Trade Secret Owners Flock to the International Trade Commission to Combat Overseas Misappropriation

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The International Trade Commission (“Commission”) has seen a spike in investigations related to the misappropriation of trade secrets since the Federal Circuit’s determination in TianRui Group Co. Ltd. v. U.S. Int’l Trade Comm’n, 2010-1395 (Fed. Cir., Oct. 11, 2011) (“TianRui”). Tian Rui affirmed that Section 337 of the Tariff Act of 1930 (“Section 337”) applies to trade secret misappropriation where the unfair act occurs exclusively overseas. It also created a uniform federal common law standard for addressing trade secret theft under Section 337 that effectively replaced the Commission’s former approach of using state trade secret laws, which differ from state to state. Section 337 makes unlawful unfair methods of competition and unfair acts in the importation of articles into the United States, or in the sale of such articles by the owner, importer, or consignee, if such importation injures or threatens to injure an industry in the United States.

In the past month, the Commission received two new complaints requesting the institution of investigations of trade secret misappropriation, each alleging unfair acts occurring exclusively overseas. The most recent complaint, Certain Robotic Toys and Components Thereof, Inv. No. 337-2930, was filed in January 2013, by Innovation First International, Inc., Innovation First, Inc. and Innovation First Labs, Inc. (“Innovation First”). Innovation First alleges unlawful importation into the United States of robotic toys by a domestic retailer. Innovation First alleges that the retailer imports and sells robotic toys manufactured by Zuru Inc. as a result of misappropriation of complainant’s trade secrets in China. The complaint alleges that Zuru deliberately engaged an Innovation First engineer in China who stole trade secrets from Innovation First and provided them to Zuru. This investigation is unique in that Innovation First named as a respondent only the retailer and did not name Zuru, the entity alleged to have engaged in the trade secret misappropriation. Innovation First’s decision not to name the parties alleged to have stolen its trade secrets may limit the ITC’s ability to afford relief. At a minimum, it will diminish Innovation First’s ability to obtain the foreign discovery needed to prove trade secret misappropriation. Although discovery between the parties does not require special procedures, discovery against non-parties must proceed by ordinary channels of foreign discovery, such as the Hague Convention or Letters Rogatory.

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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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