United States v. Kai-Lo Hsu, A/K/A James Hsu. United States of America v. Chester S. Ho. United States of America

U.S. Court of Appeals8/26/1998
View on CourtListener

AI Case Brief

Generate an AI-powered case brief with:

📋Key Facts
⚖️Legal Issues
📚Court Holding
💡Reasoning
🎯Significance

Estimated cost: $0.001 - $0.003 per brief

Full Opinion

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. § 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 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 *192 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 introduce technology from advanced countries into Taiwan. When Hart-mann 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 Hart-mann 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 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 doeu- *193 merits 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. § 1343, one count of general federal conspiracy in violation of 18 U.S.C. § 371, two counts of foreign and interstate travel to facilitate commercial bribery in violation of 18 U.S.C. § 1952(a)(3), one count of aiding and abetting in violation of 18 U.S.C. § 2, ánd, 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. §§ 1832(a)(4) and (a)(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. § 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 defense team, such as the defendants’ attorneys and trial experts, and under which the documents would be filed 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 *194 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]p 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. § 1835. We now have jurisdiction under that section, and we exercise plenary review over the novel legal questions presented by 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, Tivnds 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

For example, the government often sought convictions under the National Stolen Property Act ("NSPA"), 18 U.S.C. § 2314, or the mail and wire fraud statutes, 18 U.S.C. §f 1341 and 1343. However, the NSPA "was drafted at a time when computers, biotechnology, and copy machines did not even *195 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 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 EE A 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 EE A criminalizes two principal categories of corporate espionage, including “Economic espionage” as defined by 18 U.S.C. § 1831, and the “Theft of trade secrets” as defined by § 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 § 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, § 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, 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 § 1831. First, a defendant charged under § 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 § 1831, which states merely that *196 the offense “benefit,” in any manner, a foreign government, instrumentality, or agent. Therefore, prosecutions under § 1832 uniquely require that the defendant intend to confer an economic benefit on the defendant or another person or entity. Second, § 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 § 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 § 1831, § 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. § 1839(3) provides that a “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.

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 competitors of the trade secret owner. UTSA § 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 *197 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. § 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 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 § 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. § 1832(2).” 982 P.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 § 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 §§ 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 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 *198 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 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. § 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 § 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 nonexistence 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 nonexistence of an actual trade secret is of little consequence for an attempt or conspiracy crime. Thus, we will first 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

*199 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 unredaeted 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, “Illegal 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 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, 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 *200 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. § 1791 and 28 C.F.R. § 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.

In subsequent years, however, we have explored and defined Berrigan 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. § 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. § 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. § 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 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, 72 S.Ct. 240, 96 L.Ed. 288 (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 *201 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. 104-859, 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. 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 eases 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 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 *202 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 we find 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

Additional Information

United States v. Kai-Lo Hsu, A/K/A James Hsu. United States of America v. Chester S. Ho. United States of America | Law Study Group