CINCINNATI (CN) — A jury made improper assumptions about the value of trade secret information when it convicted a naturalized U.S. citizen from China of espionage, the woman argued Wednesday before a federal appeals court.
Xiaorong You aka Shannon You, from Lansing, Michigan, was born in China but immigrated to the United States, where she later became a naturalized citizen and worked as a chemist for several companies, including Coca-Cola and the Eastman Chemical Co. in Tennessee.
You applied for several grants in her native China and offered to bring technology for a BPA-free aluminum can liner back from the United States, which cost nearly $120 million to develop and is used to prevent corrosion and contamination.
It was her intent to start a can-coating production company in China once she was awarded the grants, according to federal investigators.
The government alleged You downloaded files in August 2017 shortly after a trip to China, but she was not arrested until nearly two years later on Valentines Day 2019.
After a 12-day trial in April 2021, You was convicted by a federal jury of conspiracy to commit economic espionage, conspiracy to steal trade secrets, possession of stolen trade secrets, economic espionage, and wire fraud. She was sentenced to 14 years in prison.
In her brief to the Cincinnati-based Sixth Circuit, You emphasized the trial took place during the height of the Covid-19 pandemic and in the midst of a "virulently anti-Chinese environment," and argued the district court should not have allowed the testimony of University of California economist and China expert Barry Naughton.
"[Naughton testified] that 'every educated Chinese person is aware of' the Chinese government's interest in acquiring illegally obtained technology," the brief said, a statement that You claims prejudiced the jury against her.
The trial court also erred when it failed to include certain elements of the espionage and trade secret charges in the jury instructions, according to You.
In its brief, the government defended the inclusion of Naughton's testimony and argued it did not claim You had the requisite intent to be found guilty of the crimes, but was only "probative of [her] plan to benefit the Chinese government."
According to the government, any errors in the jury instructions were harmless because of the overwhelming amount of evidence of You's guilt.
"You prevented other Coke scientists from seeing the chemical companies' information," it said. "She signed agreements with both Coke and Eastman certifying that, upon termination, she had not taken any confidential information with her.
"She also knew that Eastman employees went to her house to retrieve the hard drive when they found out that she had downloaded Eastman's information. And You admitted to the FBI that she had 'trade secrets' on her computer. You did not dispute any of those facts, which established overwhelmingly that she knew the companies had taken reasonable measures to safeguard their secrets."
Attorney John Cline from Seattle argued Wednesday on behalf of You and reiterated his belief that anti-Asian testimony from several expert witnesses necessitated a mistrial.
"The context of the trial [during the pandemic] is important to understand the prejudicial impact of the testimony," he told the panel.
"You can use your time however you want," Senior U.S. Circuit Judge David McKeague interjected, "but we're all familiar with Covid. We all lived through it, remember?"
McKeague, a George W. Bush appointee, also reminded Cline his client was offered a corrective instruction by the trial court but declined.
"This was the kind of inflammatory statement that a limiting instruction would not solve," the attorney said. "To use the hackneyed phrase, 'the bell could not be unrung.'"
Cline focused on the expert witnesses' use of the phrase "the Chinese," and pointed out the trial court initially excluded the recorded testimony of one witness because of the implicit bias in the words.
"You're talking about one phrase in a 10-day trial," McKeague said.
Cline proceeded to the trial court's use of "intended loss" to set sentencing guidelines after You was found guilty and claimed it made a series of improper assumptions about the value of the trade secrets taken by the scientist.
He argued the $2.9 billion figure used by the trial court as a starting point for the value of the BPA-free can liner market in China was erroneous, as was its failure to subtract the development costs of a theoretical product if You had successfully taken the technology back to her home country.
Attorney Joseph Palmer from the Justice Department's National Security Division argued on behalf of the government, and while he admitted some of the figures used by the trial court might not have been accurate, he urged the panel not to overturn the decision.
"[The monetary figure] would have to go down almost 50% to make a difference in the sentencing guidelines," he said.
Palmer argued the trial court was within its discretion to use not only the harms that resulted from You's conduct to set guidelines, but also the "object" of her conduct, which included the establishment of a can liner company in China.
In his rebuttal, Cline stressed the "record is silent" on the economic realities of the can liner market and said a remand would allow for calculations on the margins of the industry, which he argued could be razor-thin.
Senior U.S. Circuit Judge Danny Boggs, a Ronald Reagan appointee, and U.S. Circuit Judge Julia Gibbons, another George W. Bush appointee who participated remotely, rounded out the panel.
No timetable has been set for the court's decision.Follow @@kkoeninger44
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