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United States v. Zhiqiang Zhang


November 5, 2012


The opinion of the court was delivered by: Howard R. Lloyd United States Magistrate Judge

*E-filed: November 5, 2012*


ORDER [Re: Dkts. 88, 91]

The Government has indicted defendant Michael (Zhiqiang) Zhang for two counts of violating the Economic Espionage Act. One count alleges that Zhang, along with co-defendants Xiaodong Liang and Yanmin Li, conspired to misappropriate trade secrets owned by his former 19 employer, SiRF Technology (now CSR Technology Inc. "CSR"). The other count charges Zhang 20 with possession of stolen trade secrets, specifically, three source code files owned by CSR. Before 21 the Court are two motions for discovery filed by Zhang -- one that seeks production pursuant to a 22 subpoena issued to third-party CSR, and one that seeks discovery requested from the government. 23

Zhang contends that CSR controlled the government's investigation and prosecution, and 24 improperly used information obtained by threatening a civil suit, including information from 25 settlement conversations, to aid the prosecution. He also argues that, because CSR essentially 26 served as an agent for the government, CSR has Constitutional obligations toward Defendants with 27 28 regard to discovery. Zhang's discovery requests seek support for these contentions. The Court held 2 a hearing on these motions on September 13, 2012.*fn1 referred to by Zhang and CSR as Subpoena 4.*fn2 In response to Subpoena 4, CSR produced no 6 documents to defense counsel, but lodged potentially responsive documents with the Court under 7 seal, claiming attorney-client privilege and protection under the work-product doctrine. Defendants 8 protested that they had no way of even challenging the claims of privilege because they had received 9 absolutely no information from CSR; Defendants also argued that any privilege should yield to their 10

ordered CSR to produce a privilege log of all documents lodged with the Court in response to Subpoena 4. (Dkt. 105) CSR has since provided the privilege log to Defendants and to the Court. 13 A.Zhang's Motion For Release of Documents Lodged with the Court by CSR Zhang issued a number of subpoenas to CSR. At issue is CSR's response to the subpoena Constitutional right to a fair trial and due process. In response to Defendants' first point, the Court

The privilege log itself provides Defendants with some of the information they sought, such as the 14 timing of communications between CSR employees. 15

To Defendants' second point, the Court has conducted a thorough review of all of the documents. It finds that the attorney-client privilege applies to these documents. It further finds 17 that withholding these documents from Defendants does not interfere with their Constitutional 18 rights. Although the Court does not know the full background of the case, it finds no support in the 19 documents for Defendants' theory that CSR became a puppet of the government, used to obtain 20 information otherwise not obtainable through proper channels, or that the government otherwise 21 used CSR improperly to build its case against Defendants. Nor do the documents support 22

Defendants' theory that CSR was in such close cahoots with the government that it should be 23 considered an agent of the government and thus saddled with Constitutional obligations with respect 24

to Defendants. The documents do not reveal the type of chicanery that would compel this Court to 2 override the attorney-client privilege. C.f. United States v. Nixon, 418 U.S. 683, 707 (1974) (finding 3 that, under special circumstances, the legitimate needs of the judicial process may outweigh 4 privilege) (cited by Defendants at oral argument).

In his second motion, Zhang moves the Court for an order requiring the government to produce communications between CSR and the government that concern the investigation or 8 prosecution of Zhang and his co-defendants, as well as any notes that were taken during any such 9 communications. The government has responded, both in writing and under questioning at the 10 hearing, that it has already fulfilled its obligations under Brady v. Maryland, 373 U.S. 83 (1963), and that the information Defendants seek either does not exist or is not material to the guilt of Defendants. The government also contends that the work-product doctrine covers much of the 13 requested material. 14 15 hearing, the Court finds that Zhang's requests exceed the scope of the discovery allowed to him 16 under Rule 16 of the Rules of Criminal Procedure. Under Rule 16, a defendant is entitled to items 17 if: 18

(2) the government intends to use the item in its case-in-chief at trial; or

(3) the item was obtained from or belongs to the defendant.

Fed. R. Crim. P. 16(a)(1)(E)(i-iii). In United States v. Armstrong, 517 U.S. 456, 462 (1996), the 22 "sword" attacks. See Armstrong, 517 U.S. at 462 (finding that in the context of Rule 16, "defense" 24 means the defendant's response to the Government's case in chief, meaning material which would 25 refute the Government's argument that the defendant committed the crime charged; it does not allow 26 discovery for claims "challenging the prosecution's conduct of the case"). 27

The evidence sought does not bear directly on his guilt or innocence of the claims brought against him -- namely, whether he or the other defendants conspired to misappropriate trade secrets or

B. Zhang's Motion for Discovery and Order to Preserve Documents

Based on the written materials submitted by the parties and the arguments made at the (1) the item is material to preparing the defense;

Court clarified that Rule 16 entitles a defendant to discovery related to "shield" defenses, but not to 23

Here, Zhang seeks evidence to attack the conduct of the prosecution and third-party CSR. whether they possessed stolen trade secrets. Because the evidence sought does not bear on Zhang's 2 actual guilt of the charged crimes, he is not entitled to it under Rule 16(a)(1)(E)(i). The government 3 states that has already produced, or that it will produce to defendants, the materials it intends to use 4 in its case-in-chief at trial, and that it has satisfied its obligations under Brady. So, to the extent that 5

Zhang is entitled to any of this information pursuant to Rule 16(a)(1)(E)(ii), the government has 6 stated that it has provided or will provide the information. The government has also stated that it 7 will preserve any notes taken during communications between the government and CSR. The Court 8 is satisfied with these representations. Accordingly, the Court finds that Zhang is not entitled to any 9 additional information. 10


For the foregoing reasons, Defendant Zhang's motion for release of documents (Dkt. 88) and Zhang's motion for Discovery and Order to Preserve Documents (Dkt. 91) are DENIED.


CR 10-00827 LHK (HRL) Notice will be electronically mailed to: 2 Thomas Nolan Michael Haven 3 Patrick Salceda Susan Knight 4 Counsel are responsible for distributing copies of this document to co-counsel who have not registered for e-filing under the court's CM/ECF program.

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