Federal Circuit Holds That the ITC Has Jurisdiction over Foreign Trade Secret Theft in Section 337 Investigations

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The U.S. Court of Appeals for the Federal Circuit recently affirmed the U.S. International Trade Commission (“ITC”)’s determination that it had jurisdiction to ban the importation of products made using processes protected by trade secrets, even where the misappropriation took place entirely outside of the United States. See TianRui Group Co. Ltd. v. Int’l Trade Comm’n, No. 2010-1395 (Fed. Cir. Oct. 11, 2011). In a split decision, the panel also ruled that the Commission should apply uniform federal law in Section 337 investigations when choice of law questions present themselves, such as in trade secret cases. The TianRui decision appears to open the door wider to complainants seeking a trade remedy against imported goods enriched by intellectual property theft abroad, provided that these complainants’ domestic industry is injured by the misappropriation.

The Foreign Misappropriation at Issue in TianRui and the Commission’s Determination

Amsted Industries, the Complainant in the underlying Section 337 investigation (Certain Cast Steel Railway Wheels, Certain Processes for Manufacturing or Relating to Same and Certain Products Containing Same, Inv. No. 337-TA-655), is an American corporation that manufactures cast steel railway wheels using a process protected by trade secrets. TianRui, the Respondent in the underlying Section 337 investigation, is a Chinese company that had unsuccessfully attempted to enter into a license agreement with Amsted to acquire a trade secret process for manufacturing railway wheels. Failing to obtain a license to Amsted’s trade secrets, TianRui hired nine former employees of an Amsted licensee in China. These nine employees knew of Amsted’s confidential manufacturing process and had signed confidentiality agreements agreeing to keep the process secret. Yet, shortly after these employees’ arrival at TianRui, TianRui began manufacturing cast steel railway wheels using Amsted’s secret process.

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DISCLAIMER: 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.

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