U.S. loses bid to lengthen ex-GSK scientist's sentence in trade secret case

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The United States Court of Appeals for the Third Circuit is seen in Philadelphia, Pennsylvania, U.S., June 10, 2021. REUTERS/Andrew Kelly

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  • Panel finds "intended loss" requires conscious purpose
  • Prosecutors had sought 10-year sentence

A former GSK Plc researcher who admitted to stealing trade secrets from her employer about potential cancer drugs did not intend to cause the company a financial loss, a federal appeals court has ruled, upholding a relatively brief prison sentence that prosecutors had hoped to lengthen.

A unanimous panel of the 3rd U.S. Circuit Court of Appeals found Tuesday that while Yu Xue and co-conspirator Tao Li admitted to conspiring to take secrets for a Chinese company they founded, that was not enough to support enhanced sentences after a lower court concluded they never used the information to compete with London-based GSK.

The ruling allows an eight-month sentence already served by Xue and a 59-day sentence served by Li to stand. Prosecutors had sought 10 years for Xue and seven years for Li.

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"We're thrilled with the result," said Peter Zeidenberg of ArentFox Schiff, a lawyer for Xue.

John Joseph, a solo attorney who represents Li, said he was "very gratified" by the decision and that his client had "no desire to harm anybody."

A spokesperson for the Eastern District of Pennsylvania U.S. Attorney's Office declined to comment. GSK had no immediate comment.

Xue and Li pleaded guilty in Philadelphia federal court in 2018 to conspiring to steal trade secrets, and were sentenced last year. Xue admitted that she provided GSK secrets to Renopharma Ltd, a Nanjing, China-based drug development company she and Li co-founded. Renopharma received funding from the Chinese government, according to prosecutors.

In seeking stiff sentences, prosecutors argued that while GSK had not suffered any loss, U.S. District Judge Joel Slomsky should apply an enhancement under federal sentencing guidelines based on a $1 billion intended loss, which they said reflected the stolen secrets' value.

Slomsky, however, found that the defendants had not intended such a loss, and the 3rd Circuit panel agreed.

"A defendant who intends or knows that his or her conduct will injure the owner of the trade secret does not necessarily intend to inflict pecuniary harm on that secret's owner," Chief Circuit Judge Michael Chagares wrote.

Chagares was joined by Circuit Judges Thomas Ambro and Julio Fuentes. Xue and Li were among six people charged in connection with the scheme since 2016.

Xue's sister, Renopharma employee Tian Xue, and fellow GSK researcher Lucy Xi both pleaded guilty and were sentenced to probation. Xue's brother, Gongda Xue, was found guilty in May of aiding in the scheme, and Xi's husband, Renopharma co-founder Yan Mei, remains at large in China.

The case is United States v. Xue, 3rd U.S. Circuit Court of Appeals, No. 21-2227.

For Xue: Peter Zeidenberg of ArentFox Schiff

For Li: John N. Joseph

For the government: Robert Livermore of the Eastern District of Pennsylvania U.S. Attorney's Office

Read more:

Former GSK researcher pleads guilty to trade secret theft scheme

Ex-GSK scientist's sister admits to role in trade secret theft scheme

Ex-GlaxoSmithKline scientist admits stealing trade secrets for Chinese company

Swiss scientist convicted of scheme to steal GSK trade secrets

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.