Liang Chen Acquitted of Applied Materials Indictment

Robert Z Bachrach, PhD, Applied Materials Fellow Emeritus

On Friday August 27, 2021, the jury found Dr. Liang Chen not guilty of the Federal charges brought based on Applied Materials lawyers manipulating the US FBI and Federal Prosecutors to enter an indictment by hiding key eMails. Dr. Chen’s defense was represented by Ted W. Cassman and Raphael M. Goldman of Arguedas Cassman Headley & Goldman LLP. Through their defense, these key exculpatory facts were disclosed in the course of the trial well reported by Dorothy Atkins of Law360. The case was U.S. v. Chen et al., case number 5:17-cr-00603, in the U.S. District Court for the Northern District of California.

I worked with Liang and the others from 2007 to 2012 when the Large Energy Storage business initiative I started was placed in the Advanced Energy Product Group (AEP) of the Energy and Environment Systems Division (EES). I have since then had an ongoing friendship and business relationship with Liang and know well his honest, upstanding, and straightforward character. I knew those indicted were innocent and I believed then the charges would either be dismissed or those charged exonerated as has now happened with the acquittal of Liang Chen, Rob Ewald, and Wei-Yung Hsu.

I learned of the indictment in December 2017 and was quite disconcerted by the various sensationalized newspaper and web articles concerning the charges against those with whom I had worked arising from activities in 2012 during the termination of the floundering Applied Materials Gallium Nitride MOCVD equipment new product initiative. I wrote a private memo for record at the time outlining the facts as I knew them and I will, in the future, post further my perspective and my 2017 memo to this Blog. This is Part 1.

Once an Applied Materials new business initiative failed, and I will not enumerate all the many new businesses initiatives that failed, the shutdown process at Applied Materials supervised by executive management was to attempt to: (1) sell-off the business; (2) spin-out the business to a new company formed by employees; or (3) close the business and sell whatever assets and IP possible and (4) reassign or release the employees. Once the closure decision was made, all these options were typically explored in parallel until a final disposition. This was identical with how these situations were handled during the 18 years I was at the Xerox Palo Alto Research Center.

I have no idea how employees executing their assigned objectives with the agreement of divisional and corporate management became a “conspiracy”, but playing out in the same period as the Gallium Nitride MOCVD Equipment Business probe closure was a general reduction in staff across Applied Materials, including the Legal Department. So the time was one of significant uncertainty. That included lawyers whose positions were threatened. With a new head of the legal department with the retirement of Joseph Sweeny, there were many new staff in the Legal Department whose positions were threatened. My impression then was that some of the new lawyers who had only been with Applied Materials for a few months tried to protect their positions by bringing this case. The Legal Department in particular had a last in first out treatment of its staff during reductions in force. These same lawyers likely withheld the eMails.

As a member of the Applied Materials executive team at the time, I knew the charges were erroneous and damaging to both Applied Materials and to those charged. In particular, no General Manager at Applied Materials would pursue business initiatives without agreement of his management chain. No Applied Materials manager was out of touch with their employees’ activities. Applied Materials is known for its Corporate Governance and is a very well-managed company.

Part 2 to be posted

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