Trade Secrets

United States v. Xiaorong You: A 168-Month Sentence and the Anatomy of Economic Espionage

A Coca-Cola chemist's theft of $120 million in BPA-free coating formulas produced one of the rare convictions under the Economic Espionage Act's foreign-government provision — and a Sixth Circuit opinion clarifying what the government must prove.

February 5, 2026
Stacked aluminum beverage cans on an industrial line
The stolen secrets concerned bisphenol-A-free coatings for the inside of beverage cans. Shutterstock
Educational content, not legal advice. This article explains general legal concepts. It does not create an attorney–client relationship. For your specific situation, consult a licensed attorney.

United States v. Xiaorong You, No. 22-5442 (6th Cir. July 11, 2023), affirming convictions entered in United States v. You, No. 2:19-cr-00014 (E.D. Tenn.), is the rare Economic Espionage Act case that reached a jury, produced a conviction under the statute’s foreign-government provision, and then drew a published appellate opinion. A federal jury in the Eastern District of Tennessee convicted You in April 2021 after a thirteen-day trial; in May 2022 the district court sentenced her to 168 months’ imprisonment — fourteen years — three years of supervised release, and a $200,000 fine. The Sixth Circuit affirmed her convictions on July 11, 2023, while vacating the sentence and remanding for resentencing on a loss-calculation error. For a statute that prosecutors invoke sparingly and win under even more rarely, You is a useful map of what § 1831 actually requires.

At a glance

  • Case: United States v. You (a/k/a Shannon You), No. 22-5442 (6th Cir.); district docket No. 2:19-cr-00014 (E.D. Tenn., Greeneville)
  • Key dates: Jury conviction April 2021; sentence imposed May 9, 2022; Sixth Circuit decision July 11, 2023
  • Charges of conviction: Conspiracy to commit theft of trade secrets (18 U.S.C. § 1832(a)(5)); possession of stolen trade secrets (§ 1832(a)(3)); conspiracy to commit economic espionage (§ 1831(a)(5)); economic espionage (§ 1831(a)(3)); and wire fraud (§ 1343)
  • Sentence: 168 months’ imprisonment, three years’ supervised release, $200,000 fine
  • Appellate outcome: Convictions affirmed; sentence vacated and remanded for resentencing because of an erroneous intended-loss calculation
  • Panel: Judges Boggs, Gibbons, and McKeague

The conduct: two employers, one USB drive

You was a chemist with rare access to a closely held body of industrial know-how. While employed by The Coca-Cola Company in Atlanta, she had authorized access to formulations for bisphenol-A-free (BPA-free) coatings — the linings applied to the inside of beverage cans — developed not only by Coca-Cola but by a roster of chemical and coatings companies including Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, Sherwin-Williams, and Eastman Chemical. The government valued the collective development cost of those secrets at nearly $120 million.

The mechanics of the theft were prosaic, which is precisely why they recur in EEA cases. On her final night as a Coca-Cola employee, You moved the formula files to a personal Google Drive account and then onto a USB drive, all while certifying that she had retained no confidential information. She then joined Eastman Chemical in Kingsport, Tennessee, and repeated the pattern, copying company files to the same cloud account and the same drive. The purpose, the evidence showed, was to launch a competing BPA-free coatings business in China — a venture pursued with a Chinese corporate partner, the Weihai Jinhong Group, and underwritten in part by Chinese government grants.

That last fact is what separated this prosecution from an ordinary trade-secret case and pushed it into § 1831 territory.

Economic espionage versus ordinary theft: the foreign-government line

The Economic Espionage Act of 1996 created two distinct federal crimes. Section 1832 — the theft-of-trade-secrets provision — punishes misappropriation intended to benefit someone “other than the owner” and undertaken for economic gain, with knowledge that the theft will injure the owner. It is, functionally, the criminal analogue of ordinary commercial misappropriation, and it accounts for the large majority of EEA charges.

Section 1831 — economic espionage — is the graver offense. It requires the additional element that the defendant acted intending or knowing that the offense would benefit a “foreign government, foreign instrumentality, or foreign agent.” Congress attached materially higher penalties to § 1831 (up to fifteen years for an individual, versus ten under § 1832) precisely because the foreign-sovereign nexus implicates national economic security, not merely a private competitor’s balance sheet.

The central contested question under § 1831 is what “benefit a foreign government” demands. You argued, in effect, that doing business in China is not the same as acting to benefit the Chinese state, and that the government had to prove something more than the ordinary incidents of operating a company on Chinese soil. The Sixth Circuit agreed with the principle but found the record easily sufficient. The court emphasized the “considerable entanglement” between You’s venture and the Chinese government: provincial and municipal grant funding, the involvement of state-linked actors, and trial evidence — including documents — reflecting an intent to benefit the Weihai Jinhong Group and, through it, the governments of China, Shandong province, and the city of Weihai, as well as the Chinese Communist Party. The lesson is that § 1831 does not turn on a formal agency relationship with a foreign ministry; sustained financial and operational dependence on state largesse can carry the element.

The most doctrinally useful part of the opinion concerns mens rea — and it cuts against defendants. You contended that the jury instructions misstated the government’s burden by failing to require proof that she knew the specific value of the information to China, or that she understood the stolen material satisfied every technical element of the statutory “trade secret” definition.

The Sixth Circuit rejected both framings. Consistent with its earlier decision in United States v. Krumrei, the court held that the government need not prove a defendant knew the information met the legal definition of a trade secret. It suffices that the defendant knew the information was proprietary and that she took it without authorization. The defendant’s subjective legal characterization of the material — or her appraisal of exactly how valuable it would prove to a foreign sponsor — is not an element. That allocation matters enormously in practice: it means employees cannot insulate themselves by professing ignorance of trade-secret law, and it lowers the proof burden in cases where the defendant’s appreciation of “value to a foreign state” is necessarily inferential.

The sentence: why fourteen years, and why the remand

The 168-month sentence reflected the statutory weight Congress assigns to economic espionage, the nine-figure development cost of the stolen secrets, and the breadth of the conduct across two employers and multiple victim companies. But the Sixth Circuit vacated it. The district court had “clearly erred” in computing intended loss for Guidelines purposes: it relied on market estimates it had elsewhere deemed speculative, and it conflated anticipated sales with anticipated profits without calculating an actual profit margin. That is a recurring vulnerability in trade-secret sentencing, where the headline “value” of a secret and the realistic loss attributable to its theft can diverge by orders of magnitude. The convictions, however, were untouched — the remand was about arithmetic, not guilt.

Open questions

The opinion leaves several issues for future litigants. It does not draw a bright line for how much state entanglement converts a § 1832 case into a § 1831 case — “considerable entanglement” is fact-bound, and a venture with thinner government ties might fall short. It says little about how courts should police the gap between a secret’s claimed market value and provable intended loss on resentencing, an issue of growing importance as victim companies attach large numbers to R&D portfolios. And the court’s handling of the defendant’s claim that testimony about Chinese technology-acquisition strategy risked racial prejudice — rejected on the view that the references targeted the government, not the defendant’s ethnicity — leaves real questions about how trials involving foreign-state beneficiaries manage the line between probative geopolitical context and impermissible appeals to bias.

Implications

  • Section 1831 is winnable, but on the entanglement facts. Prosecutors secured the foreign-government element through grant funding and state-linked partners, not a formal espionage relationship. Defense counsel should attack the depth and directedness of that nexus.
  • “I didn’t know it was a trade secret” is not a defense. Knowledge that information is proprietary and taken without authorization suffices; subjective legal characterization is irrelevant.
  • Exit conduct is the evidence. Cloud transfers, USB copying, and false confidentiality certifications on an employee’s last days remain the evidentiary spine of EEA prosecutions.
  • Loss calculation is the soft target on appeal. Even an affirmed conviction can yield a vacated sentence if the court conflates sales with profits or leans on speculative market figures.
  • Compliance takeaway for employers: offboarding controls, departure-time access monitoring, and accurate exit certifications materially strengthen both prevention and any later criminal referral.

Frequently asked questions

What is the difference between 18 U.S.C. § 1831 and § 1832? Section 1832 punishes trade-secret theft intended to benefit someone other than the owner for economic gain. Section 1831 adds a foreign-sovereign element — intent or knowledge that the offense will benefit a foreign government, instrumentality, or agent — and carries higher penalties. You was convicted under both.

Did the Sixth Circuit overturn the conviction? No. The court affirmed all convictions on July 11, 2023. It vacated only the sentence and remanded for resentencing because the district court erred in calculating intended loss.

Must the government prove the defendant knew the information was legally a “trade secret”? No. Following United States v. Krumrei, the court held the government need only prove the defendant knew the information was proprietary and taken without authorization — not that she knew it satisfied the statutory definition or its precise value to a foreign sponsor.

Authorities and sources