A federal appeals court has overturned two men’s sentences for stealing trade secrets from the Goodyear Tire & Rubber Co. and remanded the case, questioning the leniency of the punishment.

In a combined February 4 ruling in U.S. v. Howley and U.S. v. Roberts, the U.S. Court of Appeals for the Sixth Circuit affirmed the convictions of Clark Roberts and Sean Howley for seven counts of stealing trade secrets and three counts of wire fraud following December 2010 verdicts in the Eastern District of Tennessee.

But the unanimous panel reversed Judge Thomas Phillips’ August 2011 sentences of four months of home confinement, 150 hours of community service and four years of probation for each defendant, finding them "procedurally unreasonable."

Roberts and Howley were formerly engineers at Wyko Tire Technology, a Tennessee-based supplier of Goodyear tire-assembly machine parts.

In May 2007, around the time Wyko encountered problems designing tire-building parts for a Chinese customer, Goodyear asked Wyko to fix some of its tire-assembly machines. Wyko sent Roberts and Howley, who signed confidentiality agreements before the Goodyear visit.

Before the trip, Roberts asked Wyko’s information technology manager for a camera, "a little bit larger than credit-card size," but the manager did not have one.

At the factory, a Goodyear security guard reminded them that no cameras were allowed inside. Howley secretly took seven cellphone photos. The men gave the photos to Wyko’s design team to help them to fix problems with the tire-assembly machines.

Wyko’s information technology manager later sent an email with the photos to a Goodyear employee through an anonymous Yahoo! email account.

After a seven-day trial, a jury convicted Roberts and Howley of the theft and wire fraud counts.

Judge Jeffrey Sutton wrote the opinion, joined by Judge David McKeague and Senior Judge Eugene Siler Jr.

Sutton first affirmed that what the defendants took qualified as a trade secret: "A reasonable jury could find that Goodyear took reasonable measures to keep the design of its tire-assembly machines secret."

Sutton then wrote that the panel agreed with the government that the sentences were unreasonable because the court didn’t explain why it sentenced the men as if Goodyear didn’t experience any losses due to their actions.

He observed that Phillips’ no-loss finding was significant because even the smallest loss the government argued for, $305,000, carried a guidelines sentencing range of 37 months to 46 months in prison. Even without a loss to Goodyear, Sutton continued, the men faced a sentencing guidelines range of 4 months to 10 months in prison.

Sutton wrote that "without more, the district court’s zero-loss finding seems at odds with the defendants’ convictions for stealing property that had ‘independent economic value,’ " under the U.S. trade secret statute.

In an emailed statement, Roberts’ lawyer, Stephen Ross Johnson of Ritchie, Dillard, Davies & Johnson of Knoxville, Tenn., said, "We respect the panel decision of the Sixth Circuit, and are weighing Mr. Roberts’ options. We still believe the evidence at trial was legally insufficient and that a sentence of no incarceration is appropriate."

 

Howley’s lawyer, David Eldridge of Knoxville’s Eldridge & Blakney, said he’s evaluating the opinion before determining his next course of action.

"Although it remains our position that the proof at trial was legally insufficient to support his convictions, given the limited role the evidence showed he played in these events and his positive life history, the district court judge was correct in finding that Mr. Howley merited a sentence of probation and such a sentence remains appropriate for him," Eldridge said.

The U.S. Attorney’s Office in the Eastern District of Tennessee did not respond to requests for comment. Assistant U.S. Attorney Debra Breneman argued the case for the office.

Sheri Qualters can be contacted at squalters@alm.com.