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Taiwanese executives stand trial on economic espionage charges

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CLEVELAND -- Jury selection started Tuesday for the trial of two Taiwanese executives accused of stealing trade secrets from the adhesive maker Avery Dennison Corp.

It is the first time an economic espionage case has gone to trial under a 1996 law specifically outlawing the theft of trade secrets, Justice Department spokesman John Russell said.Pin Yen Yang, 72, president of Four Pillars Co. Ltd. of Taiwan, and his 40-year-old daughter, Hwei Chen "Sally" Yang, are accused of taking secrets from Avery Dennison through one of that company's researchers in Ohio.

The Yangs have pleaded innocent to charges of economic espionage, conspiracy, mail fraud, wire fraud, money laundering and receipt of stolen goods. The money laundering charge carries the longest possible prison sentence -- 20 years.

Avery Dennison hasn't determined how much it lost because of the Yangs' alleged spying, said Steven Fink, a spokesman for the company based in Pasadena, Calif. The FBI's initial estimate said Avery Dennison may have lost as much as $200 million.

Corporations are watching this and other industrial spying cases to see if the new law is an effective weapon against economic espionage, said Joseph Ricci, a spokesman for the American Society for Industrial Security in Alexandria, Va.

An ASIS survey found that U.S.-based businesses lost $250 billion to $300 billion worth of intellectual property to foreign and domestic spies in 1997, he said.

The FBI says the Yangs paid about $150,000 to Ten Hong Lee, also known as Victor Lee, a research engineer at an Avery Dennison lab about 20 miles east of Cleveland.

In return, Lee slipped them trade secrets related to products such as self-stick postage stamps, name labels, diaper tape and battery labels from 1989 to 1997, the FBI said when the Yangs were indicted in Cleveland in September 1997.

Lee pleaded guilty to wire fraud and is expected to testify against the Yangs.

Four Pillars says its executives have done nothing criminal.

"The case is a business dispute in which the government has decided to take sides," said Patricia Smith, a Four Pillars spokeswoman.

The companies have filed lawsuits against each other. Avery Dennison is seeking unspecified damages from Four Pillars in a suit that essentially repeats the allegations made in the criminal case.

Four Pillars has sued Avery Dennison in China and Taiwan for $262 million worth of trade secrets it says Avery Dennison stole while the companies discussed a possible joint venture in the late 1980s and early 1990s.