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.)


Glen Golden Tapped To Lead Habitat For Humanity’s Retail Store

Glen Golden has been named the operations manager of Habitat for Humanity of Greater Chattanooga Area’s 13,000 square foot home improvement retail store, the ReStore. Mr. Golden, formerly the assistant manager at Home Depot, brings more than 15 years of retail manager experience to Habitat for Humanity. In addition to working in management roles at Home Depot, Mr. Golden also ... (click for more)

Market Street Solutions Ranked Number 1457 By Inc. Magazine

Inc.  magazine ranked, Chattanooga based, Market Street Solutions, a Business Analytics and Big Data Consulting Firm, Number 1457 (increasing from Number 1936 in 2014, 3511 in 2013, and 4330 in 2012) on its 34th annual Inc. 500|5000 list, an exclusive ranking of the nation’s fastest-growing private companies. This is the seventh time in the last eight years that Market ... (click for more)

Developer Says CARTA To Lease 75 Parking Spaces At Renaissance Park Lot For New $14 Million Apartments

A member of the Vision Hospitality Group said Tuesday that CARTA plans to lease 75 spaces at the public parking lot by Renaissance Park for its planned $14 million apartment complex. Drew Hibbard, vice president of finance and investments, told members of the North Chattanooga Council of the Chamber of Commerce that it will be under a 50-year lease with the transit group that ... (click for more)

Muslim Civil Rights Advocacy Group Calls For Protection Of Muslims In Tennessee In Light Of Statements By Sheriff Hammond

The Council on American-Islamic Relations (CAIR), the nation’s largest Muslim civil rights and advocacy organization, on Tuesday called on public officials "to act to protect the civil rights of Tennessee’s Muslim community following anti-Islam remarks" by Hamilton County Sheriff Jim Hammond. Sheriff Hammond told members of the Hamilton County Pachyderm Club on Monday that he ... (click for more)

Sheriff Hammond Is Right On The Muslim Threat

Sheriff Hammond is exactly correct on the Muslims in Tennessee.  He sees with clear eyes the problem with the Muslims in our state and country.  They do want to take over Tennessee.  Our politicians are selling us down the river and allowing the trouble makers to dig in like tics and suck out the life's blood of our Constitution and take us over.  They ... (click for more)

Roy Exum: My September Garden

As we begin the annual pilgrimage into fall, I walk through my garden and, in the spirit of Orchids and Onions, I see colorful mums starting to flower at the same time dried-up weeds are begging to be pulled. So as we turn the calendar to September, here are some things that catch my eye: A COLORFUL MUM to Chattanooga State for unveiling the Michael Hennen Hospitality Center in ... (click for more)