Cooperating Witnesses Said More Than Enough: D.C. Court of Appeals Upholds Theft of Trade Secrets Conspiracy Conviction
By: James W. Kraus
Last week, the D.C. Court of Appeals affirmed the theft of trade secrets conspiracy conviction of Shan Shi for his role in the theft of data from manufacturers of offshore drilling technology. The Court rejected Shi’s argument that the trial evidence, which relied heavily on cooperating witnesses, was insufficient to support the jury’s verdict.
The facts underlying Shi’s conviction relate to his company’s attempt to enter into the market for manufacturing drill riser buoyancy modules (DRBMs), used to provide buoyancy to the miles of steep pipe that carry oil from tens of thousands of feet below the ocean’s surface to drill ships. In 2012, only four major companies in the world produced DRBMs, and none of those companies were Chinese companies. The Chinese government sponsored a Chinese company to develop the technology, which in turn partnered with Shi, a Ph.D. with 25 years of engineering experience in offshore structural design. One critical problem with that plan was that Shi did not know how to manufacture the syntactic foam critical to the modules. In an effort to collect information, Shi visited factories of two competitors, Trelleborg Offshore U.S., Inc. and Cuming Corporation, both of whom he found to be quite deliberate in protecting their technology.
Shi then interviewed a former member of Trelleborg’s innovation and technology team, Sam Ogoe, for a job. During the interview, Ogoe told Shi that he had “some friends at Trelleborg” he could contact to obtain the necessary data. At trial, Ogoe testified that Shi expected him to provide this non-public information.
Ogoe obtained numerous trade secrets from Trelleborg through friends, including a chart of density and pressure specifications for macrospheres graded to withstand listed depths. Ogoe also produced a “recipe” containing specific variances of raw materials, a contribution that Shi noted had saved them valuable time. In all, Shi obtained seven non-public trade secrets relating to the project.
It all came to an end for Shi in 2017 when, at a pitch meeting with representatives of a company he believed to be Lockheed Martin, FBI agents arrested him. Shi, the two Chinese companies he worked with, and five individual co-conspirators were charged. Three of the co-conspirators entered pleas of guilty to conspiracy to commit theft of trade secrets and two others left the country before trial, leaving Shi as the lone individual defendant for trial. The 10-day jury trial, during which three co-conspirators testified against him, ended with Shi’s conviction on the charge of conspiracy to commit theft of trade secrets.
Shi’s primary argument for reversal of his conviction was that the D.C. Court of Appeals had previously reversed conspiracy convictions in cases where none of the government’s cooperating co-conspirator witnesses testified that the appellant joined in an agreement to commit a crime. Relying primarily on United States v. Gaskins, 690 F.3d 569 (DC Cir. 2012), Shi argued that there is “reason to doubt” his involvement in the conspiracy when cooperating witnesses were unable to point to “conclusive evidence” of his guilt.
The Court of Appeals was unconvinced, stating that Shi “overreads Gaskins.” It found that the key distinction between Gaskins and Shi’s case was that the Gaskins’ panel stressed the overwhelming lack of evidence in its totality and did not weigh the absence of co-conspirator testimony against countervailing evidence of guilt. Unfortunately for Shi, such was not the case for him.
The Court refused to adopt a bright-line rule requiring reversal where none of the government’s cooperating witnesses testified that the defendant joined an agreement to commit a crime. The Court stated that even if it did adopt such a rule, Shi would not satisfy his own test. It explained that two co-conspirators testified to Shi’s criminal agreement through his hiring of both individuals after each had told him that they could obtain trade secrets from their former employers.
The Court also rejected Shi’s claim that there was insufficient evidence to show that he and at least one co-conspirator believed the appropriate information contained trade secrets. It found strong evidence that at least one of the co-conspirators, Sam Ogoe, reasonably believed that Trelleborg took reasonable measures to protect its trade secrets. He testified that he understood he “did wrong” by asking his friends for “confidential information” that Trelleborg “wouldn’t put … outside.”
A complete copy of the Court’s March 16, 2021 opinion can be found here.