International Protection of Trade Secrets - ITC Wields the "Hammer of Thor"


Domestic industries in the U.S. now have a powerful tool to protect their trade secrets against international misappropriation. The tool – the International Trade Commission's ability to block imports – perhaps has been there but not nearly with the authority now being wielded. Much like how the Emperor of China gave "Bao Gong" authority to mete out justice, the Federal Circuit has given the ITC authority to use its "Hammer of Thor" to stop international trade secret misappropriation. The Court of Appeals for the Federal Circuit recently upheld an ITC decision regarding misappropriated trade secrets in TianRui Group Company v. International Trade Commission. Those trade secrets, which relate to manufacturing methods for railroad wheels, were allegedly misappropriated by a Chinese Company that manufactured railroad wheels using misappropriated trade secrets and then imported them into the United States. Under Section 337 of the Tariff Act of 1930 ("Section 337"), the ITC has had the authority to consider unfair trade practices – including trade secret misappropriation – involving imported articles. Until now, the Federal Circuit has not addressed whether Section 337 authorizes the ITC to apply domestic law when the trade secret misappropriation occurred outside the U.S. and articles related to those trade secrets thereafter were imported into the U.S.3 The TianRui holding significantly expands the ITC authority to further protect U.S. domestic industries.

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.

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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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