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China firm fights to stay out of court in U.S. spy case

By Basil Katz

NEW YORK (Reuters) - A Chinese steel firm accused by the United States with industrial espionage targeting chemical giant DuPont will ask a judge to quash moves for it to appear in court because a summons was not delivered correctly, court filings said.

The Pangang Group, a state-owned steel manufacturer in Sichuan province, allegedly worked with a California businessman and others to obtain several valuable trade secrets from DuPont, according to a U.S. indictment.

Lawyers for Pangang argued in a document filed in San Francisco federal court on Thursday that the U.S. delivered summonses to a New Jersey company called Pan America, which is a "separate and distinct legal entity" from the group.

The lawyers said Pan America could therefore not be considered a valid proxy for the Chinese company Pangang.

The lawyers said they would ask a judge on June 7 to quash the summonses on grounds the U.S. government "delivered summonses to an uncharged U.S. corporation that is not authorized to accept service on their behalf."

In a criminal case, prosecutors may ask a judge to issue a summons, which must be delivered or "served" to the defendant. Once a defendant is served, if they do not appear in court, the government may request a warrant.

A spokesman for the San Francisco U.S. Attorney's office, which is prosecuting the case, did not immediately return a request seeking comment.

The United States has identified industrial spying as a significant and growing threat to the nation's prosperity. However, some advocates have argued that Chinese targets are attractive for law enforcement in an election year, due to concerns about being called soft on China.

The Pangang Group is based in Panzhihua city in the far south of China's Sichuan province and is western China's largest steelmaker. It was formally known as Panzhihua Iron and Steel (Group) Co Ltd.

The case is United States of America vs. Walter Liew, Christina Liew et al., U.S. District Court, Northern District of California, No. 11-cr-573.

(Reporting By Basil Katz; Editing by Michael Perry)

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