Trade Secrets, IP Protection, TianRui, and the ITC: It’s a Small(er) World, After All

“Overseas manufacturers have long known that their products manufactured abroad can be excluded from importation into the U.S. if they infringe U.S. patents, trademarks or copyrights. But a new decision by the U.S. Court of Appeals for the Federal Circuit has expanded the list of acts that can result in the exclusion of articles from import to the U.S. market. Under this decision, trade secret misappropriation that occurred completely outside the U.S. can lead to the exclusion of those articles…” (From A Runaway Train? Citing Secret Stolen by Chinese Competitor, ITC Derails Import of Railway Wheels, and Federal Circuit Affirms by Sutherland Asbill & Brennan LLP) 

A recent Federal Circuit Court of Appeals decision to uphold an International Trade Commission Section 337 violation that took place entirely outside the US gives manufacturers an important new weapon in the fight to protect their intellectual property. From lawyers and law firms on JD Supra:

“Complainant Amsted is an American company that uses a secret process to make cast steel railway wheels. Defendant TianRui, a Chinese company, … hired former employees of an Amsted licensee to manufacture wheels using Amsted’s confidential process in China. Amsted filed an action with the ITC to block TianRui’s importation of these wheels into the United States. Finding that TianRui had misappropriated Amsted’s trade secrets under Illinois trade secrets law (Amsted is an Illinois company), the ITC issued an exclusion order.” (From Trade Secret Law Goes Global – and Federal. Federal Circuit Approves ITC’s Sweeping Power to Block Imports Based on Trade Secret Misappropriation outside the U.S. by Morrison & Foerster LLP) 

On appeal, “the majority held that unlike the domestic industry requirement for § 337 investigations based on statutory intellectual property rights (such as patents, copyrights and registered trademarks), the general provision in the statute relating to ‘unfair methods of competition and unfair acts in the importation of articles’ only requires that the unfair practices threaten to ‘destroy or substantially injure’ a domestic industry.” (From IP Update, Vol. 14, No. 10, October 2011 by McDermott Will & Emery) 

“The TianRui opinion establishes three separate and significant holdings: (1) the ITC has authority to consider conduct occurring in foreign countries; (2) the ITC should apply federal trade secret law; and (3) a domestic manufacturer can assert a trade secret violation claim even if that manufacturer is no longer practicing the trade secret. The rulings on all three issues favor domestic companies and create a potential hammer to enhance negotiations and enforcement of trade secrets when sharing technology outside of the U.S.” (From International Protection of Trade Secrets – ITC Wields the “Hammer of Thor” by Bracewell & Giuliani LLP) 

“The decision is significant for two reasons. First, companies can expect the ITC to be used more aggressively as a forum to litigate trade secret actions involving allegations of overseas misappropriation, though it is unclear whether the same result would have occurred if the plaintiff had not been a U.S. company that originally developed the trade secrets within the U.S. Second, the case is symptomatic of a greater federal interest in trade secret law, which is normally the province of the states.” (From Federal Circuit Affirms ITC Importation Ban Premised on Trade Secret Misappropriation in China by Wilson Sonsini Goodrich & Rosati) 

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