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Taiwanese sentenced for industrial espionage

Hours after being found guilty of industrial espionage by a US trial judge yesterday, a Taiwan-based adhesive manufacturer was quick to challenge the fairness of the 1996 Economic Espionage Act (EEA), claiming he was a victim of unfair corporate competition.

Judge Peter C. Economus of the US District Court in Youngstown, Ohio, fined Taiwan's Four Pillars Enterprise Ltd (四維企業) US$5 million, the maximum allowable under the law, for stealing trade secrets from its competitor, Avery Dennison Corp, an adhesive manufacturer based in Pasadena, California.

Four Pillars president Yang Pin-yen (楊斌彥), 73, received a sentence of six months' confinement to his US home, a US$250,000 fine, plus a 18 month probation period.

His 41-year-old daughter, Sally Yang (楊慧-s), also an executive at Four Pillars, was fined US$5,000 and received probation for one year.

Within hours of the announcement, Yang Pin-yen and his US attorney addressed the media from the US via a live broadcast.

"We will definitely appeal. The EEA is an unfair law and it was unfairly used against us," said Nancy Luque, the attorney repres-enting the Yangs.

"The Yangs waged a war in a country not their own. They're fighting for Four Pillars and for everyone's benefit," she said.

Luque said even though her clients are very pleased with the relatively light convictions handed down by the judge, they feel very unhappy about the huge fines. They believe they were caught in a trap laid by its competitor, Avery Dennison, and the US government, Luque said.

"The EEA is a very dangerous law. You can be easily tricked by your competitors and the FBI can trick you with something that they say is a trade secret," Luque said.

The US Congress passed the Economic Espionage Act in 1996, which imposes harsh penalties for business espionage. In addition to tough measures against those who actually steal, duplicate, or buy trade secrets without authorization, the EEA also allows punishment of those who attempt to commit any of the stipulated offenses.

When Avery Dennison officials learned in 1996 that Victor Lee, a research engineer at the company, was passing company secrets to Four Pillars, they informed the FBI, who arrested the engineer.

Lee later agreed to work undercover to help snare the Yangs. He lured them to a Cleveland hotel room and offered them "confidential" documents.

The FBI secretly videotaped a meeting between Lee and the Yangs, in which Sally Yang cut the "confidential" stamp off the documents Lee delivered. Her father then instructed Lee to dispose of the clipping, according to the evidence of the videotape.

The Yangs were convicted in April last year of paying Lee US$160,000 over eight years to obtain adhesive formulas and other innovations developed by the California-based company.

While Four Pillars was fined the maximum possible sum of US$5 million, Marc Zwillinger -- the US Justice Department lawyer who prosecuted the case -- thinks it is a reasonable amount.

"The judge had multiple ways to send a message and the message he chose is that corporations committing such a crime will be punished to the statutory maximum," Zwillinger said.

The Yangs each faced a maximum penalty of 10 years in prison for the charges brought against them.

But the trial judge said he was wary of handing down jail sentences to the Yangs because Avery Dennison and federal prosecutors could not provide reliable figures as to the company's losses directly attributable to the espionage.

In addition, the judge was very critical of Avery Dennison's role in the Yangs' criminal prosecution, indicating he was troubled that the US company was such an "active participant" in the criminal proceedings.

The judge said he was suspicious that the real intent of Avery Dennison was to "enhance its ability to recoup losses" in its civil suit seeking millions in damages from Four Pillars and the Yangs.

He said Avery Dennison officials made this case look like a "dress rehearsal" for their civil case, which is scheduled for trial on Jan. 10 in the US District Court in Cleveland.

The Yangs -- both of whom have served two years confined to the US while awaiting trial -- will not be able to return to Taiwan together under the judge's order, which allows Sally Yang to return after paying her fine while her father must serve six-months of home confinement there.

In June of last year, when the Yangs were still being tried in the US court, officials at Four Pillars began legal action against Avery Dennison in court in Taiwan, accusing the US company of fraud and unfair competition. The trial is continuing.

Jointly interested in the Chinese adhesive label market, officials from Four Pillars and Avery Dennison had discussed forming a joint venture in 1987. However, the two companies fell out after seven years of close contacts. Both have accused each other of being dishonest during the long process of negotiations.
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