Of Documents and Dumpsters: The Sixth Circuit Affirms Convictions for Theft of Hybrid Car Secrets from GM


http://blogs.orrick.com/trade-secrets-watch/files/2014/07/18Jul14-200x150.jpgLast month, the Sixth Circuit affirmed the convictions of co-conspirator couple Yu Qin and Shanshan Du, who were convicted in 2012 of trade secrets theft.  A jury in the Eastern District of Michigan had found that Du absconded with GM’s proprietary documents, passing them to Qin, who then used them to start his own business.

The trade secrets comprised the specially engineered and highly complex “motor control source code” of a hybrid car—the program that directs how and when the electric motor of a hybrid car runs.  The jury bought the government’s argument that the hybrid car secrets were on their way to China via Qin and Du, both engineers.

Du left GM in March 2005, shortly before Qin was fired by Controlled Power Company when his employer discovered that he was selling competing products through Millennium Technologies International, a company he founded with Du.  When MTI raided Qin’s office, it found stacks of GM’s proprietary documents in his office and called in the feds.  (We at TSW wonder why Qin apparently thought his office shelves were an intelligent place to store a major United States auto manufacturer’s trade secrets…but we digress.)

Ultimately, the jury found that Du had downloaded thousands of GM documents, including the motor control source code, and handed them over to Qin and MTI.  Further, Qin and Du had started planning a joint venture with a Chinese carmaker based on technology similar to GM’s—while Du was still at GM.

On appeal, the Sixth Circuit affirmed in an unpublished opinion on June 26.  It noted drily in its background section that after the FBI had executed a search warrant on Qin’s and Du’s home (and recovered more GM files)—and on the same day that the FBI issued subpoenas for MTI business records—an FBI surveillance team tailed Qin as he trashed two garbage bags full of shredded documents in a grocery store dumpster—documents that the FBI later reconstructed.

A note for the trade secrets law jocks in our audience: the TS charges were conspiracy, 18 U.S.C. §1832(a)(5), and unauthorized possession of trade secrets, § 18 U.S.C. 1832(a)(3).  The Sixth Circuit finding of interest concerns evidence sufficient to infer intent to convert the secrets to the benefit of a third party and intent to injure the trade secrets owner—two intent requirements that sometimes get muddled together in the jurisprudence.  Here, too, the court noted evidence that Qin and Du intended to use the trade secret in their own business ventures—to convert it.  But evidence of intent to injure seems absent.  Nevertheless, the conviction was affirmed.

And for the evidence jocks: in 2012, the court affirmed the exclusion of evidence showing that Qin had been accused of trade secrets theft in the past, finding it more prejudicial than probative.

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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