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.)


Drug Take Back Scheduled For Dec. 6

Tennessee American Water, Walgreens,  the Hamilton County Coalition and the Hamilton County Sheriff Department announced that a special Drug Take Back will be Saturday, Dec. 6, from 9 a.m. to 1 p.m. The Drug Take Back will take place at two Walgreens stores that in the past have not participated.  Feedback from area residents whose homes are close to these Walgreens locations ... (click for more)

Chattanooga Business Calendar Nov. 29 to Dec. 6

MO/1 Reality Check - Bethel Christian Academy 1:30 p.m. to 2:30 p.m. Bethel Christian Academy: 3001 Hamill Rd. Reality Check teaches 9th graders budgeting and emphasizes the connection between education and income by allowing students to role-play as heads of household while trying to provide for their families on a set budget. Community volunteers are needed to assist ... (click for more)

10-Year-Old Boy Seriously Injured In Attack By Pit Bull At His Home In Sale Creek

A 10-year-old boy suffered serious injuries when he was attacked by a pit bull on Thanksgiving Day morning. At approximately 10:12 a.m. deputies were called to 175 Daugherty Ferry Road regarding a report of a dog attack on a child. On arrival the Sale Creek Fire Department found the child on the front porch of the residence.  The child’s father said his son came ... (click for more)

Alecia Driggins Faces Multiple Charges After Robbery And Hit-And-Run In East Ridge

East Ridge Police arrived on Sunday at 12:30 p.m. at the East Ridge Flea Market at 6725 Ringgold Road in response to a reported pedestrian struck and hit and run incident. Once on the scene, police determined that the incident was actually a robbery. The victim advised police that a white woman claiming to be a police officer grabbed her purse and attempted to flee ... (click for more)

Lawlessness At Heritage Park

As a frequent visitor at Heritage Park in East Brainerd, I must say that the situation is becoming slightly out of control.  To start, parking is atrocious.  The unpaved lot contains nothing but loose gravel which has naturally given way to divots in the ground assuring you a few bumps.  Why isn't this area smoothed out?  It's not worth parking there anyways ... (click for more)

Roy Exum: Why I Am Thankful 2014

Over 40 years ago I was a young sports writer when I came up with the notion of setting daily things aside, just for one day, and writing about why “I Am Thankful.” Every Thanksgiving I come up with my list and it is as much about me as it is about my gratitude for all things great and small. I can’t imagine approaching this day in any other way. Here we go … I AM THANKFUL for ... (click for more)