United States v. Hsu

Opinions of the United

1998 Decisions States Court of Appeals

for the Third Circuit

8-26-1998

United States v. Hsu

Precedential or Non-Precedential:

Docket 97-1965

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Filed August 26, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-1965

UNITED STATES OF AMERICA

v.

KAI-LO HSU, a/k/a JAMES HSU

UNITED STATES OF AMERICA

v.

CHESTER S. HO

United States of America,

Appellant

ON APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(D.C. Criminal Nos. 97-cr-323-1 and 97-cr-323-2)

Argued: June 10, 1998

Before: STAPLETON, COWEN, and RENDELL,

Circuit Judges

(Opinion Filed: August 26, 1998)

Michael R. Stiles

Walter S. Batty, Jr.

Richard W. Goldberg (ARGUED)

Louis D. Lappen

Office of the United States Attorney

615 Chestnut Street, Suite 1250

Philadelphia, PA 19106

Attorneys for Appellant

William E. McDaniels (ARGUED)

Paul Mogin

Williams & Connolly

725 Twelfth Street, N.W.

Washington, DC 20005

Thomas H. Suddath, Jr.

Montgomery, McCracken, Walker

& Rhoads, LLP

123 South Broad Street

Philadelphia, PA 19109

Attorneys for Appellee,

Chester S. Ho

Norman E. Greenspan

Ian M. Comisky

Blank Rome Comisky &

McCauley LLP

One Logan Square

Philadelphia, PA 19103

Attorneys for Appellee,

Kai-Lo Hsu

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.

S 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

2

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 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

_________________________________________________________________

1. The factual summary that follows is based entirely on the as yet

unproven allegations in the July 1997 indictment. Because this is an

interlocutory appeal, the record is not complete, discovery has not

concluded, and no determination of the facts has yet occurred.

Therefore, we offer these facts as averred to provide a context for the

issues on appeal, without vouching for the truth of any of the facts we

recite.

3

introduce technology from advanced countries into Taiwan.

When Hartmann 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 Hartmann 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

4

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 documents 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. S 1343, one count of general federal conspiracy in

violation of 18 U.S.C. S 371, two counts of foreign and

interstate travel to facilitate commercial bribery in violation

of 18 U.S.C. S 1952(a)(3), one count of aiding and abetting

in violation of 18 U.S.C. S 2, and, 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. SS 1832 (a)(4) and

(a)(5).

_________________________________________________________________

2. An arrest warrant has since been issued for Chou, but she lives in

Taiwan, which has no extradition treaty with the United States.

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. S 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

_________________________________________________________________

3. Section 1835 is part of the EEA and provides, inter alia, that "[i]n

any

prosecution or other proceeding under this chapter, the 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."

Rule 16(d)(1) provides in relevant part that "[u]pon a sufficient showing

the court may at any time order that the discovery or inspection be

denied, restricted, or deferred, or make such other order as is

appropriate."

6

defense team, such as the defendants' attorneys and trial

experts, and under which the documents would befiled

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 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]n 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. S 1835. We now

have jurisdiction under that section, and we exercise

plenary review over the novel legal questions presented by

7

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, Trends 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

_________________________________________________________________

4. The issues are "novel" in part because this is a matter of first

impression in the federal courts. Only five EEA prosecutions were

publicly announced in the first eighteen months of the statute's

existence, and none had proceeded to trial as of March 1998. See Lorin

L. Reisner, Criminal Prosecution of Trade Secret Theft, N.Y.L.J., March

30, 1998, at 1. Furthermore, EEA prosecutions are likely to remain

infrequent in the near future, because the Attorney General of the United

States has pledged that the government will not, until October 2001,

pursue charges under the EEA "without the personal approval of the

Attorney General, the Deputy Attorney General, or the Assistant Attorney

General for the Criminal Division (or the acting official in each of these

positions if a position is filled by an acting official)." 142 Cong. Rec.

S12,214 (daily ed. Oct. 2, 1996) (letter of Janet Reno).

5. Prior to the passage of the EEA, the only federal statute directly

prohibiting economic espionage was the Trade Secrets Act, 18 U.S.C.

8

For example, the government often sought convictions

under the National Stolen Property Act ("NSPA"), 18 U.S.C.

S 2314, or the mail and wire fraud statutes, 18 U.S.C.

SS 1341 and 1343. However, the NSPA "was drafted at a

time when computers, biotechnology, and copy machines

did not even 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

_________________________________________________________________

S 1905, which forbids the unauthorized disclosure of confidential

government information, including trade secrets, by a government

employee. See, e.g., United States v. Wallington, 889 F.2d 573 (5th Cir.

1989) (upholding a defendant's conviction under S 1905 for running

background checks on persons whom the defendant's friend suspected of

trafficking in narcotics). However, the Trade Secrets Act was of limited

value, because it did not apply to private sector employees and it

provided only minor criminal sanctions of a fine and not more than one

year in prison.

6. In fact, several cases cast serious doubt as to whether the NSPA even

applies to the type of intangible information involved in modern schemes

of corporate espionage. See, e.g., Dowling v. United States, 473 U.S. 214,

216 (1985) (stating that the NSPA "seems clearly to contemplate a

physical identity between the items unlawfully obtained and those

eventually transported, and hence some prior physical taking of the

subject goods"); United States v. Brown, 925 F.2d 1301, 1307-08 (10th

Cir. 1991) (holding that the theft of purely intellectual property is not

punishable by the NSPA because it is not physical property within the

meaning of the statute).

7. State remedies were also of little assistance. As of 1996, at least

twenty-four states had criminal statutes directed at the theft of trade

secrets, James H.A. Pooley, et al., Understanding the Economic Espionage

Act of 1996, 5 Tex. Intell. Prop. L.J. 177, 186 (1997), and forty-four

states and the District of Columbia had adopted some form of the

Uniform Trade Secrets Act, which permits civil actions to enjoin and

obtain damages for actual and attempted misappropriation of trade

secrets. Victoria A. Cundiff, The Economic Espionage Act and You, 490

PLI/Pat 9, 27 (1997). Yet the states often lacked sufficient resources to

pursue espionage prosecutions, see Pooley, supra, at 186, and

corporations eschewed bringing civil lawsuits, because they had to

shoulder their own litigation costs, individual defendants were frequently

judgment proof, and it proved difficult for the state courts to exercise

jurisdiction over lawsuits involving out-of-state defendants. See Cundiff,

supra, at 27.

9

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 EEA 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 EEA criminalizes two principal categories of

corporate espionage, including "Economic espionage" as

defined by 18 U.S.C. S 1831, and the "Theft of trade

secrets" as defined by S 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 S 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, S 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,

_________________________________________________________________

8. The EEA also permits parallel civil actions to "obtain appropriate

injunctive relief against any violation" of the statute. 18 U.S.C. S

1836(a).

10

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 S 1831. First, a defendant charged

under S 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 S 1831, which states merely that

the offense "benefit," in any manner, a foreign government,

instrumentality, or agent. Therefore, prosecutions under

S 1832 uniquely require that the defendant intend to confer

an economic benefit on the defendant or another person or

entity. Second, S 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 S 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 S 1831, S 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. S 1839(3)

provides that a "trade secret" means:

_________________________________________________________________

9. Section 1832 also imposes more lenient punishments than S 1831.

Under S 1832, individuals can be sentenced to ten years in prison

and/or fined $250,000, and organizations can befined up to $5 million.

Section 1831, however, provides that individuals can be imprisoned for

fifteen years and/or fined $500,000, and organizations can be fined a

maximum of $10 million. Moreover, under both sections, defendants are

subject to criminal forfeiture pursuant to 18 U.S.C.S 1834, which states

that a person or entity shall forfeit any property constituting, or

derived

from, the proceeds of an EEA crime, and, if the sentencing court "in its

discretion so determines," any property used, or intended to be used, to

commit or facilitate an EEA offense.

11

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

_________________________________________________________________

10. For example, S 1(4) of the UTSA states that a "trade secret" includes:

information, including a formula, pattern, compilation, program,

device, method, technique, or process, that:

(i) derives independent economic value, actual or potential, from

not

being generally known to, and not being readily ascertainable by

proper means by, other persons who can obtain economic value

from its disclosure or use, and

(ii) is the subject of efforts that are reasonable under the

circumstances to maintain its secrecy.

12

competitors of the trade secret owner. UTSA S 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 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. S 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

13

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 S 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.

S 1832(2)." 982 F. 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 S 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 SS 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

14

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

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

_________________________________________________________________

11. It should be noted that the information sought to be disclosed here

includes those portions of the documents used at the June 14 meeting

which Bristol-Myers redacted before providing them to anyone, including

their counsel. The district court did not examine the redactions or assess

their true materiality. We have been advised by counsel for the

government that the redactions consist of technical information that

constitutes trade secrets under any definition.

12. The defendants also argue that disclosure is warranted because the

government has not met its burden of proving the need for a protective

order precluding discovery of the documents. However, their argument is

based entirely on the language of Federal Rule of Civil Procedure 26(c)

and on the cases interpreting its requirements in civil actions. See,

e.g.,

Smith v. BIC Corp., 869 F.2d 194, 199 (3d Cir. 1989). No such burden-

shifting or elements of proof exist under the facts of this case, where

the

government seeks to protect trade secrets in a criminal prosecution

under the provisions of the EEA.

13. Although seeking to address the government's interests in the

confidentiality of trade secrets, the district court concentrated on the

defendants' rights and did not engage in any discussion of the

relationship between the two.

15

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. S 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 S 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 non-

existence 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 non-

existence of an actual trade secret is of little consequence

for an attempt or conspiracy crime. Thus, we willfirst

_________________________________________________________________

14. See, e.g., Model Penal Code S 5.01(1)(c) (declaring a defendant guilty

of attempt when, "acting with the kind of culpability otherwise required

for commission of the crime, he ... purposely does or omits to do

anything that, under the circumstances as he believes them to be, is an

act or omission constituting a substantial step in a course of conduct

planned to culminate in his commission of the crime"); id. at S 5.02(1)(a)

(stating that a defendant is guilty of conspiracy with other persons if,

"with the purpose of promoting or facilitating[the crime's] commission

he agrees with such other person or persons that they or one or more of

them will engage in conduct which constitutes such crime or an attempt

or solicitation to commit such crime").

16

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

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 unredacted 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,

"[l]egal 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

_________________________________________________________________

15. We emphasize that we need not reach, and are not determining, the

issue addressed by the district court of whether the disclosure of trade

secrets is mandated by the Constitution or the Federal Rules of Criminal

Procedure if a defendant is charged with the actual theft of trade

secrets.

This is a complex issue. For one thing, whether information qualifies as

an actual "trade secret" is precisely defined by the EEA, and centers on

such factual questions as how the information has been guarded by its

owner and whether it is ascertainable by the public, rather than on the

content of the secret or the defendant's requests as such. This raises an

issue as to whether the information or formula itself is in fact material

to the existence of the trade secret. In addition, the other elements of

the

offense, and the available defenses, may differ significantly if the

defendant is accused of a completed crime rather than a crime of

attempt or conspiracy.

16. This type of legal impossibility is actually what some commentators

have termed "hybrid" legal impossibility, because the actor's goal is

17

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,

_________________________________________________________________

illegal, but commission of the offense is somehow rendered impossible by

attendant circumstances. See, e.g., Joshua Dressler, Understanding

Criminal Law, S 27.07[D], at 372 (2d ed. 1995). Another type of legal

impossibility -- "pure" legal impossibility-- occurs when the law does

not even "proscribe the goal that the defendant sought to achieve." Ira P.

Robbins, Attempting the Impossible: The Emerging Consensus, 23 Harv.

J. on Legis. 377, 389 (1986). Pure legal impossibility is always a

defense.

For example, a hunter cannot be convicted of attempting to shoot a deer

if the law does not prohibit shooting deer in thefirst place. Therefore,

we

make clear that our discussion refers only to "hybrid" legal impossibility

as we have defined it.

18

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 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.S 1791 and

28 C.F.R. S 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.

19

In subsequent years, however, we have explored and

defined Berrigan's 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. S 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. S 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. S 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

20

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 (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 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. 104-359, 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.

21

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 cases 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

_________________________________________________________________

17. Individual legislators echoed these goals as well, declaring that the

EEA would serve as a "comprehensive statute" to combat corporate

espionage. 142 Cong. Rec. H10,461 (daily ed. Sept. 17, 1996) (statement

of Rep. Hyde). Even the President himself stated upon signing the bill

that "[t]his Act establishes a comprehensive and systematic approach to

trade secret theft and economic espionage." Statement by President

William J. Clinton Upon Signing H.R. 3723, reprinted in 1996

U.S.C.C.A.N. 4034, 4034.

22

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 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 wefind

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 that Congress meant to

permit legal impossibility to be asserted as a defense to

EEA crimes.

Finally, we are mindful, as Everett was, 700 F.2d at 907

n.16, of the potential damage that the defendants' position

could work on law enforcement under the statute. If we

were to hold that legal impossibility is a defense to the

attempted theft of trade secrets, the government would be

compelled to use actual trade secrets during undercover

operations in order to obtain convictions underS 1832(a)(4).18

_________________________________________________________________

18. The government claims that it used documents containing actual

trade secrets in this case, only "because of the difficulty in preparing

on

short notice documents which appeared to be authentic for presentation

to the trained scientists brought to the meeting by Hsu." (Gov't. Reply

Br. at 4 n.3.)

23

Aside from the logistical difficulties this would create, it

would also have the bizarre effect of forcing the government

to disclose trade secrets to the very persons suspected of

trying to steal them, thus gutting enforcement efforts under

the EEA. We believe Congress could not have intended such

a result, inasmuch as it was striving to prevent economic

espionage and to maintain the confidentiality of trade

secrets. Therefore, given the strong indicia of legislative

intent, and given the practical import of a contrary finding,

we conclude that Congress could not have intended EEA

attempt crimes to be subject to the somewhat obscure and

rarely used common law defense of legal impossibility.

Accordingly, we hold that legal impossibility is not a

defense to a charge of attempted misappropriation of trade

secrets in violation of 18 U.S.C. S 1832(a)(4). We agree with

the district court's conclusion that a charge of "attempt"

under the EEA requires proof of the same elements used in

other modern attempt statutes, including the Model Penal

Code. A defendant is guilty of attempting to misappropriate

trade secrets if, "acting with the kind of culpability

otherwise required for commission of the crime, he ...

purposely does or omits to do anything that, under the

circumstances as he believes them to be, is an act or

omission constituting a substantial step in a course of

conduct planned to culminate in his commission of the

crime." Model Penal Code S 5.01(1)(c) (1985).19 Thus, the

defendant must (1) have the intent needed to commit a

crime defined by the EEA, and must (2) perform an act

amounting to a "substantial step" toward the commission of

that crime. See Cicco, 10 F.3d at 984-85 (attempt crimes

_________________________________________________________________

19. We adopt the Model Penal Code ("MPC") test for attempt because it

is consistent with our own caselaw and with the great weight of modern

precedent. We have indicated that the MPC constitutes "well-settled

principles of the law of attempt," United States v. Kikumura, 918 F.2d

1084, 1108 (3d Cir. 1990), we have found that it"is logical and in

conformity with the purposes of the criminal law," United States v. Cruz-

Jimenz, 977 F.2d 95, 102 n.10 (3d Cir. 1992), and we have employed its

principles on several occasions. See, e.g., id.; Cicco, 10 F.3d at 984-85;

Everett, 700 F.2d at 908. Moreover, the majority of federal courts have

now embraced the MPC test for attempts as well. See Cruz-Jimenz, 977

F.2d at 102 n.8 (citing cases); Dressler, supra, at S 27.09[A].

24

require a showing of intent and "evidence of conduct

constituting a substantial step toward commission of the

crime in pursuit of the culpable intent"); Everett, 700 F.2d

at 908 (conviction for attempt requires proof of intent and

"some measure of objective evidence corroborating the

attempted" crime).

It naturally follows that the government need not prove

that an actual trade secret was used during an EEA

investigation, because a defendant's culpability for a charge

of attempt depends only on "the circumstances as he

believes them to be," not as they really are. The government

can satisfy its burden under S 1832(a)(4) by proving beyond

a reasonable doubt that the defendant sought to acquire

information which he or she believed to be a trade secret,

regardless of whether the information actually qualified as

such. Consequently, in the instant case, the defendants

have no arguable constitutional or statutory right to view

the unredacted portion of the Taxol documents in order to

defend against charges of attempt on the basis of legal

impossibility.

2. Conspiracy

We also hold that the defendants have no need for the

Taxol documents to defend against the government's

charges of conspiracy, because we conclude that legal

impossibility is not a defense to conspiracy. Although we

have stated that impossibility may be a valid defense to

attempt crimes, Berrigan, 482 F.2d at 190, we have never

recognized the defense for conspiracy charges, and we are

persuaded by the views of our district courts, and by the

decisions of our sister circuits, that the impossibility of

achieving the goal of a conspiracy is irrelevant to the crime

itself. See, e.g., United States v. Wallach, 935 F.2d 445, 470

(2d Cir. 1991); United States v. LaBudda, 882 F.2d 244,

248 (7th Cir. 1989); United States v. Petit, 841 F.2d 1546,

1550 (11th Cir. 1988); United States v. Everett, 692 F.2d

596, 599 (9th Cir. 1982); Yepes v. United States, Civ. A. No.

93-2310, 1993 WL 525578, at *4 (D.N.J. Dec. 15, 1993).

It is well-settled that conspiracy and attempt serve

different roles in the criminal law. The law of attempts was

25

traditionally viewed as a way "to deal with conduct which

create[d] a risk of immediate harmful consequences."

Wayne R. LaFave & Austin W. Scott, Jr., Substantive

Criminal Law, S 6.5(b), at 91 (2d ed. 1986). Even under the

modern view, attempt prosecutions generally proceed only

against those who have taken a "substantial step" toward

commission of a substantive crime. See Model Penal Code

S 5.01(1)(c) (1985). However, the law of conspiracy is much

more preventive, aiming to nip criminal conduct in the bud

before it has the chance to flourish into more ominous

behavior. See Wallach, 935 F.2d at 470 (noting that

conspiracy serves to protect society and prevent criminal

behavior "in its early stages"); LaFave & Scott, supra,

S 6.5(b), at 91 (stating that "[c]ourts have generally taken a

broader view of the purposes of conspiracy"). As the

Supreme Court has written,

[t]he law of conspiracy identifies the agreement to

engage in a criminal venture as an event of sufficient

threat to social order to permit the imposition of

criminal sanctions for the agreement alone, plus an

overt act in pursuit of it, regardless of whether the

crime agreed upon actually is committed. Criminal

intent has crystallized, and the likelihood of actual,

fulfilled commission warrants preventive action.

United States v. Feola, 420 U.S. 671, 694 (1975) (citations

omitted).

It is thus the conspiratorial agreement itself, and not the

underlying substantive acts, that forms the basis for

conspiracy charges. United States v. Jannotti, 673 F.2d 578,

591 (3d Cir. 1982) (en banc). The "illegality of the

agreement does not depend on the achievement of its ends,"

and it is "irrelevant that the ends of the conspiracy were

from the very inception of the agreement objectively

unattainable." Id.; see also United States v. Olgin, 745 F.2d

263, 273 (3d Cir. 1984) (stating that "the objective

impossibility of attaining the goals of a conspiracy is

irrelevant to the guilt of those who conspire").

Consequently, it is equally irrelevant that the commission

of a substantive offense may have been legally impossible

for the conspiracy to achieve all along. We therefore join

our sister circuits, and the district courts in our own

26

circuit, in squarely holding that legal impossibility is not a

defense to conspiracy.20

As a result, the Taxol trade secrets in the Bristol-Myers

documents are not "material" to the preparation of the

defendants' impossibility defense, because proof that the

defendants sought to steal actual trade secrets is not an

element of the crimes of attempt or conspiracy under the

EEA. A defendant can be convicted of attempt or conspiracy

pursuant to 18 U.S.C. SS 1832(a)(4) or (a)(5) even if his

intended acts were legally impossible.

_________________________________________________________________

20. We are aware of only three federal appellate decisions even implying

that legal impossibility is a defense to conspiracy, but none of these

cases is probative of the issue before us. First, in Ventimiglia v. United

States, the Fourth Circuit reversed the convictions of three defendants

accused of conspiring to violate a Taft-Hartley Act provision forbidding

the payment of money by an employer to "any representative of any of

his employees." 242 F.2d 620 (4th Cir. 1957). Because the defendants

had paid a person who was not, in fact, a "representative of " their

employees, the court held that the conviction for conspiracy was legally

impossible. However, the defendants in that case knew that the

individual in question was not a "representative" within the meaning of

the statute. Id. at 266. Therefore, the court's comments regarding legal

impossibility were entirely in dicta; the convictions were reversed

because the defendants did not even have the specific intent needed to

sustain a charge of conspiracy.

Second, in O'Kelley v. United States, the Eighth Circuit held that

several defendants could not be convicted of a conspiracy to steal goods

in interstate commerce where the goods were not in interstate commerce.

116 F.2d 966, 968 (8th Cir. 1941). However, this statement was also

dicta, because there was no jurisdiction to prosecute the defendants

absent proof of an effect on interstate commerce, and, as in Ventimiglia,

there was no showing that the defendants possessed the requisite

criminal intent.

Finally, in Woo Wai v. United States, the Ninth Circuit reversed a

conviction for a conspiracy to smuggle aliens into the U.S., because,

inter

alia, the act would not have been a crime even if completed. 223 F. 412,

414-15 (9th Cir. 1915). Yet Woo Wai was an entrapment case, and any

references to the impossibility of the crime were wholly extraneous to the

holding. Moreover, to the extent that Woo Wai states that impossibility

is a defense to conspiracy in the Ninth Circuit, the Ninth Circuit has

since rejected that claim expressly. See, e.g., Everett, 692 F.2d at 599;

United States v. Sanford, 547 F.2d 1085, 1091 (9th Cir. 1976).

27

B. Relevance of Purported Secret Information to

Other Aspects of the Defense Strategy

Having concluded that the defendants' right to access

actual trade secrets is not required in order to defend

against an element of the government's case, the question

remains whether the defendants' right of access to the

information as it relates to other defenses passes muster

under the test of materiality. The defendants argue that the

unredacted documents are also material to the preparation

of the potential defenses of entrapment, outrageous

government conduct, and jurisdiction, and contend that the

documents are needed to defend against the elements of

attempt and conspiracy, the allegations of the indictment,

and the evidence that the government intends to introduce

at trial.

As an initial matter, we note that we are skeptical of the

materiality, let alone relevance, of the redacted trade secret

information to these issues. For example, the defendants

argue that they need the unredacted documents to disprove

the intent and "substantial step" elements of attempt and

the "overt act" requirement of conspiracy.21 However, proof

of these factors is necessarily independent of any trade

secrets contained in the Bristol-Myers documents, because

the defendants can be guilty of attempt and conspiracy to

steal trade secrets even if the documents contained no

confidential information at all. See MPC S 5.01(1)(c)

(attempt), S 5.02(1)(a) (conspiracy).22

_________________________________________________________________

21. Conspiracy charges under S 1832 require both an agreement and

an "overt act" in furtherance of the conspiratorial objective. See 18

U.S.C. S 1832(a)(5) (providing that a defendant is guilty of conspiracy if

he "conspires with one or more other persons" to commit an offense

proscribed by S 1832, and if "one or more of such persons do any act to

effect the object of the conspiracy").

22. Moreover, the government has assured us that it has no intention

to use or refer to the alleged trade secrets at trial. The government

intends to prove its allegations instead by using other materials that

reflect an attempt and a conspiracy to violate the EEA. For example, the

government has stated that it may offer the e-mail list that Chou

allegedly sent to Hartmann on March 13, 1997, outlining the "core

technology" that YFP would need to complete a deal. By this list the

government intends to prove that the defendants attempted to steal what

they believed to be "trade secrets" without ever revealing the actual

trade

secrets themselves. The jury will thus never learn-- and will have no

reason to learn -- of the content of the redacted material.

28

However, we will not address defendants' claim of need

for the redactions as to any other defense or aspect of the

case for two reasons. First, the defendants never raised the

materiality of the redacted information as to any other

defenses before the district court, and the court never

addressed these other arguments in its opinion. The

defendants' briefs to the district court argued only that the

government must prove the existence of an actual trade

secret in a prosecution for attempt and conspiracy and that

legal impossibility remains a viable defense. We will not

examine other contentions as to the materiality or relevance

of trade secret information that are being raised for the first

time on appeal. See Harris v. City of Philadelphia, 35 F.3d

840, 845 (3d Cir. 1994) ("This court has consistently held

that it will not consider issues that are raised for the first

time on appeal.").23

Further, no one -- not this Court, not the district court,

not even the parties themselves -- knows the content of the

redacted Bristol-Myers documents at issue in this case. It

was stated at oral argument that the documents have been

reviewed and edited for trade secrets by Bristol-Myers

employees alone, without any oversight by the court, the

government, or the defense. Thus, while we might be

skeptical of the defendants' asserted need for this

information, we will not decide whether they have a right to

access documents that could conceivably reveal information

needed to preserve their rights to a fair trial. Only defense

counsel know the precise contours of the defendants' case,

and we are not in a position to make judgments about the

_________________________________________________________________

23. In some situations, we provide direction to the parties by

addressing issues that are certain to arise upon a remand of the case,

even if the issues were not discussed initially by the district court.

See,

e.g., New Jersey Coalition of Rooming and Boarding House Owners v.

Mayor of Asbury Park, ___ F.3d ___, No. 97-5483, 1998 WL 427231, at

*2 (3d Cir. July 30, 1998) (highlighting statutory and constitutional

claims "that may require further consideration" upon remand). Here,

however, we are unable to offer informed guidance, because we are

without the benefit of a full review of the redacted materials. The

complete breadth of the defendants' arguments cannot be determined

unless and until this case is remanded and the district court examines

the potential defenses in light of the content of the Bristol-Myers

documents.

29

impact of the redacted material without having seen the

material ourselves.

Accordingly, we will remand this action to the district

court. If the defendants raise before the district court the

additional arguments that they have urged on appeal, we

would expect the district court to conduct an in camera

review to determine whether the documents have been

properly redacted to exclude only confidential information

and to assess whether what was redacted is "material" to

the defense.

In such event, because "public policy requires protection

of portions of a document, . . . in camera inspection by the

trial judge or magistrate is unavoidable." Bogosian v. Gulf

Oil Corp., 738 F.2d 587, 596 (3d Cir. 1984). Even if proof

of an actual trade secret is not an element of SS 1832(a)(4)

and (a)(5), an independent assessment of whether materials

are nonetheless discoverable is anticipated in the language

of S 1835, which provides that the district 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." Rule

16(a)(1)(C) of the Federal Rules of Criminal Procedure

enables the defendants to obtain documents in the

government's possession that are material to the

preparation of their defense, or are intended for use by the

government as evidence in chief at trial. These principles

suggest that the district court should examine the relevant

portions of the Bristol-Myers documents to assess the

materiality of those portions of the documents sought to be

withheld. See United States v. Bocra, 623 F.2d 281, 285 (3d

Cir. 1980) ("The submission of discovery materials to the

court for an in camera inspection and decision as to which

materials are discoverable is commonly used when the

Government's need for preserving confidentiality over the

materials must be balanced with the defendant's

constitutional right to evidence material to his defense.").

We leave to the district court the ultimate resolution of

these issues if raised on remand by the defendants.

30

IV. CONCLUSION

The district court's Order dated October 27, 1997, will be

reversed, and the cause will be remanded for further

proceedings consistent with this opinion.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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