U.S. v. Yeh Illustrates The Challenges In International Trade Secrets Cases

http://blogs.orrick.com/trade-secrets-watch/files/2014/04/shutterstock_139140134-200x150.jpgOn March 14, 2014, a Texas jury acquitted former Texas Instruments (“TI”) employee Ellen Chen Yeh on all counts brought against her arising from her admitted downloading of Texas Instruments proprietary information before leaving the company for a China-based semiconductor manufacturer.  The Yeh trial illustrates a number of important issues related to government trade secrets enforcement in the increasingly global knowledge economy.

Defendant Ellen Chen Yeh worked as a design engineer at TI’s Dallas headquarters from September 20, 1993 to March 11, 2005.  In her role at TI, Ms. Yeh had access to a significant amount of confidential manufacturing process information concerning certain TI semiconductor chip products.  Several weeks after her employment ended, Yeh and her husband planned to move to Shanghai, China, where both Yeh and her husband had obtained employment with a Taiwan-based semiconductor design company.  In the weeks leading up to her departure from TI, Ms. Yeh admittedly downloaded proprietary information from TI and burned some of it onto CDs.

Just as Ms. Yeh and her husband prepared to board a flight to Shanghai, the FBI stopped her and searched her luggage, carry-ons, and other possessions for evidence of misappropriation.  During the search, agents seized several digital devices but did not seize the CDs containing Texas Instruments’ proprietary information.

Subsequently, on April 8, 2008, a grand jury returned an indictment against Ms. Yeh on a number of counts, which was later expanded and ultimately included counts for trade secrets misappropriation prohibited by the Economic Espionage Act and illegal copying prohibited by the National Information Infrastructure Act (a computer crime law passed in 1996).  In August 2013, Yeh returned to the U.S. to face trial after she was detained at the South Korean border in response to a “Red Notice” issued by Interpol at the U.S. government’s request.

Ms Yeh admitted that she had downloaded TI chip design-related files but claimed that she made copies of the material only for safekeeping in case an opportunity arose for employment with TI in China.  In addition, she asserted (and even attempted to put forth a polygraph result to the effect) that she did not know that copying proprietary information to removable storage was an unauthorized activity.  She also appeared to claim confusion about what constituted a TI trade secret as opposed to non-trade secret proprietary information.  Therefore, Ms. Yeh argued at trial that she did not have the requisite intent to commit trade secrets misappropriation or illegal copying.  On March 14, 2014, after a nine day trial, the jury acquitted Ms. Yeh on all counts.

The Yeh case illustrates a number of important considerations in building a trade secrets case, including:

  • Proving intent beyond a reasonable doubt is challenging even in the best of cases, and becomes particularly tricky for complicated crimes like trade secrets misappropriation.
  • The timeframes that may be at play for complex criminal prosecutions once a defendant goes overseas may impact strategy.  In this case, Ms. Yeh departed TI over nine years ago, in 2005, and the prosecution of the case effectively stalled for five years after the grand jury indictment as she lived overseas in China.  A company that is considering trade secrets enforcement stands a much better chance of obtaining timely relief if it is able to investigate the suspected theft promptly and pursue remedies while the defendant is still located in the United States.
  • The importance of company policies regarding downloading company information, as well as company educational materials and policies concerning what constitutes highly valuable trade secret information, is critical.  Ms. Yeh’s assertions that she was unable to identify trade secrets or what constituted prohibited misuse of trade secrets highlights the importance of having a company clearly educate its employees regarding the company’s trade secrets in a visible and provable way.

Topics:  Employment Policies, Texas Instruments, Trade Secrets

Published In: Criminal Law Updates, Intellectual Property Updates, International Trade Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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