The DTSA as a Tool for Foreign Entities’ Enforcement of Trade Secrets: A New Legal Frontier

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In several recent decisions, district courts have held that liability under the Defend Trade Secrets Act can extend to extraterritorial defendants.  As set forth by Sheppard Mullin’s Tyler Baker in a prior blog post, the extraterritorial reach of the DTSA is rapidly expanding.  Non-U.S. Companies and the DTSA: Parameters of a Developing Reality | Trade Secrets Law Blog (citing vPersonalize Inc. v. Magnetize Consultants Ltd., 437 F. Supp. 3d 860, 878 (W.D. Wash. 2020); Micron Tech. Inc. v. United Microelectronics Corp., No. 17-cv-06932-MMC, 2019 WL 1959487 (N.D. Ca. May 2, 2019); Motorola Solutions Inc. v. Hytera Commc’ns Corp., 436 F.Supp.3d 1150, 1165 (N.D. Ill. 2020); ProV In’tl Inc. v. Lucca, No. 8:19-cv-978-T-23AAS, 2019 WL 5578880 (M.D. Fla. Oct. 29, 2019)).  As Mr. Baker observed, these rulings create a risk for foreign entities regarding trade secret theft, as federal courts have held that foreign actors may be subject to liability under the DTSA if the act in furtherance of the misappropriation occurred in the United States.

However, where there is risk, there is also opportunity.  Specifically, these decisions may provide foreign entities with an avenue for relief where their trade secrets are misappropriated by other foreign or U.S. entities as long as there is some nexus to the United States.  Indeed, that may mean more protection is available by U.S. trade secret laws than available in alternative jurisdictions.  Courts have found a sufficient nexus to the United States in various contexts, from promoting and advertising products that embody trade secrets at U.S. trades shows to illegally downloading files containing trade secrets from U.S. computer servers.  The key is that the domestic contact must arise in connection with the alleged misappropriation of the trade secrets.  While the law is not fully established in this area, these decisions have opened the door to the possibility that foreign entities may be able to utilize U.S. courts to litigate their trade secret claims.  This could also provide the opportunity for foreign litigants to avail themselves of more expansive discovery in the U.S. and perhaps a quicker resolution depending on the other options.  There are, of course, strategic and jurisdictional questions to consider based upon each individual case and circumstance.  And discovery is a two-way street – before deciding to bring such claims in U.S. courts, foreign entities should be prepared for the pre-trial discovery and preservation obligations in the U.S. Courts.

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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