Lee Davis: 6th Circuit Hears Criminal Trade Secrets Case Concerning Giant Tires

Friday, February 15, 2013 - by Lee Davis
Lee Davis
Lee Davis

You might not think a case about giant tires would have much to do with criminal law, but a recent case before the Sixth Circuit Court of Appeals concerning criminal trade secrets involved just that. The case, U.S. v. Howley, involves a trade secrets prosecution under 18 U.S.C. Section 1832(a). The two men at the center of the case, Sean Edward Howley and Clark Alan Roberts, were convicted of stealing trade secrets and engaging in wire fraud.

The case involved engineers who worked for Wyko, an American company that provides parts to tire manufacturers like Goodyear. Apparently the story began when a government owned Chinese company wanted to get in on the giant tire building business.

Tires for huge earthmovers and giant bulldozers are incredibly expensive, complicated items that are only produced by a handful of companies around the world.

While servicing some of the Goodyear machines, Howley and Roberts (who had already signed confidentiality agreements with Goodyear) snuck some pictures. This information was combined with sketches Wyko already obtained from a former Goodyear employee of the machines used to make the tires. This was enough to allow Wyko to start working on a machine of their own for the Chinese company.

In a curious twist, Howley and Roberts claimed that they never stole trade secrets, despite clear evidence of their photographs. The two argued that a trade secret was only a trade secret when the person who owns it has taken measures to secure the information and if the supposedly secret information has value because it is not widely known. The Sixth Circuit flatly rejected the defendants’ arguments, saying that the information was securely kept, pointing out that both had been required to sign a confidentiality agreement and to specifically agree not to take any pictures during their visit to the plant. Moreover, the secret was economically valuable given the lengths Wyko and the Chinese company went to obtain it.

More bad news for the defendants came when the government cross-appealed their sentence, originally a four-month period of home confinement. According to prosecutors, the issue was that the sentence did not match the value of the criminal act. There were three estimates of damage provided by the government: the contract price between the Chinese firm and Wyko - $305,000; the price of Goodyear to make the equipment - $520,000; and finally, Goodyear’s annual sales of the giant tires - $20 million.

The lower court never fully grappled with the estimates given by prosecutors, saying they had failed to prove any economic loss, and decided to simply give Howley and Roberts the minimum sentence allowed. The Sixth Circuit disagreed with the lower court, saying that while it may be difficult to fix the value of a trade secret, the lower court should have at least tried. Even the lowest estimate provided by the prosecution would have resulted in a 37 to 46 month prison sentence. The Court then decided to remand the case for resentencing.

To read the full opinion, click here.

---

(Lee Davis is a Chattanooga attorney who can be reached at lee@davis-hoss.com or at 266-0605.)



TVA Inspector General Resigns To Be U.S. Attorney For Southern District Of Alabama

The TVA Inspector General, Richard W. Moore, was confirmed by the United States Senate on Sept. 14, as the new U.S. Attorney for the Southern District of Alabama after having been nominated by President Donald J. Trump in June of this year. Mr. Moore submitted his resignation letter as Inspector General to President Trump effective the date of his appointment as the ... (click for more)

Chattanooga Chamber Calendar For Sept. 25-29

Here is the calendar for the Chattanooga Chamber of Commerce for Sept. 25-29: Tuesday, Sept. 26, Government Contracting: Managing the Maze to Get the Contract 9-11:30 a.m. BrightBridge Women’s Business Center: 535 Chestnut St., Ste. 161 Are you ready for government contracting? How to sell your products and services to federal, state and/or local governments. How to register ... (click for more)

Jury Hears About Incident Behind Food Lion That Authorities Say Led To Triple Murders In Lookout Valley

A Criminal Court jury on Thursday was told about an incident behind the Food Lion on Brown's Ferry Road that authorities say was the motive for an April 9, 2014, massacre at a Lookout Valley trailer park. Brandon Jackson said the incident five days earlier involved Derek Morse, who is standing trial on three counts of first-degree murder and one count of attempted first-degree ... (click for more)

Firefighters Battle 2-Alarm Apartment Building Fire

More than a dozen people were forced from their homes early Thursday morning when fire broke out in their apartment building.   The Chattanooga Fire Department received the alarm at  2:58 a.m.  and responded to Rainbow Creek Apartments at  7604 Standifer Gap Road  with six fire companies. Seeing a significant amount of fire upon arrival, a ... (click for more)

September Is Prostate Cancer Awareness Month

The calendar fills up quickly in September as families return to a packed routine after quieter summer days. Unfortunately, your health might take a backseat to your busy schedule. So make a note on your calendar that September is Prostate Cancer Awareness Month, and remind yourself—or the men in your life—about the importance of a healthy prostate.   Prostate cancer is ... (click for more)

Roy Exum: McQueen & Her TVAAS

If I am reading my Ouija Board right, I suspect the Hamilton County School Board will vote to allow a controversial “partnership” to be formed with the state Board of Education tonight at its monthly meeting. State Education Commissioner Candice McQueen has said she will demand the one-sided partnership to take over the operation of five at-risk schools in Hamilton County and, if ... (click for more)