Supreme Court Denies Petition for Writ of Certiorari Over Sino Legend’s Trade Secret Theft Challenge

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On January 9, 2017, the Supreme Court denied the petition for writ of certiorari submitted by Sino Legend Chemical Co., Ltd. (Sino) in litigation stemming from SI Group, Inc.’s (SI) Section 337 complaint. In a Section 337 challenge, the U.S. International Trade Commission (ITC) investigates allegations that goods imported into the United States infringe the Complainant’s valid U.S. patent, trademark, or copyright, or involve some other method of unfair competition or unfair act, such as trade secret theft.

In 2012, SI – a New York company – filed a complaint with the ITC alleging a Section 337 violation with regard to the sale for importation, importation, or sale after importation into the United States of rubber resin by means of trade secret misappropriation. On June 17, 2013, the presiding administrative law judge (ALJ) found that Sino and certain of its affiliated companies and shareholders were in possession of an SI trade secret that it misappropriated, leading to a violation of Section 337. In January 2014, the ITC upheld in part the ALJ’s decision, finding Sino Legend ZJG; SLHG Ltd.; Sino Legend Marshall Islands; PMI; Red Avenue Hong Kong; Sino Legend HGL; Shanghai Lunsai; and Red Avenue BV to be in violation of Section 337. The ITC issued a limited exclusion order over the rubber resin products that infringed on SI’s specific trade secrets.

Facing a ten-year import ban, Sino challenged the ITC’s decision in the U.S. Court of Appeals for the Federal Circuit and, when unsuccessful, petitioned for review at the Supreme Court. Sino challenged the ITC’s jurisdiction to rule on trade secret misappropriation claims which were “alleged to have occurred outside the United States.” Sino criticized the Federal Circuit’s ruling in TianRui Grp. Co. v. ITC, 661 F.3d 1322 (Fed. Cir. 2011), where “the Federal Circuit {held} that Section 337(a)(1)(A) reaches across the globe, permitting the {ITC} to apply U.S. law to regulate unfair business practices wherever they occur—as long as the alleged unfair business practice is in some way connected to the production of a good subsequently imported into the United States.” This, Sino argued, is an impermissible extraterritorial extension of Section 337.

Significantly, Sino was joined in its Supreme Court appeal by the Chinese government, whose Ministry of Commerce Trade Remedy and Investigation Bureau (TRB) filed an amicus brief in support of Sino’s position. TRB wrote that it was “disappointed by recent actions of the {ITC},” and “{i}n wrongly interpreting Section 337 of the Tariff Act to allow the ITC to bar imports into the United States based on alleged actions conducted, and adjudicated, wholly within the borders of China, the Commission has impugned the sovereignty of China and refused to accord the comity expected of a trade partner.”

With the Supreme Court’s denial of Sino’s petition for writ of certiorari, the ITC continues, at least for the present, to maintain broad jurisdiction over alleged trade secret misappropriations for articles imported into the United States.

 


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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