United States: Winning Streak Continues In ITC Trade Secret Theft Investigations

In fact, every Section 337 complaint based on theft of trade secrets in the last 10 years has succeeded.

Section 337—the unfair trade practice remedy administered by the International Trade Commission (ITC or the "Commission")—has most often been used to counter importation of goods that infringe U.S. patents. A recent case, however, reinforces the concept that Section 337 can also be used to protect U.S. trade secrets.

On April 17, 2015, the ITC published a notice affirming the decision of an Administrative Law Judge finding a foreign party in default as to allegations of importing goods into the United States that were made using trade secrets of Dow Chemical Company.[1]

This was, however, no ordinary case. Here, the Commission found that the respondent had spoliated evidence and, as a sanction, held the respondent in default and issued both an exclusion order to U.S. Customs and Border Protection and a cease-and-desist order to the respondent, each with a duration of 25 years. The remedial orders are applicable to any product that embodies any of Dow's 52 trade secrets at issue. This case is interesting as it shows the Commission's commitment to protecting domestic trade secrets; yet it is just one of a series of cases favorable to complainants in trade secret cases.

In a prior case, the Commission held, and the Federal Circuit affirmed, that Section 337 provides a remedy even where the actual misappropriation of the trade secret is extraterritorial. That is, the court held that Section 337 can be violated "based in part on acts of trade secret misappropriation occurring overseas."[2]

In fact, every Section 337 complaint based on theft of trade secrets in the last 10 years has succeeded. Of the 11 trade secret complaints filed since 2005, four resulted in findings of violation,[3] four led to consent orders[4] and three resulted in findings of default and issuance of an exclusion order.[5]

The consistently favorable outcomes of Section 337 trade secret complainants and recent rulings regarding spoliation and extraterritoriality highlight the appeal of the ITC as an effective venue. Considered in conjunction with the ITC's "rocket docket" timeline and its easy jurisdictional reach over foreign corporations (with no delay for international service), it may be the optimal venue for a trade secret case implicating imported goods.

Notes

  1. Organic Polymers, ITC Inv. No. 337-TA-883, Commission Notice (April 17, 2015).
  2. TianRui Group Co. Ltd. v. Int'l Trade Comm'n., 661 F.3d 1322 at 1332 (Fed. Cir. 2011).
  3. ITC Inv. Nos. 337-TA-655, 337-TA-698, 337-TA-849 and 337-TA-887.
  4. ITC Inv. Nos. 337-TA-550, 337-TA-562,337-TA-863 and 337-TA-869.
  5. ITC Inv. Nos. 337-TA-791, 337-TA-826 and 337-TA-883.

If you have any questions about this Alert, please contact Michael G. McManus, any member of the Intellectual Property: ITC Section 337 Litigation Practice Group or any attorney in the firm with whom you are in regular contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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