USA v. Chung

OPPOSITION to MOTION to Dismiss Counts 1 through 9 of the Indictment As Unconstitutionally Vague 53

C.D. Cal.March 30, 2009

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 THOMAS P. O’BRIEN United States Attorney ROBB C. ADKINS Assistant United States Attorney Chief, Santa Ana Branch Office GREGORY W. STAPLES Assistant United States Attorney California Bar Number: 155505 IVY A. WANG Assistant Unites States Attorney California Bar Number: 224899 United States Courthouse 411 West Fourth Street, Suite 8000 Santa Ana, California 92701 Telephone: (714) 338-3549 Facsimile: (714) 338-3561 E-mail address: ivy.wang@usdoj.gov Attorney for Plaintiff United States of America UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION UNITED STATES OF AMERICA, Plaintiff, v. DONGFAN “GREG” CHUNG, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. SA CR 08-024-CJC GOVERNMENT’S OPPOSITION TO DEFENDANT’S MOTION TO DISMISS; EXHIBITS Date: April 13, 2009 Time: 9:00 a.m. The government submits its opposition to defendant’s Motion to Dismiss Counts 1 through 9 of the Indictment (“Motion to Dismiss”). Dated: March 30, 2009 GREGORY W. STAPLES IVY A. WANG Assistant United States Attorneys Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 1 of 24 Page ID #:198 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . ii I. INTRODUCTION.. . . . . . . . . . . . . . . . . . . . . . . . . 1 II. STATEMENT OF FACTS.. . . . . . . . . . . . . . . . . . . . . 2 III. LEGAL STANDARDS.. . . . . . . . . . . . . . . . . . . . . . 4 A. The Motion to Dismiss.. . . . . . . . . . . . . . . . . 4 B. The EEA. . . . . . . . . . . . . . . . . . . . . . . . . 6 IV. ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . 10 A. The EEA’s References to “Not Generally Known” and “Not Readily Ascertainable Through Proper Means” Are Not Unconstitutionally Vague.. . . . . . . 11 B. The EEA’s Reference to “Reasonable Measures” Taken to Protect Trade Secrets Is Not Unconstitutionally Vague. . . . . . . . . . . . . . . 14 C. The EEA’s Reference to “Independent Economic Value” Is Not Unconstitutionally Vague. . . . . . . . 16 D. The EEA Presents No Danger of Arbitrary Enforcement.. . . . . . . . . . . . . . . . . . . . . 18 E. Section 371 Is Not Unconstitutionally Vague.. . . . . 19 VI. CONCLUSION.. . . . . . . . . . . . . . . . . . . . . . . . 20 Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 2 of 24 Page ID #:199 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ii TABLE OF AUTHORITIES PAGE CASES: BBA Nonwovens Simpsonville, Inc. v. Superior Nonwovens, LLC, 303 F.3d 1332 (Fed. Cir. 2002). . . . . . . . . . . . . . . 9 Buffets, Inc. v. Klinke, 73 F.3d 965 (9th Cir. 1996).. . . . . . . . . . . . . . . . 9 Cheek v. United States, 498 U.S. 192 (1991).. . . . . . . . . . . . . . . . . . . . 5 DeBartolo Corp. v. Florida Gulf Coast Building and Trades Council, 485 U.S. 568 (1988).. . . . . . . . . . . . . . . . . . . . 5 Flemming v. Nestor, 363 U.S. 603 (1960).. . . . . . . . . . . . . . . . . . . . 5 Hamling v. United States, 418 U.S. 87 (1974). . . . . . . . . . . . . . . . . . . . . 6 Harvey Barnett, Inc. v. Shidler, 338 F.3d 1125 (10th Cir. 2003). . . . . . . . . . . . . . . 9 Hess v. Board of Parole, 514 F.3d 909 (9th Cir. 2008). . . . . . . . . . . . . . 6, 13 Hotel & Motel Association of Oakland v. City of Oakland, 344 F.3d 959 (9th Cir. 2003). . . . . . . . . . . . . . . . 6 Kolender v. Lawson, 461 U.S. 352 (1985).. . . . . . . . . . . . . . . . . . . . 5 Metallurgical Industries, Inc. v. Fourtek, 790 F.2d 1195 (5th Cir. 1986).. . . . . . . . . . . . . . . 9 Servo Corporation of America v. General Electric Company, 393 F.2d 551 (4th Cir. 1968). . . . . . . . . . . . . . . . 9 Syntex Opthalmics, Inc. v. Tsuetaki, 701 F.2d 677 (7th Cir. 1983). . . . . . . . . . . . . . . . 9 United Stated v. Williams, 128 S. Ct. 1830 (2008). . . . . . . . . . . . . . . . . 6, 18 United States v. Genovese, 409 F. Supp. 2d 253 (S.D.N.Y. 2005).. . . . . . . . . . 12, 15 United States v. Hsu, 40 F. Supp. 2d 623 (E.D. Penn. 1999). . . . . . . . . . passim Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 3 of 24 Page ID #:200 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 iii TABLE OF AUTHORITIES (CONTINUED) PAGE United States v. Hsu, 155 F.3d 189 (3d Cir. 1998).. . . . . . . . . . . . . 6, 7, 9 United States v. Jae Gab Kim, 449 F.3d 933 (9th Cir. 2006). . . . . . . . . . . . 6, 10, 13 United States v. Krumrei, 258 F.3d 535 (6th Cir. 2001). . . . . . . . . . . . 4, 14, 15 United States v. National Dairy Products Corp., 372 U.S. 29 (1963). . . . . . . . . . . . . . . . . . . . . 4 United States v. Nippon Paper Industries, 109 F.3d 1 (1st Cir. 1997). . . . . . . . . . . . . . . . . 4 United States v. Schales, 546 F.3d 965 (9th Cir 2008).. . . . . . . . . . . . . 5, 6, 18 Vermont Microsystems, Inc. v. Autodesk, Inc., 88 F.3d 142 (2d Cir. 1996). . . . . . . . . . . . . . . . . 9 Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489 (1982).. . . . . . . . . . . . . . . . . . . . 10 STATUTES: 18 U.S.C. § 1001. . . . . . . . . . . . . . . . . . . . . . . . . 2 18 U.S.C. § 1251(b)(3). . . . . . . . . . . . . . . . . . . . . . 2 18 U.S.C. § 1831. . . . . . . . . . . . . . . . . . . . . . passim 18 U.S.C. § 371.. . . . . . . . . . . . . . . . . . . . . . . 2, 19 18 U.S.C. § 922(d)(8).. . . . . . . . . . . . . . . . . . . . . 14 18 U.S.C. § 951.. . . . . . . . . . . . . . . . . . . . . . . . . 2 MISCELLANEOUS: H.R. Rep. 104-778 (1996). . . . . . . . . . . . . . . . . . . . . 9 Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 4 of 24 Page ID #:201 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 I. INTRODUCTION The definition of trade secret in the Economic Espionage Act is not unconstitutionally vague. First, defendant is charged with violating 18 U.S.C. § 1831, which contains a double scienter requirement that a defendant (1) knowingly take a trade secret (2) knowing that it will benefit a foreign government. The Supreme Court and the Ninth Circuit have routinely rejected vagueness challenges to statutes with a scienter requirement, because such a requirement lessens concern that a defendant will not be on notice of the proscribed conduct. Second, a challenge for vagueness in a statute that does not implicate the First Amendment is tested “as applied” to the facts of the case before the court. A number of courts have already upheld vagueness challenges to some of the terms defendant challenges. Defendant fails to cite to any specific facts in this case that would establish a vagueness problem. Defendant cannot overcome the strong presumption of constitutional validity that attaches to statutes by engaging in speculation and general arguments about the possible uncertainty of terms. On the contrary, the facts of this case prove that defendant, an engineer with a secret clearance at Rockwell and Boeing for more than thirty years, knew that he was taking restricted information in response to requests from the government of the People’s Republic of China. Accordingly, defendant’s Motion to Dismiss should be denied. (At the status conference on March 26, 2009, defendant withdrew his motion to strike surplusage so that motion is not addressed here.) //// Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 5 of 24 Page ID #:202 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 II. STATEMENT OF FACTS Defendant is charged with conspiracy to commit economic espionage in violation of 18 U.S.C. § 371. See Indictment, attached as Exhibit 1. Counts 2 through 9 of the Indictment charge defendant with economic espionage to benefit a foreign country in violation of 18 U.S.C. § 1831, the Economic Espionage Act (“EEA”). Count 10 charges defendant with acting as an agent of the People’s Republic of China (“PRC”) in violation of 18 U.S.C. § 951. Count 11 charges defendant with obstructing justice in violation of 18 U.S.C. § 1251(b)(3). Counts 12 through 14 charge defendant with making false statements to the FBI in violation of 18 U.S.C. § 1001. Count 15 is a criminal forfeiture allegation that would only have effect upon conviction for economic espionage. Counts 1 through 9, which defendant seeks to dismiss, are based on defendant’s unauthorized taking, possession, and concealment in his home of documents containing trade secrets belonging to his employer, The Boeing Company (“Boeing”), with the intent to benefit the PRC. Defendant worked at Rockwell International (“Rockwell”), and later Boeing when it acquired Rockwell’s space division, from 1973 to 2002 as a stress analyst on the forward fuselage section of the Space Shuttle. Indictment ¶ 10. Defendant returned to work as a contractor at Boeing from March 2003 to September 2006. Id. at ¶ 11. The charged documents contain trade secrets pertaining to Boeing’s Space Shuttle program, in which defendant worked, and Boeing’s Delta IV rocket and C-17 military cargo plane programs, in which defendant did not work. Indictment ¶¶ 5, 7, 9. Only Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 6 of 24 Page ID #:203 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 Boeing employees who worked in these programs and had a need to know were authorized to have access to these documents. Id. at ¶¶ 4, 6, 8. The Indictment charges defendant with possessing eight documents containing trade secrets, five of which bore restrictive markings. The documents were responsive to requests for specific types of technology that defendant had received from PRC government officials in the past. Indictment ¶ 22. One letter indicated that defendant was paid for providing information to the PRC, suggested “cover stories” for his travel to the PRC, and advised giving information to Chi Mak as a “faster and safer” channel for sending information to the PRC. Indictment ¶ 22.n. The letter concludes, “It is your honor and China’s fortune that you are able to realize your wish of dedicating yourself to the service of your country.” Id. From 1973 to 2002, defendant held a secret clearance. Indictment ¶ 13. As a condition of his secret clearance and his employment at Rockwell and Boeing, defendant was required to report any foreign travel, contacts with foreign officials, and any planned disclosure of company information in a foreign country. Id. Despite this, defendant gave lectures on the Space Shuttle and other programs in the PRC beginning in 1985 that he did not disclose to Rockwell or Boeing. Indictment ¶ 21.d. During his employment at Boeing, defendant signed numerous agreements stating that he would not use or disclose without authorization any proprietary, confidential, or trade secret information belonging to Boeing. Indictment ¶¶ 14-18. When defendant left Boeing the first time in 2002, he signed a Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 7 of 24 Page ID #:204 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 statement that he had returned to Boeing “all documents, computer software or databases, and other materials or items which at the time of the termination of my employment were in my possession, custody, or control by virtue of my employment with Boeing.” Indictment ¶ 15. At trial, the government will show that defendant had more than 250,000 pages of documents relating to aerospace and defense technology in his home. Defendant is charged with obstruction of justice for persuading his son to tell FBI agents that he could remember nothing of a trip the Chungs took to the PRC in 1985 where they met with Gu Weihao, an official with the PRC’s Ministry of Aviation. Indictment ¶ 28. Defendant is also charged with false statements for lying to FBI agents about reporting his travel to the PRC to Boeing, lying about the number of trips he took to the PRC, and lying about having authorization to taking Boeing documents home. III. LEGAL STANDARDS A. The Motion to Dismiss Allegations of an indictment are accepted as true on a motion to dismiss. United States v. Nat’l Dairy Prods. Corp., 372 U.S. 29, 33, n.2 (1963); United States v. Nippon Paper Industries, 109 F.3d 1, 2 (1 Cir. 1997). Defendant bears thest burden of establishing that the statute is vague as applied to his particular case, not merely that the statute could be construed as vague in some hypothetical situation. United States v. Krumrei, 258 F.3d 535, 537 (6 Cir. 2001).th A party challenging the constitutionality of a statute bears a heavy burden. A presumption of validity attaches to the acts Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 8 of 24 Page ID #:205 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 of Congress, and courts are required to interpret statutes in favor of finding them constitutional. “It is common ground that [the Supreme Court], where possible, interprets enactments so as to avoid raising serious constitutional questions.” Cheek v. United States, 498 U.S. 192, 203 (1991) citing DeBartolo Corp. v. Florida Gulf Coast Building and Trades Council, 485 U.S. 568, 575 (1988)(“every conceivable construction must be resorted to, in order to save a statute from unconstitutionality”). The presumption of constitutionality with which [a statute] comes to us forbids us lightly to choose that reading of the statute’s setting which invalidates it over that which will save it . . . it is not on slight implication and vague conjecture that the legislature is to be pronounced to have transcended its powers, and its acts to be considered as void. Flemming v. Nestor, 363 U.S. 603, 617 (1960). “To avoid being unconstitutionally vague, a penal statute must ‘define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement.’” United States v. Schales, 546 F.3d 965, 972 (9 Cir 2008) citing Kolender v. Lawson, 461 U.S. 352,th 357 (1985). The Constitution does not require impossible standards; all that is required is that the language conveys sufficiently definite warning as to the proscribed conduct when measured by common understanding and practices . . . perfect clarity and precise guidance have never been required even of Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 9 of 24 Page ID #:206 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 regulations that restrict expressive activity. Schales, 546 F.3d at 972, citing Hamling v. United States, 418 U.S. 87, 111 (1974) and United Stated v. Williams, 128 S.Ct. 1830, 1845 (2008). When challenging a statute that does not implicate the First Amendment, as defendant does here, a party must “demonstrate that the enactment is impermissibly vague in all of its applications.” Hess v. Board of Parole, 514 F.3d 909, 913 (9 Cir. 2008) citingth Hotel & Motel Ass’n of Oakland v. City of Oakland, 344 F.3d 959, 972 (9 Cir. 2003). As a matter of practice, defendant mustth show that the statute is vague as applied to him. If the statute is not vague as applied to defendant, it cannot be vague in all of its applications and no further inquiry is required. Hess, 514 F.3d at 913. Therefore, a challenge to the vagueness of a statute “must be examined as applied to the defendant.” United States v. Jae Gab Kim, 449 F.3d 933, 942 (9 Cir. 2006).th “What renders a statute vague is not the possibility that it will sometimes be difficult to determine whether the incriminating fact it establishes has been proved, but rather the indeterminacy of precisely what that fact is.” Williams, 128 S.Ct. at 1846. In assessing the clarity of the statute, courts may look to “statutory definitions, narrowing context, or settled legal meanings,” and may also consult the legislative history. Id. at 1846 and 1847 (J. Stevens concurring). B. The EEA Congress passed the EEA in 1996 “against a backdrop of increasing threats to corporate security and a rising tide of international and domestic economic espionage.” United States v. Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 10 of 24 Page ID #:207 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Hsu, 155 F.3d 189, 194 (3d Cir. 1998). It was enacted to close a gap in federal law that made it difficult to prosecute the theft of trade secrets, conduct that frequently crossed state and international boundaries. Id. Title 18, United States Code, Section 1831 states the following: (a) In general. Whoever, intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent, knowingly– (1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret; (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret; (3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; (4) attempts to commit any offense described in any of paragraphs (1) through (3); or (5) conspires with one or more other persons to commit any offense described in any of paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy, shall, except as provided in subsection (b), be fined not more than $500,000 or imprisoned not more than 15 years, or both. Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 11 of 24 Page ID #:208 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 The elements of the crime are as follows: 1. The defendant intended or knew his actions would benefit a foreign government, foreign instrumentality, or foreign agent; 2. The defendant knowingly stole, or without authorization appropriated, took, carried away, or concealed, or by fraud, artifice, or deception obtained a trade secret; and; 3. The information was, in fact, a trade secret. 18 U.S.C. § 1831(a)(1). Section 1839(3) defines “trade secret” and “owner” as follows: (3) the term "trade secret" means 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; and (4) the term "owner," with respect to a trade secret, means Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 12 of 24 Page ID #:209 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 the person or entity in whom or in which rightful legal or equitable title to, or license in, the trade secret is reposed. The EEA’s definition of trade secret is based on the definition of trade secret in the Uniform Trade Secrets Act (“UTSA”). See H.R. Rep. 104-778, at 12 (1996), attached as Exhibit 2. The UTSA has been adopted in some form in forty-four states and the District of Columbia. Hsu, 155 F.3d at 195, n.7. As a result, in most instances civil cases involving the USTA can provide guidance in interpreting the EEA. The government need only prove that the defendant intended that his actions in taking or otherwise controlling the trade secret would benefit a foreign government in any way. The term “benefit” may be an “economic, reputational, strategic, or tactical benefit.” Ex. 2, H. Rep. No. 104-788, at 11. Information can be a trade secret even if some of its components are in the public domain, provided that some elements of the information have independent economic value due to their not being widely known, and the owner of the information has taken reasonable steps to protect the elements of the information that are not widely known. Buffets, Inc. v. Klinke, 73 F.3d 965, 968 (9 Cir. 1996); Harvey Barnett, Inc. v. Shidler, 338 F.3dth 1125, 1129 (10 Cir. 2003); BBA Nonwovens Simpsonville, Inc. v.th Superior Nonwovens, LLC, 303 F.3d 1332, 1339 (Fed. Cir. 2002); Vermont Microsystems, Inc. v. Autodesk, Inc., 88 F.3d 142, 147 (2d Cir. 1996); Metallurgical Industries, Inc. v. Fourtek, 790 F.2d 1195, 1201 (5 Cir. 1986); Syntex Opthalmics, Inc. v.th Tsuetaki, 701 F.2d 677, 684 (7 Cir. 1983); Servo Corporation ofth Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 13 of 24 Page ID #:210 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Hsu dealt with § 1832, which is theft of a trade secret1 where the intent is not to benefit a foreign country, but to benefit another party, such as a competitor, to the detriment of the owner of the trade secret. Both § 1831 and § 1832 use the definition of trade secret in § 1839. Thus the analysis of the definition of trade secret with respect to § 1832 applies to § 1831. 10 America v. General Electric Company, 393 F.2d 551 (4 Cir.th 1968). As discussed below, the EEA is not vague because it clearly states the facts to be determined for a trade secret: information which (1) has economic value to its owner from the fact that it is not widely known or easily replicated by proper means, and (2) for which the owner has taken reasonable steps to protect. IV. ARGUMENT Before considering the specific challenges made by defendant, it should be noted that the scienter requirement in § 1831 usually defeats a claim of vagueness. “[A] scienter requirement may mitigate a law’s vagueness, especially with respect to the adequacy of notice to the complainant that his conduct is prohibited.” Jae Gab Kim, 449 F.3d at 943, citing Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 499 (1982); United States v. Hsu, 40 F.Supp.2d at 631, n. 8. In the case of Section 1831, there is a double1 scienter requirement: a defendant must (1) knowingly steal a trade secret (2) knowing that it will benefit a foreign government. Therefore, defendant can only be convicted if the government proves beyond a reasonable doubt that (1) defendant knew he was taking trade secrets, and (2) knew he was doing it for the benefit of a foreign government. //// Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 14 of 24 Page ID #:211 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 At trial the government will offer more evidence2 regarding defendant’s knowledge regarding the secrecy of the documents, including the fact that defendant had received training on trade secrets and export controls while at Boeing. The government will also present evidence showing the physical security at the Boeing plant where defendant worked, which included restricted access, compartmentalization of work, and separate shared computer drives that were password-protected for different work projects. 11 A. The EEA’s References to “Not Generally Known” and “Not Readily Ascertainable Through Proper Means” Are Not Unconstitutionally Vague As set forth above, a statute is tested for vagueness by applying it to the facts of case. Here, a person of reasonable intelligence in defendant’s position would know that the Boeing documents he stole were not generally known or readily ascertainable through proper means, in part due to the steps Boeing took to protect the documents. Defendant was an insider with a secret clearance at Rockwell and Boeing since 1973. He signed agreements to protect and not disclose without authorization Boeing’s proprietary information. He stole documents bearing stamps indicating that the information belonged to Boeing. Defendant was aware that access to documents at Boeing was restricted to engineers working on a given program who had a need to know. Finally, defendant lied about having permission to take the documents to his home. Although the government will produce far more evidence at trial regarding the steps Boeing took to protect its information, and defendant’s knowledge of those steps, the facts set forth in the Indictment show that defendant was aware he was taking without authorization information that did not belong to him.2 One court, dealing with fewer adverse facts than presented Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 15 of 24 Page ID #:212 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 here, denied a defendant’s motion to dismiss due to vagueness of the terms “not generally known” and “reasonable means” in the EEA. In United States v. Genovese, 409 F.Supp.2d 253 (S.D.N.Y. 2005), the defendant found a portion of Microsoft source code on the Internet and immediately offered to sell it, describing it as “jacked,” and claiming that others would have a hard time finding it. 409 F.Supp.2d at 257. The court rejected defendant’s argument that he could not have known that the source code was not widely known when he found it on the Internet. Id. The court relied on the fact that defendant knew the source code was stolen (“jacked”) and not widely available (others would have a hard time finding it). Unlike Genovese where the defendant did not work at Microsoft, but instead merely found the source code on the Internet, defendant here was an insider with a secret clearance at Boeing, and signed documents pledging to protect Boeing’s information from improper disclosure. Defendant’s lie about being given permission to take documents home shows defendant knew that he was not allowed to take the documents from Boeing, another indicator they were not generally known. In the case cited by defendant, United States v. Hsu, 40 F.Supp.2d 623 (E.D. Penn. 1999), the court rejected the defendant’s claim that the “generally known” and “readily ascertainable” portions of the trade secret definition were vague. 40 F.Supp.2d at 629. The court did so based on its finding that the defendant knew he could not lawfully obtain the technology he wanted; i.e., that the information was restricted by its owner. The court noted that the defendant had been told Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 16 of 24 Page ID #:213 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 the technology in questions was “proprietary” to its owner, could not be obtained via a license or joint venture due to cost, and would have to be obtained through a corrupt employee. Id. The concerns of that court, cited by defendant, that the terms “not generally known” and “readily ascertainable” were “vaporous” are unpersuasive for two reasons. First, the basis for the court’s concern stemmed from a hypothetical the court posed involving Hannibal Lecter and Little Mary Sunshine. Id. Though perhaps an interesting intellectual exercise, a hypothetical is not the proper test for vagueness. See Hess, 514 F.3d at 909 (“Accordingly, mere ‘speculation about possible vagueness in hypothetical situations not before the [c]ourt’ will not support a facial attack on a statute that is ‘valid in the vast majority of its intended applications.’”) citing Hill, 530 U.S. at 733. A challenge to the vagueness of a statute “must be examined as applied to the defendant.” Jae Gab Kim, 449 F.3d at 942. Defendant does not discuss any facts in this case that even suggest a vagueness problem. Second, the court cited the rapid spread of information in the modern age, such as through the Internet, which made it difficult to know what is “generally known” at any given time. In fact, the argument cuts both ways. What makes it easy to disseminate information also makes it easy to find information. In other words, the Internet makes it easy to publish information, but it also makes it just as easy to find that information. Finally, as noted in Hsu, the concerns expressed by the court were mitigated by the fact that the EEA contains a scienter Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 17 of 24 Page ID #:214 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 requirement. 40 F.Supp.2d at 631, n. 8. As discussed above, the double scienter requirement of § 1831 vitiates any concern over there being a sufficiently clear warning of the proscribed conduct, or the risk of arbitrary law enforcement. B. The EEA’s Reference to “Reasonable Measures” Taken to Protect Trade Secrets Is Not Unconstitutionally Vague At least three courts have rejected vagueness challenges to the “reasonable measures” portion of the trade secret definition of the EEA. In Hsu, the court held that a statute is not void merely for using the word “reasonable.” 40 F.Supp.2d at 628. The court noted that judges and juries are called upon routinely to decide what is reasonable. The court cited the examples of the Fourth Amendment’s ban on unreasonable searches, the provisions in 18 U.S.C. § 922(d)(8) which proscribe the sale of a firearm to a person whom the seller has “reasonable cause” to believe is engaged in conduct that would put an intimate partner in “reasonable fear” of bodily injury, and to the fact that the jury in that case would be applying a standard of beyond a reasonable doubt. Id. The court noted that the defendant had been told the technology in questions was “proprietary,” could not be easily obtained, and would have to be obtained through a corrupt employee. Id. Based on these facts, the court found that “Hsu thus knew that BMS had taken many steps to keep its technology to itself, and therefore he will not be heard to quibble with the ductility of ‘reasonable measures’ as applied to him in this case.” Id. In Krumrei, the defendant worked for a subcontractor that was assisting another company develop a new process for applying Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 18 of 24 Page ID #:215 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The lack of a restrictive stamps on some of the documents3 defendant stole does not defeat a claim of trade secret status. As will be shown at trial, the totality of circumstances in this case will show both that Boeing took more than reasonable steps to protect its trade secrets even without a restrictive stamp, and that defendant knew the unstamped documents were restricted. 15 hard coatings to certain types of surfaces. 258 F.3d at 536. In that case, the prime contractor took steps to safeguard the technology. Although the defendant was not an employee of the prime contractor, but was instead an employee of a subcontractor to another subcontractor, he was told of the confidential nature of the work they were doing. The court rejected a vagueness challenge to reasonable measures, finding that the defendant “was aware he was selling confidential information to which he had no claim,” knew that the information was proprietary, and that the defendant “need not have been aware of particular security measures taken” by the owner of the information. 258 F.3d at 539. In Genovese, the court found that defendant knew that the source code was proprietary to Microsoft and that someone had stolen (“jacked”) it. 409 F.Supp.2d at 258. The court cited the Krumrei decision and found that the defendant did not need to know the “particular security measures” taken by Microsoft, so long as the defendant “knew that the information was proprietary.” Id. citing Krumrei, 258 F.3d at 539. In this case, defendant (1) worked at Boeing and held a secret clearance; (2) signed agreements to protect and not disclose without authorization Boeing’s proprietary information; (3) stole documents bearing stamps indicating that the information belonged to Boeing; (4) was aware that access to3 Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 19 of 24 Page ID #:216 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 documents at Boeing was restricted to engineers working on a given program who had a need to know; and (4) lied about having permission to take the documents to his home. Although the government will produce far more evidence a trial regarding the steps Boeing took to protect its information, and defendant’s knowledge of those steps, the facts set forth in the Indictment show that defendant was aware he was taking without authorization information that did not belong to him. As in Hsu, defendant cannot be heard to “quibble” about lack of notice as to what constitutes “reasonable measures” as applied to him. (Defendant is free, of course, to argue at trial that the steps taken by Boeing were not reasonable, but that is a separate issue from whether the statute is unconstitutionally vague.) C. The EEA’s Reference to “Independent Economic Value” Is Not Unconstitutionally Vague Defendant argues that a “person of ordinary intelligence such as Mr. Chung cannot reasonably be expected to know what information has ‘independent economic value’ and what ‘actual’ versus ‘potential’ ‘economic value’ means, where the ‘value’ set forth . . . derives from ‘not being generally known’ and ‘readily ascertainable,’ which . . . are also unconstitutionally vague.” Motion p. 10. Notably, defendant’s argument contains not a single reference to any of the facts in this case. Mere speculation about possible difficulties in understanding words is not the test for validity. The test is to apply the terms to the facts of this case. First, defendant is not “a person of ordinary intelligence,” but was a trained engineer with a secret clearance who had worked Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 20 of 24 Page ID #:217 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 at Rockwell/Boeing for more than thirty years. One clue to defendant that the information had value was that he and his colleagues were being paid to produce it, often under multi- million dollar contracts with NASA and the Air Force. Second, defendant signed agreements that he would protect all information belonging to Boeing. Third, defendant stole documents that were stamped as proprietary to Boeing. Fourth, defendant lied about having permission to take the documents. Finally, the documents were responsive to requests from PRC officials for specific types of aerospace and defense technology. Assuming that defendant’s co-conspirators in the PRC were of “ordinary intelligence,” they would not ask (and pay) defendant to clandestinely give them technology that lacked any value and could be found in open sources (i.e., was “generally known”) or was readily ascertainable (i.e., the PRC could easily develop the same technology). The concept of “independent economic value from not being generally known” is easily understood through an example. The recipe for Coke has value to its owner from not being generally known because it allows the company to be the sole vendor of that drink. If its recipe became generally known, others could step in and, without the research and development costs the company expended in creating and marketing the drink, sell Coke and deprive the company of market share. The EEA does not require that the government prove a specific value for a trade secret, just that it has value that derives from not being generally known. The issue of specific value only becomes relevant at sentencing. (EEA violations are Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 21 of 24 Page ID #:218 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 sentenced using the fraud loss table of USSG § 2B1.1.) In sum, as applied in this case, the terms “not generally known,” “not readily ascertainable,” “reasonable measures,” and “independent economic value” provide “sufficiently definite warning as to the proscribed conduct.” Schales, 546 F.3d at 972. “Perfect clarity and precise guidance” are not required. Id. Defendant’s arguments go to his perceived difficulty in determining “whether the incriminating fact . . . [can be] proved,” not the “indeterminacy of precisely what that fact is.” Williams, 128 S.Ct. at 1846. Defendant’s arguments are that elements such as “not generally known” or “reasonable measures” may be - in his view - difficult to prove. But the statute itself gives ample notice of “precisely what [the] fact is” that needs to be proved. Also, the scienter requirement is additional proof that the statute will not ensnare otherwise innocent conduct. D. The EEA Presents No Danger of Arbitrary Enforcement Defendant’s argument concerning arbitrary enforcement consists of one conclusory sentence: “The government’s application of the EEA charges against Mr. Chung is hopelessly vague resulting in the ad hoc determination that Mr. Chung’s conduct is illegal.” Motion p. 11. Defendant cites not a single fact to support his argument. This case is neither ad hoc nor arbitrary. Defendant’s home and work space at Boeing were searched after a letter addressed to defendant and his wife was found in the home of Chi Mak in June 2006. The letter was from a PRC official asking for technology and promising payment. Prior to the searches, Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 22 of 24 Page ID #:219 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 defendant was seen discarding newspapers in which he had hidden export-controlled documents taken from the Shuttle Drawing System at Boeing. The search of defendant’s home revealed more than 250,000 pages of documents from Boeing, more letters and tasking lists from PRC officials, export-controlled documents, document containing trade secrets, journals referring to undisclosed trips to the PRC and contact with PRC officials, and a medal and pins from PRC aircraft companies. The government then submitted documents for review to Boeing (the engineers reviewing the documents were not told the reason why they were doing so) to determine if the documents contained any information that was not known outside of Boeing and that had value to Boeing from not being generally known. The government also interviewed Boeing security personnel to determine what steps the company took to protect the information defendant stole. The investigation of defendant lasted more than a year-and-a-half, from the discovery of the letter at Chi Mak’s home in June 2006, to the indictment of defendant in early 2008. The claim that the case against defendant is ad hoc or arbitrary is not credible. This is particularly true given the double scienter requirement in § 1831 that allows conviction only on a finding beyond reasonable doubt that defendant knowingly took trade secrets knowing they would benefit a foreign government. E. Section 371 Is Not Unconstitutionally Vague Defendant’s argument that § 371 is vague is premised wholly on his argument that the EEA’s definition of trade secret is vague. Because the latter is not true, the former is not true either. Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 23 of 24 Page ID #:220 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 VI. CONCLUSION For the foregoing reasons, defendant’s motion to dismiss should be denied. Case 8:08-cr-00024-CJC Document 57 Filed 03/30/09 Page 24 of 24 Page ID #:221