Trade-theft case collapses in federal court

June 4, 2013 • Business

This photo released by the Cache Sheriff’s Office shows Prabhu Mohapatra. Federal prosecutors have dropped industrial espionage charges against a scientist accused of spilling the secrets of a Utah chemical company. A judge recently ruled that chemical recipes held by Logan-based Frontier Scientific Inc. were widely known to professionals in the field. To settle the case, chemist Prabhu Mohapatra pleaded guilty last month to a single count of unauthorized access to his former employer’s computer database. He was let go. Twenty-five other charges were dismissed, and U.S. District Judge Clark Waddoups threw out a $227,985 damage claim against the foreign scientist. He was accused of sharing a chemical recipe with a colleague in India. Mohapatra remains in Utah to answer a related state charge of theft. He is due to appear in court Thursday for a preliminary hearing. (AP Photo/Cache Sheriff’s Office)

SALT LAKE CITY (AP) — More than a year after federal authorities trumpeted their first-ever arrest in Utah for industrial espionage, the case has collapsed with the dismissal of 25 charges.

A judge found a Utah company’s “secret” chemical recipe was not only widely known to professionals in the field, but inferior in some [auth] respects.

Far from being harmed, Logan-based Frontier Scientific Inc. enjoyed “extraordinary” sales of a key chemical last year, U.S. District Court Clark Waddoups ruled recently.

Company executives took sharp exception on Tuesday to the judge’s reasoning and said they were placing their hope with local prosecutors. Cache County attorneys charged Prabhu Mohapatra with a simple theft charge as the federal case was imploding.

Mohapatra is due to appear for a preliminary hearing Thursday. His lawyers say the local charge is an act of revenge based on the faulty federal case.

“There was no trade secret to steal,” said his federal defender, Kathryn N. Nester. “It was all information available to people skilled in the trade.”

The scientist from India on a U.S. work visa was indicted for disclosing how Frontier cooks a class of chemicals. He made the disclosure to a colleague in India, allegedly to set up a competing supplier.

Authorities held a news conference on the arrest, calling it Utah’s first prosecution of industrial espionage. Nearly 18 months later, there was no announcement on how the case turned out.

To settle matters, Mohapatra pleaded guilty May 11, 2012 to one of 26 charges — unauthorized access to Frontier’s computer database. He was let go on time already served, 30 days. More recently, Waddoups threw out a $227,985 damage claim. The judge ordered Mohapatra to reimburse Frontier only for an internal investigation that had technicians following his key strokes and dissecting his work and personal computers.

“None of the information disclosed by Dr. Mohapatra meets the requirements to be protectable as a trade secret,” Waddoups wrote in a sentencing order on April 23. He said the government failed to carry its burden of proof, and that Frontier suffered no harm.

Federal prosecutors have no comment because parts of the case remain under seal, Melodie Rydalch, a spokeswoman for the U.S. Attorney’s Office in Salt Lake City, said Tuesday.

Company executives said Waddoups ignored a threat to their future profits.

“We were shocked and disappointed and we completely disagree with his ruling,” said Tim Miller, chief executive for Frontier Scientific.

The company’s secret turns on making large, pure quantities of porphyrins, a class of chemicals with myriad applications, from a hardener for paints to an ingredient in prescription drugs, he said.

“No one else in the world has made recipes to scale up production of these compounds,” Miller said Tuesday. “It took many experiments to adjust the variables of heat, temperature and ingredients — to come up with an economically viable recipe to synthesize this stuff in high purity and large quantities.”

Mohapatra apologized to the company, cooperated from the start and begged forgiveness, and Waddoups gave him credit for accepting responsibility. The chemist said he was trying to save a colleague the expense of pulling together published research on synthesizing porphyrins.

In a 54-page ruling, Waddoups eviscerated the government case and dismantled a claim that Mohapatra’s disclosure caused Frontier to lose a big sale for a key ingredient in paint to Emeryville, Calif.-based Dura Chemicals Inc.

Waddoups cited internal email showing Frontier lost the sale because “our price was too high.”

Mohapatra’s troubles aren’t over. A conviction on the felony theft charge is punishable by one to 15 years in prison and a $10,000 fine, said deputy Cache County Attorney Tony Baird, who defended the state prosecution.

“The idea is he took information developed by this private company to make a profit, and gave it to somebody else,” Baird said Tuesday.

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