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
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.