DuPont Trade Secrets Case Heads to Trial

, The Litigation Daily

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SAN FRANCISCO — An immigrant businessman. A powerful U.S. corporation. And the secret to making everyday products from paper to paint a bright, luminous white.

Those are the elements of a high-stakes trial beginning this week in San Francisco federal court, where combustible racial politics and the strained relations between  the U.S. and China are inextricably linked to economic espionage charges levied against an East Bay engineer.

Walter Liew, a U.S. citizen of Chinese descent, is accused of stealing valuable manufacturing secrets from the industrial giant DuPont and selling them to entities controlled by the Chinese government. But Liew's lawyers at Keker & Van Nest insist their client carried out nothing more than routine business deals in China­—a far cry from the spy narrative offered up by federal prosecutors.

It's among the first economic espionage cases to go to trial. And with the U.S. government determined to crack down on what it sees as pervasive domestic spying by China, the politics of the prosecution have been somewhat fevered since the Justice Department announced the charges in a three-page press release.

Both sides have vowed to steer clear of incendiary comments about China. But Liew's lawyers fear that jurors may report to court with subtle cultural biases. Given the amount of recent "China-bashing" in the media, even a remark about "the need to protect American businesses" could stir up prejudice, they wrote in a pretrial brief.

"It seems likely that the government will try to steer clear of inflammatory rhetoric," wrote lead defense lawyer Stuart Gasner, a Keker & Van Nest partner. "But it is also likely that the prosecution and defense have different notions of what is inflammatory."

E.I. du Pont de Nemours & Co. is a leading manufacturer of titanium dioxide, or TiO2, a commercially valuable white pigment. Prosecutors contend Liew conspired to steal the industrial giant's proprietary production method for TiO2 and help China build rival factories in exchange for nearly $30 million.

Liew, who has been held without bond for more than two years, will face counts of economic espionage, trade secret theft, tax evasion, and witness and evidence tampering in a two-month trial in U.S. District Judge Jeffrey White's courtroom. Liew will stand trial with his business associate Robert Maegerle, a former DuPont employee who has also been charged with trade secret theft and witness and evidence tampering. Maegerle is represented by Atlanta lawyer Jerome Froelich.

Liew's wife Christina will face charges of economic espionage, trade secret theft and witness and evidence tampering in a separate trial. Another former DuPont employee, Tze Chao, pleaded guilty shortly after he was arrested.

When the federal charges were announced in early 2012, a Justice Department official called the case part of an effort to combat industrial spying by China. "We are committed to holding accountable anyone who robs American businesses of their hard-earned research," said Lisa Monaco, now Obama's top advisor for homeland security.

Julia Love writes for The Recorder, an American Lawyer affiliate.

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