## Facts

- Federal prosecutors charged Kai-Lo Hsu and Chester S. Ho (and separately, Jessica Chou) with multiple offenses arising from an FBI undercover operation involving purported Bristol-Myers Squibb information about manufacturing the anti-cancer drug Taxol.
- The indictment included, among other counts, attempt and conspiracy to steal trade secrets under the Economic Espionage Act of 1996 (EEA), 18 U.S.C. §§ 1831–1832, plus non-EEA offenses such as wire fraud and related conspiracy/travel counts.
- The government alleged that the defendants sought to obtain valuable, confidential processes, methods, and formulas for manufacturing Taxol.
- The investigation involved an undercover agent posing as a technology broker and negotiations culminating in a meeting where the defendants would receive a “sample” document represented as a Bristol-Myers trade secret in exchange for payment.
- Hsu and Ho were arrested during the arranged transaction in which the government provided the purported “sample” document.
- In pretrial proceedings, the district court (i) rejected a “legal impossibility” defense to the EEA attempt and conspiracy counts, but (ii) ordered the government to disclose the alleged trade secret materials to the defense, reasoning disclosure was needed to test whether the information qualified as a statutory “trade secret.”
- The United States took an interlocutory appeal challenging the disclosure order.

## Issues

1. Whether “legal impossibility” is a defense to attempt and conspiracy charges under the EEA where the information targeted may not, in fact, qualify as a trade secret.
2. Whether, in an EEA attempt/conspiracy prosecution, defendants are entitled to discovery of the alleged trade secret materials based on a need to litigate whether the information is a “trade secret,” notwithstanding EEA confidentiality concerns and ordinary criminal discovery limits.

## Decision

- The Third Circuit affirmed the district court’s conclusion that legal impossibility is not a defense to EEA attempt and conspiracy counts.
- The Third Circuit reversed the district court order compelling disclosure of the alleged trade secrets.
- The court remanded for reconsideration of discovery and other asserted defenses under the correct legal framework, including appropriate protective mechanisms.

## Legal Principles

- For attempt and conspiracy under 18 U.S.C. § 1832(a)(4)–(5), liability turns on the defendant’s intent and the belief (including reasonable belief) that the targeted information is a trade secret, not on whether the information is ultimately proven to be a trade secret in fact.
- “Legal impossibility,” framed as the contention that the information was not actually a trade secret, does not defeat EEA attempt or conspiracy charges when defendants intended to steal what they believed to be trade secret information.
- Discovery of alleged trade secret material in EEA cases is not automatic; courts must apply standard criminal discovery doctrines (including materiality) while also implementing confidentiality protections to prevent unnecessary dissemination of proprietary information.
- Trial courts may use measures such as in camera review and tailored protective orders to balance defendants’ access to material evidence against the strong interests in preserving trade secret secrecy.

## Conclusion

The Third Circuit held that EEA attempt and conspiracy prosecutions do not fail merely because the government cannot prove the targeted material was an actual trade secret, and it vacated a compelled-disclosure order that rested on that premise, requiring any trade-secret discovery to be justified by materiality and managed through strict confidentiality safeguards.


United States v. Hsu (Hsu II), 155 F.3d 189 (3d Cir. 1998)