If you’ve ever argued over hours with your significant other, the trade secret defamation case of Lee v. Li will probably elicit some lulz. Ostensibly a straightforward workplace defamation suit, Lee v. Li is also a cautionary tale about what not to do when feeling neglected by your work-obsessed partner.

The Trade Secret Defamation Lawsuit Players

Plaintiff Lan Lee – A microchip engineer, Lan Lee worked at NetLogic Microsystems, Inc. Every day, when the NetLogic whistle blew, Lee and his friend and colleague, Yuefei Ge, got to work on their side business, SICO Microchips.

Yunchun Li – Wife of Yuefei Ge, Yunchun Li was frustrated by — and skeptical of — her husband’s side business with Lan Lee. But instead of dealing directly with her husband, Yuchun emailed his day-job boss at NetLogic with concerns. In the e-mail missive, Yunchun Li accused Lan Lee of stealing NetLogic’s intellectual property in service of a funding pitch to Chinese investors. Li also left “tips” about her suspicions on the FBI’s crime hotline.

Lawsuit #1: Lan Lee Accused of Federal Crimes Related To Microchip Espionage; Ultimately Acquitted

Thanks to Li’s ill-conceived sabotage campaign, both her husband and his business partner lost their jobs. The paid also had to stand trial for criminal fraud.

During the trial, Yunchun Li admitted that there was “no basis for her allegations” against Lan Lee stealing intellectual property from NetLogic. Basically, she admitted she conjured the story.

In the end, the court absolved Lan Lee and Yuefei Ge of all criminal charges. Having been given the all clear, Lan Lee sued Yunchun Li for defamation.

Lawsuit #2: Former Espionage Lawsuit Defendant Sues His Accuser For Trade Secret Defamation

In certain circumstances, comments made in the course of a quasi-legal setting are deemed privileged communications and therefore not defamatory. But in some cases, statements connected to a legal proceeding do qualify as actionable slander and libel claims.

This is one such case.

Since Li admitted she fabricated the trade secret and espionage claims against Lee, he was free to move forward with the defamation suit – especially since she’d made direct contact with his employer.

In 99.9% of Cases, Statements Made To The FBI Are Privileged and Therefore Not Defamatory

Lee also tried to sue Li over the “tips” she left on the FBI hotline, but the judge said no. Why? Because communication to law enforcement officials about a potential crime is 99.9% of the time considered protected speech.

Anti-SLAPP Doesn’t Work If The Topic At Hand Is Not A Matter Of Public Interest

Reporting Possible Crime to FBI = Privileged and Not Defamatory. Emailing Accusations of Theft To Employer = Potentially Defamatory.

Li tried to get the defamation charges dismissed using California’s anti-SLAPP statute, claiming the e-mails to NetLogic’s CEO were her “opinion” and therefore protected. She also reasoned that NetLogic’s intellectual property was a matter of public interest.

But it didn’t work. The judge sided with Lee, reasoning that Lee’s employment status was in no way a matter of public interest and was no way related to “China’s recent economic espionage” as Li had argued.

Li appealed, but the panel court came to the same conclusion as the lower court regarding the defamation charges (though, the appeals court rejected his emotional distress and economic interference claims).

Kelly / Warner Law handles all manners of business and trade secret defamation lawsuits, and we rank amongst the highest-rated firms for these types of cases. The statute of limitation for defamation isn’t long. If you have an issue, take action soon.

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