 1905 for running
background checks on persons whom the defendant's friend suspected of
trafficking in narcotics). However, the Trade Secrets Act was of limited
value, because it did not apply to private sector employees and it
provided only minor criminal sanctions of a fine and not more than one
year in prison.
6. In fact, several cases cast serious doubt as to whether the NSPA even
applies to the type of intangible information involved in modern schemes
of corporate espionage. See, e.g., Dowling v. United States, 473 U.S. 214,
216 (1985) (stating that the NSPA "seems clearly to contemplate a
physical identity between the items unlawfully obtained and those
eventually transported, and hence some prior physical taking of the
subject goods"); United States v. Brown, 925 F.2d 1301, 1307-08 (10th
Cir. 1991) (holding that the theft of purely intellectual property is not
punishable by the NSPA because it is not physical property within the
meaning of the statute).
7. State remedies were also of little assistance. As of 1996, at least
twenty-four states had criminal statutes directed at the theft of trade
secrets, James H.A. Pooley, et al., Understanding the Economic Espionage
Act of 1996, 5 Tex. Intell. Prop. L.J. 177, 186 (1997), and forty-four
states and the District of Columbia had adopted some form of the
Uniform Trade Secrets Act, which permits civil actions to enjoin and
obtain damages for actual and attempted misappropriation of trade
secrets. Victoria A. Cundiff, The Economic Espionage Act and You, 490
PLI/Pat 9, 27 (1997). Yet the states often lacked sufficient resources to
pursue espionage prosecutions, see Pooley, supra, at 186, and
corporations eschewed bringing civil lawsuits, because they had to
shoulder their own litigation costs, individual defendants were frequently
judgment proof, and it proved difficult for the state courts to exercise
jurisdiction over lawsuits involving out-of-state defendants. See Cundiff,
supra, at 27.
9
needed to combat the increasing prevalence of espionage in
corporate America. Congress recognized "the importance of
developing a systematic approach to the problem of
economic espionage," H. Rep. No. 104-788, at 7 (1996),
reprinted in 1996 U.S.C.C.A.N. 4021, 4025, and stressed
that "[o]nly by adopting a national scheme to protect U.S.
proprietary economic information can we hope to maintain
our industrial and economic edge and thus safeguard our
national security." S. Rep. No. 104-359, at 11. The House
and Senate thus passed the Economic Espionage Act, and
the President signed the bill into law on October 11, 1996.
The EEA consists of nine sections which protect
proprietary information from misappropriation. Three
sections are of particular import to our analysis: what acts
are penalized by the statute, how the law defines a "trade
secret," and when trade secrets are to remain confidential.
A. Criminal activities
The EEA criminalizes two principal categories of
corporate espionage, including "Economic espionage" as
defined by 18 U.S.C. S 1831, and the "Theft of trade
secrets" as defined by S 1832.8 The former provision
punishes those who knowingly misappropriate, or attempt
or conspire to misappropriate, trade secrets with the intent
or knowledge that their offense will benefit a foreign
government, foreign instrumentality, or foreign agent. The
legislative history indicates that S 1831 is designed to apply
only when there is "evidence of foreign government
sponsored or coordinated intelligence activity." 142 Cong.
Rec. S12,212 (daily ed. Oct. 2, 1996) (Managers' Statement
for H.R. 3723). By contrast, S 1832, the section under
which the defendants are charged, is a general criminal
trade secrets provision. It applies to anyone who knowingly
engages in the theft of trade secrets, or an attempt or
conspiracy to do so, "with intent to convert a trade secret,
that is related to or included in a product that is produced
for or placed in interstate or foreign commerce, to the
economic benefit of anyone other than the owner thereof,
_________________________________________________________________
8. The EEA also permits parallel civil actions to "obtain appropriate
injunctive relief against any violation" of the statute. 18 U.S.C. S
1836(a).
10
and intending or knowing that the offense will, injure any
owner of that trade secret." Section 1832(a) makes clear
that attempt and conspiracy are distinct offenses, and it
lists them separately from those acts that constitute
completed crimes under the statute.
Section 1832 also contains at least three additional
limitations not found in S 1831. First, a defendant charged
under S 1832 must intend to convert a trade secret "to the
economic benefit of anyone other than the owner thereof,"
including the defendant himself. This "economic benefit"
requirement differs from S 1831, which states merely that
the offense "benefit," in any manner, a foreign government,
instrumentality, or agent. Therefore, prosecutions under
S 1832 uniquely require that the defendant intend to confer
an economic benefit on the defendant or another person or
entity. Second, S 1832 states that the defendant must
intend or know that the offense will injure an owner of the
trade secret, a restriction not found in S 1831. The
legislative history indicates that this requires "that the
actor knew or was aware to a practical certainty that his
conduct would cause such a result." S. Rep. No. 104-359,
at 15. Finally, unlike S 1831, S 1832 also requires that the
trade secret be "related to or included in a product that is
produced for or placed in interstate or foreign commerce."9
B. What constitutes a "trade secret"
The EEA defines a "trade secret" to expressly extend
protection to the misappropriation of intangible information
for the first time under federal law. 18 U.S.C. S 1839(3)
provides that a "trade secret" means:
_________________________________________________________________
9. Section 1832 also imposes more lenient punishments than S 1831.
Under S 1832, individuals can be sentenced to ten years in prison
and/or fined $250,000, and organizations can befined up to $5 million.
Section 1831, however, provides that individuals can be imprisoned for
fifteen years and/or fined $500,000, and organizations can be fined a
maximum of $10 million. Moreover, under both sections, defendants are
subject to criminal forfeiture pursuant to 18 U.S.C.S 1834, which states
that a person or entity shall forfeit any property constituting, or
derived
from, the proceeds of an EEA crime, and, if the sentencing court "in its
discretion so determines," any property used, or intended to be used, to
commit or facilitate an EEA offense.
11
all forms and types of financial, business, scientific,
technical, economic, or engineering information,
including patterns, plans, compilations, program
devices, formulas, designs, prototypes, methods,
techniques, processes, procedures, programs, or codes,
whether tangible or intangible, and whether or how
stored, compiled, or memorialized physically,
electronically, graphically, photographically, or in
writing if --
(A) the owner thereof has taken reasonable measures
to keep such information secret; and
(B) the information derives independent economic
value, actual or potential, from not being generally
known to, and not being readily ascertainable through
proper means by, the public.
The EEA's definition of a "trade secret" is similar to that
found in a number of state civil statutes and the Uniform
Trade Secrets Act ("UTSA"), a model ordinance which
permits civil actions for the misappropriation of trade
secrets.10 There are, though, several critical differences
which serve to broaden the EEA's scope. First, and most
importantly, the EEA protects a wider variety of
technological and intangible information than current civil
laws. Trade secrets are no longer restricted to formulas,
patterns, and compilations, but now include programs and
codes, "whether tangible or intangible, and whether or how
stored." Second, the EEA alters the relevant party from
whom proprietary information must be kept confidential.
Under the UTSA, information classified as a "trade secret"
cannot be generally known by businesspersons or
_________________________________________________________________
10. For example, S 1(4) of the UTSA states that a "trade secret" includes:
information, including a formula, pattern, compilation, program,
device, method, technique, or process, that:
(i) derives independent economic value, actual or potential, from
not
being generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value
from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
12
competitors of the trade secret owner. UTSA S 1(4). The
EEA, however, indicates that a trade secret must not be
generally known to, or readily ascertainable by, the general
public, rather than simply those who can obtain economic
value from the secret's disclosure or use. Finally, the EEA
contains a definition crafted to reach only illicit behavior.
Although legislators eliminated language providing that
general knowledge, skills, and experience are not"trade
secrets," 142 Cong. Rec. S12,213 (daily ed. Oct. 2, 1996)
(Managers' Statement), it is clear that Congress did not
intend the definition of a trade secret to be so broad as to
prohibit lawful competition such as the use of general skills
or parallel development of a similar product. See, e.g., id. at
S12,212 (noting that "[t]his legislation does not in any way
prohibit companies, manufacturers, or inventors from using
their skills, knowledge and experience to solve a problem or
invent a product that they know someone else is working
on").
C. Preservation of confidentiality
The EEA also contains a provision designed to preserve
the confidentiality of trade secrets during criminal
prosecutions. 18 U.S.C. S 1835 states that a court:
shall enter such orders and take such other action as
may be necessary and appropriate to preserve the
confidentiality of trade secrets, consistent with the
requirements of the Federal Rules of Criminal and Civil
Procedure, the Federal Rules of Evidence, and all other
applicable laws. An interlocutory appeal by the United
States shall lie from a decision or order of a district
court authorizing or directing the disclosure of any
trade secret. (emphasis added).
This section does not, of course, abrogate existing
constitutional and statutory protections for criminal
defendants. It does, however, represent a clear indication
from Congress that trade secrets are to be protected to the
fullest extent during EEA litigation. Moreover, it further
encourages enforcement actions by protecting owners who
might otherwise "be reluctant to cooperate in prosecutions
for fear of further exposing their trade secrets to public
13
view, thus further devaluing or even destroying their
worth." H.R. Rep. No. 104-788, at 13, 1996 U.S.C.C.A.N. at
4032. Therefore, as with the definition of trade secrets, the
confidentiality provision aims to strike a balance between
the protection of proprietary information and the unique
considerations inherent in criminal prosecutions.
III. DISCUSSION
With this statutory framework in mind, we turn our
attention to determining whether the district court properly
ordered the government to disclose the alleged trade secrets
in this case. We begin by recognizing that the defendants
are charged only with attempting to steal, and conspiring to
steal, trade secrets under S 1832. The district court believed
that the defendants were charged with both attempted theft
of trade secrets as well as with "the completed offense of
unauthorized conveyance of a trade secret under 18 U.S.C.
S 1832(2)." 982 F. Supp. at 1023 (emphasis added). It thus
found that the defendants' constitutional rights to cross-
examination and a fair trial would be violated absent full
disclosure of the Bristol-Myers documents.
However, the district court's analysis represents an
incorrect reading of the indictment and a mistaken view of
the charges lodged under the EEA. For one thing, there is
no S 1832(2) in the statute. More importantly, the
defendants are not charged with the completed offense of
theft of trade secrets. They have been indicted only for
attempting to steal, and conspiring to steal, trade secrets
pursuant to SS 1832(a)(4) and (a)(5). Therefore, our task is
to examine the defendants' entitlement to the information
they seek, as defending against the attempt and conspiracy
provisions of the EEA, rather than the completed theft
provisions. We need not decide, as the district court did,
whether a failure to disclose trade secrets would undermine
the constitutional rights of defendants charged with a
completed offense under the statute.
The defendants argue that unfettered access to
confidential documents is required even in EEA
prosecutions for attempt and conspiracy. They assert that
documents containing trade secrets are "material to the
14
preparation of the defendant's defense," and therefore, that
they must be disclosed consistent with the terms of Fed. R.
Crim. P. 16(a)(1)(C).11 In particular, they contend that
disclosure is warranted by (1) the availability of a legal
impossibility defense, and (2) their need for access to the
proprietary information as it relates to their defense of the
allegations of the indictment and other defenses to the
crimes charged.12
A. Legal Impossibility:
The Relationship of the Existence of
Trade Secrets to the Crimes Charged
As previously mentioned, the district court believed that
the defendants had been charged with the substantive
offense of theft of trade secrets, and, without addressing in
any detail the EEA's concern for confidentiality of trade
secrets in prosecutions under the statute, concluded that
the defendants' constitutional rights required disclosure of
the redacted material. The court premised its view on the
fact that the existence of a trade secret was an element of
the offense, and that the defendants thus had a
constitutional right to access the alleged secrets based on
the due process and fair trial guarantees of the Fifth and
Sixth Amendments.13 We need not determine whether the
_________________________________________________________________
11. It should be noted that the information sought to be disclosed here
includes those portions of the documents used at the June 14 meeting
which Bristol-Myers redacted before providing them to anyone, including
their counsel. The district court did not examine the redactions or assess
their true materiality. We have been advised by counsel for the
government that the redactions consist of technical information that
constitutes trade secrets under any definition.
12. The defendants also argue that disclosure is warranted because the
government has not met its burden of proving the need for a protective
order precluding discovery of the documents. However, their argument is
based entirely on the language of Federal Rule of Civil Procedure 26(c)
and on the cases interpreting its requirements in civil actions. See,
e.g.,
Smith v. BIC Corp., 869 F.2d 194, 199 (3d Cir. 1989). No such burden-
shifting or elements of proof exist under the facts of this case, where
the
government seeks to protect trade secrets in a criminal prosecution
under the provisions of the EEA.
13. Although seeking to address the government's interests in the
confidentiality of trade secrets, the district court concentrated on the
defendants' rights and did not engage in any discussion of the
relationship between the two.
15
district court was correct in its ruling, because the crimes
actually charged do not include the substantive offense of
theft of trade secrets. Rather, the crimes charged--
attempt and conspiracy -- do not require proof of the
existence of an actual trade secret, but, rather, proof only
of one's attempt or conspiracy with intent to steal a trade
secret. 18 U.S.C. S 1832(a).14 We must determine how and
to what extent this alters the analytic landscape, including
statutory and policy considerations regarding confidentiality
under the EEA, and principles of disclosure of material
information under the federal criminal rules.
It should be noted at the outset that the confidentiality
provision of the EEA does not exist in a vacuum. As the
EEA provides in S 1835, confidentiality must coexist with or
be tempered by other principles of the law, including a
defendant's constitutional rights and the Federal Rules of
Criminal Procedure. Therefore, we must first ask whether
the non-disclosure of trade secret data does have
implications if a defendant is defending against charges of
attempt and conspiracy to steal trade secrets. The answer
lies in the resolution of the question of whether the non-
existence of a trade secret matters in defense of an attempt
or conspiracy crime. If the defense of legal impossibility is
viable -- that is, if the defendants are not guilty of attempt
if the material is not truly a trade secret -- then it could
matter, and the defendants' constitutional or statutory
rights could be implicated. If the defense of legal
impossibility is not cognizable, then the existence or non-
existence of an actual trade secret is of little consequence
for an attempt or conspiracy crime. Thus, we willfirst
_________________________________________________________________
14. See, e.g., Model Penal Code S 5.01(1)(c) (declaring a defendant guilty
of attempt when, "acting with the kind of culpability otherwise required
for commission of the crime, he ... purposely does or omits to do
anything that, under the circumstances as he believes them to be, is an
act or omission constituting a substantial step in a course of conduct
planned to culminate in his commission of the crime"); id. at S 5.02(1)(a)
(stating that a defendant is guilty of conspiracy with other persons if,
"with the purpose of promoting or facilitating[the crime's] commission
he agrees with such other person or persons that they or one or more of
them will engage in conduct which constitutes such crime or an attempt
or solicitation to commit such crime").
16
address the threshold question of whether legal
impossibility is a defense to crimes of attempt and
conspiracy, as this discussion frames the remainder of our
analysis.15
1. Attempt
The defendants' primary contention in the district court,
and one of their principal arguments on appeal, is that they
need to view the unredacted Taxol documents to prove their
defense of legal impossibility. They assert that they can
successfully defend against a charge of attempt to steal
trade secrets if the documents used at the June 14, 1997,
meeting did not actually contain trade secrets. Only by
disclosure can they determine whether the materials did, in
fact, contain proprietary information, and therefore mount
their defense.
The law of impossible attempts has received much
scholarly attention, but remains a murky area of the law.
The common law distinguishes between two types of
impossibilities -- legal and factual -- and provides that the
former is a defense while the latter is not. In this regard,
"[l]egal impossibility is said to occur where the intended
acts, even if completed, would not amount to a crime."
United States v. Berrigan, 482 F.2d 171, 188 (3d Cir. 1973).16
_________________________________________________________________
15. We emphasize that we need not reach, and are not determining, the
issue addressed by the district court of whether the disclosure of trade
secrets is mandated by the Constitution or the Federal Rules of Criminal
Procedure if a defendant is charged with the actual theft of trade
secrets.
This is a complex issue. For one thing, whether information qualifies as
an actual "trade secret" is precisely defined by the EEA, and centers on
such factual questions as how the information has been guarded by its
owner and whether it is ascertainable by the public, rather than on the
content of the secret or the defendant's requests as such. This raises an
issue as to whether the information or formula itself is in fact material
to the existence of the trade secret. In addition, the other elements of
the
offense, and the available defenses, may differ significantly if the
defendant is accused of a completed crime rather than a crime of
attempt or conspiracy.
16. This type of legal impossibility is actually what some commentators
have termed "hybrid" legal impossibility, because the actor's goal is
17
By contrast, "factual impossibility is said to occur when
extraneous circumstances unknown to the actor or beyond
his control prevent consummation of the intended crime."
Id. For example, legal impossibility occurs when A shoots a
corpse believing it to be alive and intending to commit
murder; the attempt does not amount to murder even if
completed. Factual impossibility occurs when A fires a gun
at a bed intending to kill V, and V is not on the bed; the
crime cannot be completed because of extraneous factors
beyond A's control.
The difficulty, of course, is that the distinction between
factual and legal impossibility is essentially a matter of
semantics, for every case of legal impossibility can
reasonably be characterized as a factual impossibility. For
instance, the fact that A shoots a corpse, rather than a
person, is also a product of circumstances beyond A's
control; A did not commit murder because the person he
intended to kill was already dead. Likewise, in the case at
bar, the defendants argue that their crimes would have
been legally impossible if the redacted portions of the June
14 documents did not contain trade secrets. Yet this could
just as easily be characterized as a factual impossibility,
because extraneous circumstances unknown to the
defendants, i.e., that documents they believed to contain
trade secrets really did not, would have prevented the
consummation of their crime.
As a result, the great majority of jurisdictions have now
recognized that legal and factual impossibility are "logically
indistinguishable," United States v. Darnell, 545 F.2d 595,
_________________________________________________________________
illegal, but commission of the offense is somehow rendered impossible by
attendant circumstances. See, e.g., Joshua Dressler, Understanding
Criminal Law, S 27.07[D], at 372 (2d ed. 1995). Another type of legal
impossibility -- "pure" legal impossibility-- occurs when the law does
not even "proscribe the goal that the defendant sought to achieve." Ira P.
Robbins, Attempting the Impossible: The Emerging Consensus, 23 Harv.
J. on Legis. 377, 389 (1986). Pure legal impossibility is always a
defense.
For example, a hunter cannot be convicted of attempting to shoot a deer
if the law does not prohibit shooting deer in thefirst place. Therefore,
we
make clear that our discussion refers only to "hybrid" legal impossibility
as we have defined it.
18
597 (8th Cir. 1976), and have abolished impossibility as a
defense. See, e.g., United States v. Quijada, 588 F.2d 1253,
1255 (9th Cir. 1978) (eschewing any effort to distinguish
between the two concepts); United States v. Duran, 884 F.
Supp. 577, 580 n.5 (D.D.C. 1995) (noting that "categorizing
a case as involving legal versus factual impossibility is
difficult, if not pointless."), aff'd , 96 F.3d 1495 (D.C. Cir.
1996).
In fact, we are the only circuit which continues to
recognize a common law defense of legal impossibility. We
established its validity in United States v. Berrigan, 482
F.2d at 190, where we held that legal impossibility is a
defense to certain crimes of attempt. Berrigan involved a
federal prisoner convicted of attempting to smuggle letters
in and out of a federal prison without the knowledge and
consent of the warden, in violation of 18 U.S.C.S 1791 and
28 C.F.R. S 6.1. The evidence showed that the defendant
used another prisoner on study-release as a courier for his
mail, believing all along that the warden was not aware of
the duo's scheme. However, the warden had learned of the
defendant's first correspondence, and, working with the
police, he allowed the courier to carry all subsequent letters
with his knowledge and consent. Thus, the defendant
argued that his crime was legally impossible; he had been
charged with attempt to smuggle letters without the
warden's knowledge and consent, and yet the warden both
knew and consented to the crime.
On appeal, we agreed with the defendant and held that
his crime was legally impossible. We recognized that
"elimination of impossibility as a defense . . . is consistent
with the overwhelming modern view," 482 F.2d at 186
(quotation omitted), but we concluded that legal
impossibility remains a valid defense to common law crimes
of attempt in this circuit. Emphasizing that "[f]ederal
criminal law is purely statutory," id. at 185, we wrote that
we had no choice but to recognize a defense of legal
impossibility in the absence of a federal statute providing
otherwise. Id. at 190. Therefore, we stated,"attempting to
do that which is not a crime is not attempting to commit a
crime." Id.
19
In subsequent years, however, we have explored and
defined Berrigan's reach and have recognized exceptions to
the Berrigan rule. In United States v. Everett, we held that
legal impossibility was "no defense to the charge of
attempted distribution of a controlled substance under 21
U.S.C. S 846 (1976)." 700 F.2d 900, 908 (3d Cir. 1983). In
that case, a jury convicted the defendant of attempting to
distribute the drug phenyl-2-propanone in violation of the
Comprehensive Drug Abuse Prevention and Control Act
("the Drug Control Act"). However, the liquid Everett gave to
an undercover agent was not, in fact, a controlled
substance. Relying on Berrigan, Everett thus argued that
his conviction should be set aside as having been legally
impossible; he was convicted of an attempt to distribute
drugs, but the substance he distributed was not actually a
narcotic.
We rejected Everett's argument and held that Berrigan
did not apply to the Drug Control Act. We noted that
Berrigan was a case of statutory interpretation, and we
found that we should limit its reasoning to the particular
law in that case (18 U.S.C. S 1791). As our opinion stated,
"[w]e cannot rest on Berrigan's interpretation of what
Congress meant by the word `attempts' when it enacted 18
U.S.C. S 1791. Instead we must examine legislative intent
anew. If Congress chose in enacting [the Drug Control Act]
to define `attempt' to punish efforts to [distribute narcotics]
regardless of impossibility, that intent governs." 700 F.2d at
904. Therefore, we reviewed the legislative history of the
Drug Control Act, and we concluded that "Congress
intended to eliminate the defense of impossibility when it
enacted section 846." Id.
We agree with Everett's analysis and we believe it should
be employed in this case. Consistent with Everett, we
should resort to legislative intent to determine whether
Congress meant to permit a defense of impossibility to an
"attempt" crime under the EEA. When Congress uses a
common law term such as "attempt," we generally presume
that it intended to adopt the term's widely-accepted
common law meaning, including any common law defenses
such as impossibility. United States v. Cicco, 10 F.3d 980,
984 (3d Cir. 1993). However, as Everett recognized, "the
20
courts will not impose that meaning if there are `grounds
for inferring an affirmative instruction from Congress' to
define it otherwise." 700 F.2d at 904 (quoting Morissette v.
United States, 342 U.S. 246, 273 (1952)).
After reviewing the legislative history of the EEA, we
conclude that Congress did not intend to allow legal
impossibility to be asserted as a defense to attempt crimes
created by its terms. Congress never spoke directly as to
why it used the term "attempt," or as to the issue of legal
impossibility, in any of the reports or debates on the
statute. We find, however, that, as we held in Everett, the
underlying purposes of the law provide substantial evidence
of a congressional intent that the defense of legal
impossibility should not apply.
One of the key findings in Everett was that the Drug
Control Act was designed to offer a "comprehensive"
solution to narcotics offenses. 700 F.2d at 906-07. We
concluded from this that Congress could not have intended
to adopt the impossibility defense, "whose viability at
common law was questionable at best," because doing so
would only "hamper federal efforts to enforce the drug
laws." Id. at 907.
Here, the very same goals, and the very same language,
appear throughout the legislative history of the EEA. Just
as the Drug Control Act embraced a "comprehensive"
solution for drug trafficking, so too does the EEA attempt to
provide a "comprehensive" mechanism for curtailing the
escalating threat of corporate espionage. The Senate Report
includes an entire section entitled "Need for a
Comprehensive Federal Law," and "underscore[s] the
importance of developing a systematic approach to the
problem of economic espionage." S. Rep. No. 104-359, at
11. The Report notes that "a Federal criminal statute will
provide a comprehensive approach to [the theft of trade
secrets] -- with clear extraterritoriality, criminal forfeiture,
and import-export sanction provisions." Id. at 12. Likewise,
the House Report states that the EEA is designed to provide
a "systematic approach" to trade secret theft, and asserts
that "a comprehensive federal criminal statute will better
facilitate the investigation and prosecution of this crime."
H.R. Rep. No. 104-788, at 7, 1996 U.S.C.C.A.N. at 4025.
21
The House also explained that the EEA was crafted to
punish virtually every form of illegal industrial espionage,
"from the foreign government that uses its classic espionage
apparatus to spy on a company, to the two American
companies that are attempting to uncover each other's bid
proposals, or to the disgruntled former employee who walks
out of his former company with a computer diskette full of
engineering schematics." Id. at 5, 1996 U.S.C.C.A.N. at
4024.17
In an effort to undermine this evidence of intent, the
defendants offer the statement of Senator Herbert Kohl, a
co-sponsor of the trade secrets legislation, who commented
that the EEA should "only be used in flagrant and
egregious cases of information theft." 142 Cong. Rec.
S12,212 (daily ed. Oct. 2, 1996). The defendants contend
that this demonstrates an intent to limit the statute's
reach. However, the Senator's remarks are taken out of
context. His entire statement reads, in pertinent part, as
follows:
[W]e have carefully drafted these measures to ensure
that they can only be used in flagrant and egregious
cases of information theft. Moreover, trade secrets are
carefully defined so that the general knowledge and
experience that a person gains from working at a job is
not covered.
Mr. President, we do not want this law used to stifle
the free flow of information or of people from job to job.
But we built in a number of safeguards to prevent
exactly these problems.
Id. Senator Kohl did not intend to limit the statute's
comprehensive scope. He meant merely to allay any fears
that the government would use the EEA to police clearly
_________________________________________________________________
17. Individual legislators echoed these goals as well, declaring that the
EEA would serve as a "comprehensive statute" to combat corporate
espionage. 142 Cong. Rec. H10,461 (daily ed. Sept. 17, 1996) (statement
of Rep. Hyde). Even the President himself stated upon signing the bill
that "[t]his Act establishes a comprehensive and systematic approach to
trade secret theft and economic espionage." Statement by President
William J. Clinton Upon Signing H.R. 3723, reprinted in 1996
U.S.C.C.A.N. 4034, 4034.
22
innocuous and otherwise lawful behavior, such as occurs
when employees change jobs or start their own companies
using general knowledge that they have acquired through
prior employment. See, e.g., Sen. Rep. No. 104-359, at 12
(clarifying that the EEA "does not apply to innocent
innovators or to individuals who seek to capitalize on their
lawfully developed knowledge, skill or abilities"). We do not
read Senator Kohl's comments as undermining the
comprehensiveness of the statute as it pertains to the theft
of trade secrets. We believe that the great weight of the
EEA's legislative history evinces an intent to create a
comprehensive solution to economic espionage, and wefind
it highly unlikely that Congress would have wanted the
courts to thwart that solution by permitting defendants to
assert the common law defense of legal impossibility.
We also find it significant, as Everett did, that the statute
we are considering was drafted at a time when "the doctrine
of impossibility had become mired in fine distinctions and
had lost whatever acceptance at common law it may have
possessed when the statute considered in Berrigan was first
enacted in 1930." 700 F.2d at 905. The EEA was drafted in
1996, more than twenty-five years after the National
Commission on Reform of the Federal Criminal Laws had
concluded that the abolition of legal impossibility was
already "the overwhelming modern position." Id. (quotation
omitted). In fact, to this day, "[a]side from the Third Circuit
in Berrigan, every Circuit that has considered the defense
of impossibility has rejected it." Duran, 884 F. Supp. at 580
(emphasis added). Thus, we doubt that Congress meant to
permit legal impossibility to be asserted as a defense to
EEA crimes.
Finally, we are mindful, as Everett was, 700 F.2d at 907
n.16, of the potential damage that the defendants' position
could work on law enforcement under the statute. If we
were to hold that legal impossibility is a defense to the
attempted theft of trade secrets, the government would be
compelled to use actual trade secrets during undercover
operations in order to obtain convictions underS 1832(a)(4).18
_________________________________________________________________
18. The government claims that it used documents containing actual
trade secrets in this case, only "because of the difficulty in preparing
on
short notice documents which appeared to be authentic for presentation
to the trained scientists brought to the meeting by Hsu." (Gov't. Reply
Br. at 4 n.3.)
23
Aside from the logistical difficulties this would create, it
would also have the bizarre effect of forcing the government
to disclose trade secrets to the very persons suspected of
trying to steal them, thus gutting enforcement efforts under
the EEA. We believe Congress could not have intended such
a result, inasmuch as it was striving to prevent economic
espionage and to maintain the confidentiality of trade
secrets. Therefore, given the strong indicia of legislative
intent, and given the practical import of a contrary finding,
we conclude that Congress could not have intended EEA
attempt crimes to be subject to the somewhat obscure and
rarely used common law defense of legal impossibility.
Accordingly, we hold that legal impossibility is not a
defense to a charge of attempted misappropriation of trade
secrets in violation of 18 U.S.C. S 1832(a)(4). We agree with
the district court's conclusion that a charge of "attempt"
under the EEA requires proof of the same elements used in
other modern attempt statutes, including the Model Penal
Code. A defendant is guilty of attempting to misappropriate
trade secrets if, "acting with the kind of culpability
otherwise required for commission of the crime, he ...
purposely does or omits to do anything that, under the
circumstances as he believes them to be, is an act or
omission constituting a substantial step in a course of
conduct planned to culminate in his commission of the
crime." Model Penal Code S 5.01(1)(c) (1985).19 Thus, the
defendant must (1) have the intent needed to commit a
crime defined by the EEA, and must (2) perform an act
amounting to a "substantial step" toward the commission of
that crime. See Cicco, 10 F.3d at 984-85 (attempt crimes
_________________________________________________________________
19. We adopt the Model Penal Code ("MPC") test for attempt because it
is consistent with our own caselaw and with the great weight of modern
precedent. We have indicated that the MPC constitutes "well-settled
principles of the law of attempt," United States v. Kikumura, 918 F.2d
1084, 1108 (3d Cir. 1990), we have found that it"is logical and in
conformity with the purposes of the criminal law," United States v. Cruz-
Jimenz, 977 F.2d 95, 102 n.10 (3d Cir. 1992), and we have employed its
principles on several occasions. See, e.g., id.; Cicco, 10 F.3d at 984-85;
Everett, 700 F.2d at 908. Moreover, the majority of federal courts have
now embraced the MPC test for attempts as well. See Cruz-Jimenz, 977
F.2d at 102 n.8 (citing cases); Dressler, supra, at S 27.09[A].
24
require a showing of intent and "evidence of conduct
constituting a substantial step toward commission of the
crime in pursuit of the culpable intent"); Everett, 700 F.2d
at 908 (conviction for attempt requires proof of intent and
"some measure of objective evidence corroborating the
attempted" crime).
It naturally follows that the government need not prove
that an actual trade secret was used during an EEA
investigation, because a defendant's culpability for a charge
of attempt depends only on "the circumstances as he
believes them to be," not as they really are. The government
can satisfy its burden under S 1832(a)(4) by proving beyond
a reasonable doubt that the defendant sought to acquire
information which he or she believed to be a trade secret,
regardless of whether the information actually qualified as
such. Consequently, in the instant case, the defendants
have no arguable constitutional or statutory right to view
the unredacted portion of the Taxol documents in order to
defend against charges of attempt on the basis of legal
impossibility.
2. Conspiracy
We also hold that the defendants have no need for the
Taxol documents to defend against the government's
charges of conspiracy, because we conclude that legal
impossibility is not a defense to conspiracy. Although we
have stated that impossibility may be a valid defense to
attempt crimes, Berrigan, 482 F.2d at 190, we have never
recognized the defense for conspiracy charges, and we are
persuaded by the views of our district courts, and by the
decisions of our sister circuits, that the impossibility of
achieving the goal of a conspiracy is irrelevant to the crime
itself. See, e.g., United States v. Wallach, 935 F.2d 445, 470
(2d Cir. 1991); United States v. LaBudda, 882 F.2d 244,
248 (7th Cir. 1989); United States v. Petit, 841 F.2d 1546,
1550 (11th Cir. 1988); United States v. Everett, 692 F.2d
596, 599 (9th Cir. 1982); Yepes v. United States, Civ. A. No.
93-2310, 1993 WL 525578, at *4 (D.N.J. Dec. 15, 1993).
It is well-settled that conspiracy and attempt serve
different roles in the criminal law. The law of attempts was
25
traditionally viewed as a way "to deal with conduct which
create[d] a risk of immediate harmful consequences."
Wayne R. LaFave & Austin W. Scott, Jr., Substantive
Criminal Law, S 6.5(b), at 91 (2d ed. 1986). Even under the
modern view, attempt prosecutions generally proceed only
against those who have taken a "substantial step" toward
commission of a substantive crime. See Model Penal Code
S 5.01(1)(c) (1985). However, the law of conspiracy is much
more preventive, aiming to nip criminal conduct in the bud
before it has the chance to flourish into more ominous
behavior. See Wallach, 935 F.2d at 470 (noting that
conspiracy serves to protect society and prevent criminal
behavior "in its early stages"); LaFave & Scott, supra,
S 6.5(b), at 91 (stating that "[c]ourts have generally taken a
broader view of the purposes of conspiracy"). As the
Supreme Court has written,
[t]he law of conspiracy identifies the agreement to
engage in a criminal venture as an event of sufficient
threat to social order to permit the imposition of
criminal sanctions for the agreement alone, plus an
overt act in pursuit of it, regardless of whether the
crime agreed upon actually is committed. Criminal
intent has crystallized, and the likelihood of actual,
fulfilled commission warrants preventive action.
United States v. Feola, 420 U.S. 671, 694 (1975) (citations
omitted).
It is thus the conspiratorial agreement itself, and not the
underlying substantive acts, that forms the basis for
conspiracy charges. United States v. Jannotti, 673 F.2d 578,
591 (3d Cir. 1982) (en banc). The "illegality of the
agreement does not depend on the achievement of its ends,"
and it is "irrelevant that the ends of the conspiracy were
from the very inception of the agreement objectively
unattainable." Id.; see also United States v. Olgin, 745 F.2d
263, 273 (3d Cir. 1984) (stating that "the objective
impossibility of attaining the goals of a conspiracy is
irrelevant to the guilt of those who conspire").
Consequently, it is equally irrelevant that the commission
of a substantive offense may have been legally impossible
for the conspiracy to achieve all along. We therefore join
our sister circuits, and the district courts in our own
26
circuit, in squarely holding that legal impossibility is not a
defense to conspiracy.20
As a result, the Taxol trade secrets in the Bristol-Myers
documents are not "material" to the preparation of the
defendants' impossibility defense, because proof that the
defendants sought to steal actual trade secrets is not an
element of the crimes of attempt or conspiracy under the
EEA. A defendant can be convicted of attempt or conspiracy
pursuant to 18 U.S.C. SS 1832(a)(4) or (a)(5) even if his
intended acts were legally impossible.
_________________________________________________________________
20. We are aware of only three federal appellate decisions even implying
that legal impossibility is a defense to conspiracy, but none of these
cases is probative of the issue before us. First, in Ventimiglia v. United
States, the Fourth Circuit reversed the convictions of three defendants
accused of conspiring to violate a Taft-Hartley Act provision forbidding
the payment of money by an employer to "any representative of any of
his employees." 242 F.2d 620 (4th Cir. 1957). Because the defendants
had paid a person who was not, in fact, a "representative of " their
employees, the court held that the conviction for conspiracy was legally
impossible. However, the defendants in that case knew that the
individual in question was not a "representative" within the meaning of
the statute. Id. at 266. Therefore, the court's comments regarding legal
impossibility were entirely in dicta; the convictions were reversed
because the defendants did not even have the specific intent needed to
sustain a charge of conspiracy.
Second, in O'Kelley v. United States, the Eighth Circuit held that
several defendants could not be convicted of a conspiracy to steal goods
in interstate commerce where the goods were not in interstate commerce.
116 F.2d 966, 968 (8th Cir. 1941). However, this statement was also
dicta, because there was no jurisdiction to prosecute the defendants
absent proof of an effect on interstate commerce, and, as in Ventimiglia,
there was no showing that the defendants possessed the requisite
criminal intent.
Finally, in Woo Wai v. United States, the Ninth Circuit reversed a
conviction for a conspiracy to smuggle aliens into the U.S., because,
inter
alia, the act would not have been a crime even if completed. 223 F. 412,
414-15 (9th Cir. 1915). Yet Woo Wai was an entrapment case, and any
references to the impossibility of the crime were wholly extraneous to the
holding. Moreover, to the extent that Woo Wai states that impossibility
is a defense to conspiracy in the Ninth Circuit, the Ninth Circuit has
since rejected that claim expressly. See, e.g., Everett, 692 F.2d at 599;
United States v. Sanford, 547 F.2d 1085, 1091 (9th Cir. 1976).
27
B. Relevance of Purported Secret Information to
Other Aspects of the Defense Strategy
Having concluded that the defendants' right to access
actual trade secrets is not required in order to defend
against an element of the government's case, the question
remains whether the defendants' right of access to the
information as it relates to other defenses passes muster
under the test of materiality. The defendants argue that the
unredacted documents are also material to the preparation
of the potential defenses of entrapment, outrageous
government conduct, and jurisdiction, and contend that the
documents are needed to defend against the elements of
attempt and conspiracy, the allegations of the indictment,
and the evidence that the government intends to introduce
at trial.
As an initial matter, we note that we are skeptical of the
materiality, let alone relevance, of the redacted trade secret
information to these issues. For example, the defendants
argue that they need the unredacted documents to disprove
the intent and "substantial step" elements of attempt and
the "overt act" requirement of conspiracy.21 However, proof
of these factors is necessarily independent of any trade
secrets contained in the Bristol-Myers documents, because
the defendants can be guilty of attempt and conspiracy to
steal trade secrets even if the documents contained no
confidential information at all. See MPC S 5.01(1)(c)
(attempt), S 5.02(1)(a) (conspiracy).22
_________________________________________________________________
21. Conspiracy charges under S 1832 require both an agreement and
an "overt act" in furtherance of the conspiratorial objective. See 18
U.S.C. S 1832(a)(5) (providing that a defendant is guilty of conspiracy if
he "conspires with one or more other persons" to commit an offense
proscribed by S 1832, and if "one or more of such persons do any act to
effect the object of the conspiracy").
22. Moreover, the government has assured us that it has no intention
to use or refer to the alleged trade secrets at trial. The government
intends to prove its allegations instead by using other materials that
reflect an attempt and a conspiracy to violate the EEA. For example, the
government has stated that it may offer the e-mail list that Chou
allegedly sent to Hartmann on March 13, 1997, outlining the "core
technology" that YFP would need to complete a deal. By this list the
government intends to prove that the defendants attempted to steal what
they believed to be "trade secrets" without ever revealing the actual
trade
secrets themselves. The jury will thus never learn-- and will have no
reason to learn -- of the content of the redacted material.
28
However, we will not address defendants' claim of need
for the redactions as to any other defense or aspect of the
case for two reasons. First, the defendants never raised the
materiality of the redacted information as to any other
defenses before the district court, and the court never
addressed these other arguments in its opinion. The
defendants' briefs to the district court argued only that the
government must prove the existence of an actual trade
secret in a prosecution for attempt and conspiracy and that
legal impossibility remains a viable defense. We will not
examine other contentions as to the materiality or relevance
of trade secret information that are being raised for the first
time on appeal. See Harris v. City of Philadelphia, 35 F.3d
840, 845 (3d Cir. 1994) ("This court has consistently held
that it will not consider issues that are raised for the first
time on appeal.").23
Further, no one -- not this Court, not the district court,
not even the parties themselves -- knows the content of the
redacted Bristol-Myers documents at issue in this case. It
was stated at oral argument that the documents have been
reviewed and edited for trade secrets by Bristol-Myers
employees alone, without any oversight by the court, the
government, or the defense. Thus, while we might be
skeptical of the defendants' asserted need for this
information, we will not decide whether they have a right to
access documents that could conceivably reveal information
needed to preserve their rights to a fair trial. Only defense
counsel know the precise contours of the defendants' case,
and we are not in a position to make judgments about the
_________________________________________________________________
23. In some situations, we provide direction to the parties by
addressing issues that are certain to arise upon a remand of the case,
even if the issues were not discussed initially by the district court.
See,
e.g., New Jersey Coalition of Rooming and Boarding House Owners v.
Mayor of Asbury Park, ___ F.3d ___, No. 97-5483, 1998 WL 427231, at
*2 (3d Cir. July 30, 1998) (highlighting statutory and constitutional
claims "that may require further consideration" upon remand). Here,
however, we are unable to offer informed guidance, because we are
without the benefit of a full review of the redacted materials. The
complete breadth of the defendants' arguments cannot be determined
unless and until this case is remanded and the district court examines
the potential defenses in light of the content of the Bristol-Myers
documents.
29
impact of the redacted material without having seen the
material ourselves.
Accordingly, we will remand this action to the district
court. If the defendants raise before the district court the
additional arguments that they have urged on appeal, we
would expect the district court to conduct an in camera
review to determine whether the documents have been
properly redacted to exclude only confidential information
and to assess whether what was redacted is "material" to
the defense.
In such event, because "public policy requires protection
of portions of a document, . . . in camera inspection by the
trial judge or magistrate is unavoidable." Bogosian v. Gulf
Oil Corp., 738 F.2d 587, 596 (3d Cir. 1984). Even if proof
of an actual trade secret is not an element of SS 1832(a)(4)
and (a)(5), an independent assessment of whether materials
are nonetheless discoverable is anticipated in the language
of S 1835, which provides that the district court "shall enter
such orders and take such other action as may be
necessary and appropriate to preserve the confidentiality of
trade secrets, consistent with the requirements of the
Federal Rules of Criminal and Civil Procedure, the Federal
Rules of Evidence, and all other applicable laws." Rule
16(a)(1)(C) of the Federal Rules of Criminal Procedure
enables the defendants to obtain documents in the
government's possession that are material to the
preparation of their defense, or are intended for use by the
government as evidence in chief at trial. These principles
suggest that the district court should examine the relevant
portions of the Bristol-Myers documents to assess the
materiality of those portions of the documents sought to be
withheld. See United States v. Bocra, 623 F.2d 281, 285 (3d
Cir. 1980) ("The submission of discovery materials to the
court for an in camera inspection and decision as to which
materials are discoverable is commonly used when the
Government's need for preserving confidentiality over the
materials must be balanced with the defendant's
constitutional right to evidence material to his defense.").
We leave to the district court the ultimate resolution of
these issues if raised on remand by the defendants.
30
IV. CONCLUSION
The district court's Order dated October 27, 1997, will be
reversed, and the cause will be remanded for further
proceedings consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
31