United States v. Greenwald, 72-2117.

• Decision Date: 01 June 1973
• Docket Number: No. 72-2117.,72-2117.
• Citation: 479 F.2d 320
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Steven Jeffrey GREENWALD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

479 F.2d 320 (1973)

UNITED STATES of America, Plaintiff-Appellee, v. Steven Jeffrey GREENWALD, Defendant-Appellant.

No. 72-2117.

United States Court of Appeals, Sixth Circuit.

June 1, 1973.

Harry E. Youtt (Court Appointed), Cleveland, Ohio, James London of counsel, for defendant-appellant.

Joseph T. McGinness, Asst. U. S. Atty., Frederick M. Coleman, U. S. Atty., Joseph T. McGinness, Asst. U. S. Atty., Cleveland, Ohio, on brief, for plaintiff-appellee.

Before PHILLIPS, Chief Judge, McCREE, Circuit Judge, and PRATT^*, District Judge.

PRATT, Judge.

The defendant, Steven Jeffrey Greenwald, was convicted by a jury for a violation of Title 18, United States Code, Section 2314, transporting in interstate commerce "goods, wares, merchandise, securities or money, of the value of $5,000 or more, knowing the same to have been stolen, converted or taken by fraud." The crucial issue presented by this appeal is whether secret chemical formulae, or formulations, fall within the statutory language of "goods, wares or merchandise."

The facts are essentially undisputed. Researchers of Pearsall Corporation, defendant's employer, discovered a substitute for antimony oxide, a rare and expensive chemical used in fire retardation processes. The uniqueness of Pearsall's formulations provided an appreciable competitive advantage and it chose not to reveal its discovery but to utilize it in the manufacture of its own products. The number of documents containing the formulations, therefore, was highly restricted but one set was disseminated to the defendant, a chemical engineer employed in the sales department.¹

The uncontradicted testimony of an officer of Pearsall Corporation and the President of Dover Chemical Company, both experienced and knowledgeable in the workings of the chemical industry, demonstrated that there is an established market, even among competitors, of chemical formulae and formulations. While there is, in addition, a commerce in finished products or components, it is not uncommon, according to that testimony, for chemical manufacturers to exchange formulae and formulations either by outright sale or through licensing agreements. Significantly, these formulae are treated as assets, in the same manner as machinery, equipment or accounts receivable.

It is within this context, then, that the defendant contacted a Pearsall Chemical Corporation competitor in Ohio and negotiated for the transmittal of the formulation documents that had come into his possession. After several telephone calls and a personal meeting in New Jersey, it was agreed that the competitor would pay defendant $40,000 for the documents. On August 21, 1970, by pre-arrangement, defendant journeyed to Cleveland, Ohio, and he was there apprehended in the course of consummating the sale.

While this definitional issue is one of first impression in this Court, we have no hesitancy in following the short but impressive interpretations adopted by the Third and Second Circuits in United States v. Seagraves, 265 F.2d 876 (3rd Cir. 1959); United States v. Lester, 282 F.2d 750 (3rd Cir. 1960), cert. denied 364 U.S. 937, 81 S.Ct. 385, 5 L.Ed.2d 368 (1961); American Cyanamid Company v. Sharff, 309 F.2d 790 (3rd Cir. 1962); United States v. Bottone, 365 F. 2d 389 (2d Cir. 1966), cert. denied, 385 U.S. 974, 87 S.Ct. 514, 17 L.Ed.2d 437; In Re Carol Vericker, 446 F.2d 244 (2d Cir. 1971).

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