Trade Secrets – Restitution

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7^th Circuit Court of Appeals

Case Name: United States of America v. Yihao Pu

Case No.: 15-1180

Officials: BAUER, KANNE, and WILLIAMS, Circuit Judges.

Focus: Trade Secrets – Restitution

Appellant removal of proprietary information from employer was does no warrant restitution ordered by the court.

“We do not doubt that the cost of development of the trade secrets was an easy figure to use when making the intended loss calculation. The guidelines suggest that the cost of development is the metric to use to estimate loss in a trade secrets case. See U.S.S.G. § 2B1.1 n.3(C)(ii). But the real question is whether the government proved by a preponderance of the evidence that the cost of development of the trade secrets was the correct loss figure. See United States v. Berheide, 421 F.3d 538, 541 (7th Cir. 2005). To answer this, we must determine whether the record supports a finding that it was more likely than not that Pu intended to cause a loss to the victims that equaled the cost of development. See id. We conclude that it does not. There is no direct evidence of how much of a loss Pu intended Company A and Citadel to suffer. There is also no evidence from which we can infer how much of a loss Pu in- tended the victims to suffer. The evidence shows that the cost of development was$12million. By finding a $12 million intended loss amount, the district court determined that the government proved by a preponderance of the evidence that Pu intended to cause the victims to suffer a $12 million loss. However, evidence of Pu’s intent to cause the victims any loss is not in the record. Because the record does not support the district court’s conclusion, we find it to be clearly erroneous.”

Vacated and Remanded

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.