Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Bowers

United States Court of Appeals, Tenth Circuit

February 10, 2017

UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
DONALD BOWERS, Defendant-Appellant.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH (D.C. No. 2:13-CR-00413-DB-BCW-2)

         Submitted on the briefs:[*]

          Stephen R. McCaughey, Attorney at Law, Salt Lake City, Utah, for Defendant-Appellant.

          John W. Huber, United States Attorney, District of Utah; Jason R. Burt, Assistant United States Attorney, Salt Lake City, Utah, for Plaintiff-Appellee.

          Before BRISCOE, MATHESON and PHILLIPS, Circuit Judges.

          BRISCOE, Circuit Judge.

         Defendant Donald Bowers was previously involved in a civil trade secret misappropriation case that was litigated in the United States District Court for the District of Utah. During the course of that litigation, Bowers willfully and repeatedly violated a permanent injunction issued by the district court presiding over the case, and also refused to purge himself of civil contempt. His actions resulted in findings of civil contempt against him, judgments against him for the plaintiff's attorneys' fees, and, ultimately, a criminal referral to the United States Attorney for the District of Utah. A federal grand jury subsequently indicted Bowers on two counts of contempt, in violation of 18 U.S.C. § 401(3). The case proceeded to trial, where a jury found Bowers guilty of both counts. Bowers was sentenced to a term of imprisonment of fifteen months, to be followed by a thirty-six month term of supervised release. He was also directed, as a condition of supervised release, to make monthly payments on the outstanding amount owed by him to the plaintiff in the underlying civil case.

         Bowers now appeals, arguing that the district court erred in (1) imposing a special condition of supervised release requiring him to make monthly payments on the outstanding judgments owed to the plaintiff in the civil case, (2) denying his motion for disclosure of the criminal referral, and (3) sentencing him to a term of imprisonment that exceeded six months. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm in all respects.

         I

         This criminal case has roots in an earlier civil case, ClearOne Communications, Inc. v. Bowers, 643 F.3d 735 (10th Cir. 2011) (Bowers I). The complete factual and procedural history of that civil case is detailed in Bowers I and will not be repeated here. Instead, we proceed to outline only the facts necessary to understand how the criminal charges arose against Bowers.

         The filing of ClearOne's lawsuit against the WideBand defendants

         In early 2007, ClearOne Communications, Inc. (ClearOne) filed suit in Utah state court seeking relief for alleged misappropriation of its trade secrets. Those trade secrets, which ClearOne put to use in audio teleconferencing equipment, "allegedly included an acoustic echo cancellation algorithm and sub-algorithms, in both source and object code form, nicknamed the Honeybee Code." ClearOne Commc'ns, Inc. v. Bowers, 651 F.3d 1200, 1203 n.1 (10th Cir. 2011) (Bowers II). Ultimately named as defendants in the suit were WideBand Solutions, Inc. (WideBand), which was a Massachusetts corporation, and Andrew Chiang, Jun Yang, and Lonny Bowers (hereinafter Lonny), all of whom served as officers of WideBand. Collectively, these defendants will be referred to as the WideBand defendants. ClearOne's lawsuit also named two additional corporations: Versatile DSP, Inc., and Biamp Systems (Biamp). "Chiang, Yang and WideBand removed the case to federal district court [in Utah] on the basis of diversity jurisdiction."[1]Bowers I, 643 F.3d at 744.

         Donald Bowers' initial involvement in the lawsuit

         The defendant in the instant case, Bowers, is the father of Lonny. After ClearOne initiated its lawsuit against the WideBand defendants, Bowers began "loaning money to the WideBand defendants to pay a portion of the legal fees they were incurring." Bowers II, 651 F.3d at 1203. Further, in June 2008, "Bowers and a Georgia-based company he founded called WideBand Solutions, Inc. (WideBand Georgia), entered into an agreement with" the WideBand defendants "pursuant to which WideBand would transfer its assets to WideBand Georgia." Id. "ClearOne, upon learning of the asset transfer agreement, filed a motion for a temporary restraining order (TRO) and preliminary injunction to prevent any transfer of its alleged trade secrets." Id. at 1204.

         "The district court held a hearing on ClearOne's motion on June 18, 2008, during which attorney Randolph Frails appeared by telephone as the legal representative for . . . Bowers." Id. "Frails represented during the hearing that the language of the asset transfer agreement excluded the trade secrets that the WideBand defendants had purportedly misappropriated from ClearOne." Id. "Nevertheless, the district court ordered Frails and . . . Bowers to provide counsel for ClearOne and the WideBand defendants with copies of the asset transfer agreement." Id.

         On "June 19, 2008, ClearOne filed a renewed motion for a TRO and preliminary injunction alleging that, contrary to Frails' representations, the terms of the asset transfer agreement included WideBand's intellectual property, most notably the Honeybee Code." Id. "ClearOne that same day also filed with the district court a separate lawsuit against WideBand Georgia and . . . Bowers alleging fraudulent transfer." Id. (citing ClearOne Commc'ns, Inc. v. WideBand Sols., Inc., No. 2:08-CV-00474-TS (D. Utah June 19, 2008)).

         On June 26, 2008, the district court held a hearing "to address the asset transfer agreement." Id. "Frails again appeared by telephone on behalf of . . . Bowers and WideBand Georgia." Id. "During the hearing, the district court issued a TRO prohibiting the WideBand defendants from transferring the Honeybee Code." Id. The district court also, as part of its TRO, "expressly prohibited the transfer of any related items, including all of the various codes that Yang had allegedly derived from the Honeybee Code while working for WideBand, and it directed the WideBand defendants to make a full disclosure and production of all documents relating to the asset transfer agreement." Id.

         "On July 10, 2008, the district court, prompted by another TRO motion filed by ClearOne, held a . . . hearing concerning the asset transfer agreement." Id. Frails appeared by telephone on behalf of Bowers and WideBand Georgia, and stated that the asset purchase agreement had been rescinded because Bowers "felt that he was buying nothing." Id. (internal quotation marks omitted). "Frails argued that ClearOne's TRO motion was moot because no assets had been transferred and the asset transfer agreement had been rescinded." Id. The district court, relying on Frails' representations, "denied ClearOne's TRO motion as moot." Id.

         "In October 2008, the district court granted . . . Bowers' motion to dismiss ClearOne's case against him and WideBand Georgia without prejudice on the basis that the claims, all of which concerned the purportedly rescinded asset transfer agreement, were moot." Id. at 1205.

         The trial of ClearOne's case against the WideBand defendants

         ClearOne's case against the WideBand defendants ultimately proceeded to trial in October 2008. "After hearing eleven days of evidence, the jury returned a special verdict finding in favor of ClearOne on each of its claims against the defendants." Bowers I, 643 F.3d at 745. The verdict included substantial compensatory damages against all of the defendants, as well as punitive damages against Chiang and Yang. Id. (detailing the damages award).

         Donald Bowers' reemergence in the case

         "On January 16, 2009, ClearOne filed a motion for an order to show cause why the WideBand defendants and . . . Bowers should not be held in contempt of the district court's June 26, 2008 TRO." Bowers II, 651 F.3d at 1205. In support of its motion, ClearOne alleged that on November 6, 2008, the day after the jury returned its verdict in ClearOne's case against the WideBand defendants, Bowers filed a statement in Massachusetts purporting to perfect a security interest in all of WideBand's assets, including all of its software and intellectual property, pursuant to Article 9 of the Uniform Commercial Code. Id.

         "On January 26, 2009, the district court issued an order to show cause directing the WideBand defendants and . . . Bowers to appear before the court on February 10, 2009, and show cause why they should not be held in contempt for the reasons alleged in ClearOne's motion." Id. Although the evidence indicated that Bowers was properly served with the district court's show cause order, he "failed to appear at the February 10, 2009 show cause hearing." Id.

         On February 24, 2009, the district court issued a written order concluding that Bowers was effectively subject to the district court's June 26, 2008 TRO because he had acted in concert or participation with the WideBand defendants. Id. The district court also found that on November 6, 2008, Bowers had filed a UCC statement in Massachusetts listing WideBand as a debtor and describing the relevant collateral as all of WideBand's assets, including its intellectual property. Id. Despite these findings and conclusions, however, the district court "'continued' the issue of whether Bowers should be held in contempt of the district court's June 26, 2008 TRO, and directed Bowers to appear in person before the court on March 13, 2009, 'to show cause why [he] should not be held in contempt for violating the June 26, 2008 Order.'" Id. (citation omitted). "On March 5, 2009, the district court vacated its February 24, 2009 show cause order and ordered that a show cause hearing regarding . . . Bowers would be rescheduled at a future date." Id.

         The permanent injunction

         "On April 9, 2009, the district court issued a permanent injunction against all of the defendants." Bowers I, 643 F.3d at 745. The injunction permanently enjoined the WideBand defendants from disclosing, using or transferring in any way ClearOne's trade secret Honeybee Code, as well as "product development documentation for the Honeybee Code or any other documentation that reveal[ed] the contents of the Honeybee Code." Id. (internal quotation marks omitted). The injunction also prohibited the WideBand defendants from marketing, selling, manufacturing, developing, modifying, duplicating, transporting or delivering any technology that contained the Honeybee Code or any product that was substantially derived from the Honeybee Code. Id. at 745-46.

         Continued contempt proceedings against Donald Bowers

         "On April 28, 2009, the district court issued an order rescheduling for June 3, 2009, the show cause hearing regarding . . . Bowers." Bowers II, 651 F.3d at 1206. "In its order, the district court directed both . . . Bowers and . . . Frails to appear and testify by telephone at the June 3, 2009 hearing." Id. Both men "appeared by telephone at the June 3, 2009 hearing." Id. At the conclusion of the hearing, the district court "took the matter of . . . Bowers' contempt under advisement." Id.

         Three months later, on September 3, 2009, the district court issued a memorandum decision and order of contempt based on the evidence presented at the June 3, 2009 show cause hearing. Id. at 1207. The district court specifically found "Bowers in contempt for the post-verdict act of filing a UCC financing statement encumbering WideBand's assets, as well as for failing to appear at the February 10, 2009 contempt hearing." Id. "Based on these findings, the district court directed . . . Bowers to take actions to assure the court that he had removed any encumbrances he had placed on WideBand's assets and to pay ClearOne's attorneys' fees and costs associated with the contempt proceedings against him." Id.

         "On September 17, 2009, . . . Bowers filed a personal Chapter 7 bankruptcy petition in Georgia." Id. "The automatic stay entered in connection with the filing of that bankruptcy petition prevented ClearOne from collecting on the contempt judgment for fees and costs and prevented, for a period of time, the district court's consideration of ClearOne's ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.