United States: Sino Legend v. ITC: Federal Circuit Affirms ITC's Trade Secret Misappropriation Determination

On December 11, 2015, two days after hearing oral arguments in an appeal from an ITC determination finding trade secret misappropriation, the Federal Circuit summarily affirmed the ITC's decision. Sino Legend Chemical Co., v. International Trade Commission, No. 2014-1478 (Fed. Cir. December 11, 2015). The primary issues raised on appeal were: (1) whether the ITC can block the importation of products resulting from trade secret misappropriation occurring entirely outside the U.S.; and (2) whether the ITC should have deferred to the judgments of the Chinese courts that were reviewing the same trade secret allegations.


The Commission instituted the investigation of Certain Rubber Resins and Processes for Manufacturing Same, Inv. No. 337-TA-849 ("Rubber Resins"), based on complainant SI Group's allegations that respondents Sino Legend misappropriated trade secrets for tackifiers — chemical compounds used to bind rubber mixtures in tires.

SI Group hired two employees at its Chinese facilities, both of whom had access to SI Group's trade secrets concerning tackifiers. The employees left SI Group and joined Sino Legend in China, bringing with them SI Group's formulas for producing tackifiers. Shortly thereafter, Sino Legend began producing its own tackifiers and importing them from China into the U.S.

SI Group brought multiple actions against Sino Legend for trade secret misappropriation in China. These included criminal and civil investigations. The civil investigation resulted in a ruling that Sino Legend had not misappropriated protectable trade secrets. The ruling was affirmed on appeal.

SI Group also filed an ITC Complaint under Paragraph (a)(1)(A) of Section 337, which renders unlawful the importation of goods stemming from "[u]nfair methods of competition and unfair acts in the importation of articles...into the United States." As the Federal Circuit held in TianRui Group Co. Ltd. v. ITC, 661 F.3d 1322, 1327 (Fed. Cir. 2011), trade secret misappropriation is a form of unfair competition encompassed by the statute. Moreover, TianRui specifically held that Section 337 encompasses trade secret misappropriation that occurs abroad. Id. at 1335 ("To bar the Commission from considering such acts because they occur outside the United States would thus be inconsistent with the congressional purpose of protecting domestic commerce from unfair methods of competition in importation such as trade secret misappropriation").

In Rubber Resins, the Administrative Law Judge issued a final initial determination finding a violation of Section 337 for trade secret misappropriation and recommending a 10-year general exclusion order (GEO), or alternatively, a limited exclusion order (LEO) directed to a number of named individuals and companies that manufacture, distribute, and import the accused product. The Judge did not afford comity or give deference to the Chinese litigations, one of which was co-pending at the time.

The Commission adopted the Judge's findings and issued a 10-year LEO. The Commission declined to dismiss the case for comity to the Chinese court, stating in a footnote that "abstention and international comity do not relieve the Commission of its statutory responsibility to determine whether there is a violation of Section 337." Sino Legend appealed the Commission's decision to the Federal Circuit.

Oral Argument

The Federal Circuit panel consisted of Judges Reyna, Mayer, and Chen. The panel focused on two primary questions:

  1. Extraterritoriality – can the ITC block imported articles arising from trade secret misappropriation that occurred entirely in China?
  2. Comity – did the ITC err by not considering judgments from Chinese courts that litigated SI Group's trade secret allegations?
  1. Extraterritoriality
  1. Sino Legend

TianRui held that the ITC has the power to block the importation of goods derived from trade secret misappropriation occurring outside the U.S. In its briefing and during oral argument, respondent Sino Legend urged the Federal Circuit to reconsider TianRui in view of the intervening Supreme Court decision in Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659, 1664 (2013). According to Sino Legend, Kiobel states that a statute can only apply extraterritorially when it includes a clear indication of extraterritoriality. Sino Legend argued that Section 337 does not clearly indicate that it should reach conduct occurring wholly outside of the U.S.

During Sino Legend's oral argument, Judge Chen observed that in Kiobel, the conduct being regulated or policed occurred entirely overseas, whereas in Section 337 proceedings at the ITC (as addressed in TianRui), the focus is on domestic matters – i.e., a domestic injury triggered by the domestic act of importation, with a domestic remedy. In response, Sino Legend pointed to the dissent in TianRui, which stated that in addition to importation, Section 337 investigations involve an unfair method or act in connection with the importation. Sino Legend argued that to count unfair acts occurring anywhere in the world as triggering violations under Section 337 would constitute an improper extraterritorial application of the statute that cannot be upheld in the absence of explicit statutory language confirming its extraterritorial application.

Judge Reyna asked why Kiobel did not explicitly overrule TianRui. Sino Legend responded that Section 337 was not before the Supreme Court in Kiobel. Judge Reyna then asked why the Federal Circuit should presume that Kiobel reaches TianRui. Sino Legend responded that the Federal Circuit should revisit TianRui because its rationale is undercut by Kiobel.

  1. The ITC

During its arguments, the ITC relied on the holding in TianRui, which stated that Section 337 does not regulate foreign conduct and does not apply extraterritorially; the statute instead applies to importation and economic injury in the U.S. Thus, Kiobel's holding regarding extraterritoriality is not relevant to TianRui and Section 337.

  1. SI Group

Complainant and intervenor SI Group separately argued that Sino Legend's briefs to the ITC did not address extraterritoriality, and that Sino Legend raised this issue for the first time on appeal.

  1. Comity
  1. Sino Legend

Sino Legend argued that the ITC committed error by failing to consider whether to accord comity to the decisions of Chinese courts regarding the trade secret allegations. According to Sino Legend, the ITC concluded that comity has no role to play in an ITC proceeding. Sino Legend argued that the case should be remanded to allow the ITC to consider the various factors to determine whether to grant comity to the Chinese proceedings.

Judge Reyna noted that comity is discretionary and that the ITC is not obligated to accord comity. Sino Legend responded that there is no mandate that the ITC defer to foreign decisions, but the ITC must apply the applicable test to determine whether or not to accord comity. Judge Reyna observed that whether to defer to a foreign judgment requires a due process analysis regarding the foreign proceedings, and asked whether there had been a factual finding that the Chinese proceedings were unfair. Sino Legend responded that the ITC did not make any such factual findings.

On rebuttal, Judge Reyna asked Sino Legend why it did not submit additional arguments on fairness and due process of the Chinese proceedings, including the factors that courts examine when deciding whether to defer to a foreign judgment. Sino Legend stated that its submission of the Chinese judgments met its prima facie burden, and that although Sino Legend raised comity generally in its Petition to the Commission, the Commission did not request briefing on the comity issue.

  1. The ITC

Judge Reyna asked if there were arguments made at the ITC that the Chinese proceedings were unfair. The ITC responded that Sino Legend never submitted evidence supporting the according of comity to the Chinese judgments and did not preserve those arguments. When the Commission reviewed the case, there was no evidence regarding comity in the record and no evidence about the fairness or unfairness of the Chinese judicial system.

Judge Chen asked about the ITC's position on comity and whether it flatly rejects comity. The ITC responded that Sino Legend raised comity late in the proceedings and did not include substantial arguments or evidence. In future cases involving comity, there might be "a little bit of wiggle room" for a party who makes substantial arguments in a timely manner.

  1. SI Group

SI Group said they did not interpret the ITC's decision as precluding comity in all cases. In this case, Sino Legend did not raise the issue of comity in its briefs to the Commission.

Judge Reyna asked if there was any discussion or argument in the proceeding as to due process in China. SI Group said that its brief included a discussion on procedural issues in the Chinese case, and referenced an ITC report regarding the effects of intellectual property rights infringement in China and China's indigenous innovation policies. By contrast, Sino Legend relied on a law review article that SI Group characterized as a "marketing fluff piece."

Audio of the oral argument is available here.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Lynn I. Levine
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions