A rare economic espionage case ended badly for the government Friday, as a federal jury acquitted two Silicon Valley engineers on a pair of counts and deadlocked on three others.
Jurors who sided with Lan Lee and Yuefei Ge felt the government relied too heavily on evidence supplied by NetLogic Microsystems Inc., the alleged victim. To prove that information found on defendants' computers was, in fact, a trade secret, prosecutors called only witnesses from the company itself.
But those corporate witnesses had an interest in testifying that way, juror Qin Yuqiang told The Recorder on Friday.
"The government should bring a third party, independent. That would be more convincing," said Yuqiang, a Chinese-American juror with a tech background. (Prosecutors tried to bump Yuqiang during voir dire, but the defense argued, successfully, that he was being targeted because of his racial background.)
The government accused Ge and Lee of stealing trade secrets from their employer, NetLogic, and trying to commercialize them with venture funding from the Chinese government.
The Justice Department has been vocal about blocking technology leaks to foreign governments, especially China. So as part of its effort against Lee and Ge, Assistant U.S. Attorney Matthew Parrella cut a deal with two other engineers. He put them before the grand jury to discuss how the Chinese government funds startups, and then bumped up the trade secret charges against Lee and Ge to include economic espionage counts.
The trial lasted three weeks. U.S. District Judge James Ware of San Jose, Calif., didn't allow Parrella and Assistant U.S. Attorney Joseph Fazioli to call their cooperators at trial, though, because they had nothing to do with Lee and Ge's specific conduct.
The jury deliberated for five days. On both a conspiracy count and an economic espionage count, the jury hung 9-3 in favor of acquittal. On another trade secret count, they divided 6-6.
A government spokesman declined to comment Friday afternoon. Lee's attorney, Thomas Nolan of Nolan, Armstrong & Barton, said his client was very pleased.
"My sense is that this is an effort to try to intimidate people from starting businesses in China," Nolan said.
Ge's attorney, Edward Swanson of Swanson McNamara & Haller, said some of the pro-government jurors were clearly troubled that the defendants had materials in their possession that belonged to NetLogic. "For a lot of people that was the beginning and the end of it," he said.
However, Swanson said jurors correctly applied trade secret law and concluded that the company didn't take sufficient steps to protect the information -- and that the defendants' possession of it didn't harm the company.
They also weren't swayed by negative references to the Chinese government. "We're delighted the jury, in some cases unanimously, and in some 9-3, were able to see through that," Swanson said.
Forewoman Christy Masangcay said the government didn't have evidence of a fully developed connection to the Chinese.
"They found documents that had indications they were working with the [Chinese] government, but there was no smoking gun," Masangcay said.
