In the Courts

Federal Appeals Court Overturns Engineer's Obstruction and Witness Tampering Convictions

On May 5, 2017, the U.S. Court of Appeals for the Ninth Circuit set aside the convictions of Walter Liew, a Chinese-American engineer, for witness tampering and making false statements to the court. Notably, the Ninth Circuit upheld Liew's 2014 conviction on the theft of trade secrets and subsequent sale of those secrets to state-owned Chinese companies.

In May 2009, after filing for bankruptcy with his previous company, Liew formed USA Performance Technology, Inc. (USAPTI) and signed a $17.8 million dollar project contract with the Pangang Group (Pangang), a Chinese state-controlled company, for the construction of a Titanium Dioxide (TiO2) facility in Chongquing, China. TiO2 is a white pigment commonly used for a variety of products, including paint and Oreo cookie filling. To assist him with the design and construction of the plant, Liew employed two former engineers from E. I. DuPont de Nemours and Company (DuPont), the world's largest TiO2 producer. Upon receiving an anonymous letter about USAPTI's activities, DuPont suspected that Liew and his business associates stole confidential trade secrets from the company, including information regarding the process and equipment required to build a titanium dioxide production line, the architecture of a plant system, and an internal report about the computer model for a chemical process.

Subsequently, DuPont sued Liew, USAPTI, and his other associates in April 2011 for misappropriating trade secrets. In March 2013, the United States government charged them with several violations of The Economic Espionage Act of 1996 (EEA), plus obstruction of justice, and witness tampering. A jury in the U.S. District Court for the Northern District of California ultimately found Liew guilty on all 10 felony charges, and sentenced him to 15 years in prison with $28 million in fines. The court also fined USAPTI nearly $19 million and sentenced it to five years' probation.

On appeal, the Ninth Circuit upheld the economic-espionage convictions, but overturned the obstruction and witness tampering convictions. In upholding the economic-espionage convictions, the court noted that it was the “minute details and data” of DuPont's TiO2 technology that made it a trade secret under the EEA, and that the technology was “not generally known to the public.” Thus, a reasonable jury could have concluded that Liew sold the technology that DuPont “took reasonable measures to protect” to state-controlled Chinese companies.

On the other hand, the court held that the evidence presented at trial was insufficient to sustain the conviction for conspiracy to obstruct justice. Namely, the court found that Liew's statements in his answer to DuPont's civil complaint that they “never misappropriated any information from DuPont or any of its locations” was merely a general denial of liability. While the court acknowledged that it was possible for a misrepresentation of a material fact in an answer to violate federal law, this did not occur in Liew's case. Liew's conviction for witness tampering, the Ninth Circuit further explained, suffered the same fate. During trial, the prosecution alleged that Liew sought to influence or delay his associate's testimony by suggesting that he not mention anything about the former DuPont employees working on the USAPTI project because it “would not be good for his family.” The court found that, though this evidence could support trade secret charges, it was insufficient to prove beyond a reasonable doubt that Liew intended to intimidate or corrupt the associate and prevent his testimony.

Consequently, the court reversed both the obstruction of justice and witness tampering convictions and remanded the case to the district court to re-examine the evidence and recalculate Liew's sentence, which could now be reduced by five years.

***** In the Courts was written by Monique Agnes O. Ladeji, a summer associate at Mayer Brown, Washington, DC.