U.S. v. Hsu, Crim.A. 97-323-01.

• Decision Date: 11 March 1999
• Docket Number: No. Crim.A. 97-323-01.,Crim.A. 97-323-01.
• Parties: UNITED STATES of America v. Kai-Lo HSU.
• Court: U.S. District Court — Eastern District of Pennsylvania

40 F.Supp.2d 623

UNITED STATES of America v. Kai-Lo HSU.

No. Crim.A. 97-323-01.

United States District Court, E.D. Pennsylvania.

March 11, 1999.

COPYRIGHT MATERIAL OMITTED

Norman E. Greenspan, Ian M. Comisky, Blank, Rome, Comisky & McCauley LLP, Philadelphia, PA, Stephen R. LaCheen, Philadelphia, PA, for Defendant.

Louis Lappen, J. Alvin Stout, III, Asst. U.S. Atty's, Philadelphia, PA, for U.S.

MEMORANDUM

DALZELL, District Judge.

Defendant Kai-Lo Hsu argues that the recently-enacted Economic Espionage Act, 18 U.S.C. § 1831 et seq. ("EEA"), is unconstitutionally vague. Hsu's motion to dismiss the EEA charges in Counts Ten and Eleven of the Indictment raises serious concerns about the scope and clarity of the EEA that we at some length address here.¹

Defendant's Vagueness Argument²

Hsu is charged in the Indictment with, inter alia, conspiracy to steal trade secrets in violation of 18 U.S.C. § 1832(a)(5) (Count Ten), and attempted theft of trade secrets in violation of 18 U.S.C. § 1832(a)(4) (Count Eleven).³ In his motion to dismiss Counts Ten and Eleven of the Indictment, Hsu argues that the EEA is unconstitutionally vague in two respects. First, he contends that the statute is unlawfully vague in that it fails to define the term "related to or included in" a product that is produced for or placed in interstate or foreign commerce. See 18 U.S.C. § 1832(a) (highlighted above). Second, Hsu argues that the definition of "trade secret" in 18 U.S.C. § 1839(3) offends due process with its vagueness because it does not define either "reasonable measures" to keep the information secret, or what is meant by information not being "generally known" or "readily ascertainable" to the public. See 18 U.S.C. § 1839(3) (highlighted above).

The Legal Landscape

It is well-recognized that due process requires a penal statute to "define [a] 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." Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 L.Ed.2d 903 (1983); see also United States v. National Dairy Prods. Corp., 372 U.S. 29, 32-33, 83 S.Ct. 594, 9 L.Ed.2d 561 (1963) ("Void for vagueness simply means that criminal responsibility should not attach where one could not reasonably understand that his contemplated conduct is proscribed"); United States v. Pungitore, 910 F.2d 1084, 1104 (3d Cir.1990) ("A statute is unconstitutionally vague when it either forbids or requires the doing of an act in terms so vague that men of ordinary intelligence must necessarily guess as to its meaning and differ as to its application." (internal quotations omitted)). The void for vagueness doctrine, however, does not mean that a statute is unconstitutionally vague where "Congress might, without difficulty, have chosen `clearer and more precise language' equally capable of achieving the end which it sought." United States v. Powell, 423 U.S. 87, 94, 96 S.Ct. 316, 46 L.Ed.2d 228 (1975) (quoting United States v. Petrillo, 332 U.S. 1, 7, 67 S.Ct. 1538, 91 L.Ed. 1877 (1947)).

It has also been the experience, as Professor Anthony Amsterdam observed almost forty years ago, that "legislation creating `new' crimes (which does not generically tend to be unclear, but is likely to represent affirmative legislative intrusion into realms previously left to individual freedom) is particularly vulnerable to vagueness attack." Anthony G. Amsterdam, The Void-for-Vagueness Doctrine in the Supreme Court, 109 U.Pa.L.Rev. 67, 84 (1960) (citing, e.g., Winters v. New York, 333 U.S. 507, 519-20, 68 S.Ct. 665, 92 L.Ed. 840 (1948); United States v. Reese, 92 U.S. 214, 219, 23 L.Ed. 563 (1875)). The EEA certainly constitutes such legislation, criminalizing, as it does, conduct that heretofore was thought best left to the civil law of unfair competition and cognate jurisprudence.

The developed case law recognizes that when, as here, the First Amendment is not implicated, a void for vagueness challenge must be unconstitutional as applied to the defendant and "must be examined in light of the facts of the case at hand." United States v. Mazurie, 419 U.S. 544, 550, 95 S.Ct. 710, 42 L.Ed.2d 706 (1975); United States v. Pungitore, 910 F.2d 1084, 1104 (3d Cir.1990) (explaining that "[o]utside the First Amendment context, a party has standing to raise a vagueness challenge only insofar as the statute is vague as applied to his or her specific conduct" and citing Supreme Court cases such as New York v. Ferber, 458 U.S. 747, 767-69, 102 S.Ct. 3348, 73 L.Ed.2d 1113 (1982)).⁴

Analysis

Before addressing the merits of Hsu's vagueness arguments as applied to the facts of this case, we must address two contentions defense counsel pressed at the March 8 hearing on this motion.

First, this particular case does not implicate free expression and its attending First Amendment jurisprudence. This case only concerns Hsu's alleged pursuit of taxol technology, more specifically, the plant cell tissue culture technology to make Taxol, from an allegedly corrupt Bristol-Myers Squibb ("BMS") employee. At the hearing, defense counsel contended that free expression issues are implicated here because Tibor A. Rasz, the BMS employee who aided the Government "sting" operation on June 14, 1997 by posing as a corrupt employee, has a right freely to express himself and exchange information with the defendant, or with anyone else he thinks is a potential employer. This argument must fail because Hsu does not have standing to raise Mr. Rasz's First Amendment rights. See, e.g., John E. Nowak and Ronald D. Rotunda, Constitutional Law § 2.12(f) (5th ed.1995) (explaining the law of standing). Furthermore, even if Hsu had standing to champion such rights, in this case Mr. Rasz was knowingly participating in a Government sting operation and did not, for example, believe he was on a job interview with a potential employer. No First Amendment interests are in play here.

Second, at the hearing and in his reply brief, Hsu also argues that the EEA is overbroad because it stifles the free flow of ideas. See Def.'s Omnibus Reply at 8. While we are sympathetic to Hsu's argument, see infra, the Supreme Court has made it clear that "outside the limited First Amendment context, a criminal statute may not be attacked as overbroad." Schall v. Martin, 467 U.S. 253, 268 n. 18, 104 S.Ct. 2403, 81 L.Ed.2d 207 (1984); see also United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987); United States v. Raines, 362 U.S. 17, 21, 80 S.Ct. 519, 4 L.Ed.2d 524 (1960).

"Related to or included in"

We reject Hsu's argument that the term "related to or included in a product that is produced for or placed in interstate or foreign commerce" is unacceptably vague. The cases he cites in support of his argument are all First Amendment decisions in which the only connection to what is at stake here is the fact that the cases involve the use of the term related. See Def.'s Mot. at 20-21 (citing First Amendment cases involving "gang related" symbols and "airport related" activities). We believe the term "related to or included in" is readily understandable to one of ordinary intelligence, particularly here where the defendant appears to be well versed as to the relationship (and technological differences) between "first generation" and "second generation" taxol technology. See, e.g., Transcript of Meeting between Hsu and FBI Agent Hartmann, (Feb. 27, 1996), at DOJ232-33 (in which Hsu explains to Agent Hartmann why he is specifically interested in the "tissue culture" technology to make Taxol).

"Reasonable Measures"

Similarly, we also find that the EEA's definition of "trade secret" — requiring, in part, that the owner take "reasonable measures" to keep such information secret — is also not for use of that locution void for vagueness. First, a statute is not void for vagueness merely because it uses the word "reasonable" or "unreasonable". See, e.g., U.S. Const. amend. IV (prohibiting "unreasonable searches and seizures"); 18 U.S.C. § 922(d)(8) (making it unlawful for any person to sell to, or dispose of, a firearm or ammunition to any person who the seller knows or has "reasonable cause" to believe that such person is engaged in other conduct that would place an intimate partner in "reasonable fear" of bodily injury).⁵ In sustaining the antitrust "rule of reason" as sufficiently definite even in a criminal prosecution, Justice Holmes observed, with his customary sensitivity to human frailty, that "the law is full of instances where a man's fate depends on his estimating rightly, that is, as the jury subsequently estimates it, some matter of degree. If his judgment is wrong, not only may he incur a fine or a short imprisonment ...; he may incur the penalty of death." Nash v. United States, 229 U.S. 373, 377, 33 S.Ct. 780, 57 L.Ed. 1232 (1913).

The Government has here pointed out that the definition of "trade secret" is taken, "with only minor modifications", from the definition used in the Uniform Trade Secret Act (UTSA), which has apparently been adopted in forty states and the District of Columbia, and the language has withstood at least one vagueness attack. See Government's Resp. at 33-34; see also People v. Serrata, 62 Cal.App.3d 9, 133 Cal.Rptr. 144 (Cal.Ct.App.1976) (upholding the constitutionality of California's criminal trade secret statute and explaining that the term "measures" in the statute is not unconstitutionally vague).

Finally, as applied here, it is clear that Hsu and his alleged co-conspirator, Jessica Chou, were told on several occasions (in e-mails, telephone conversations, and in-person meetings) that the taxol technology in question was proprietary to BMS and Phyton, could not be acquired via a license or joint venture (as the cost would be too high), and that they would have to "get [it] another way", namely, through an allegedly corrupt...