Practitioners often lose sight of the fact that the ITC statute (19 U.S.C. §1337) is an unfair trade statute, not limited to claims of patent infringement by imported products.Section 337 provides remedies for any unfair act in the importation of goods into the US, including:
- Infringement of US patents, trademarks, copyrights, mask works, or designs
- Unfair competition
- False origin
- Trade dress infringement
- Misappropriation of trade secrets
- Gray market good importations
- Antitrust violations
One example of the extensive jurisdiction of ITC Section 337 investigations over acts of unfair trade involves trade secret misappropriation. Two of the last ten Complaints filed at the Commission (at the time of this writing) have been for claims of trade secret misappropriation: Balanced Armature Devices, Dkt. No. 3409 and Bone Cement Accessories, Inv. No. 337-TA-1175. This is in addition to several cases involving trade secrets instituted earlier this year: Botulinum Toxic Products, 337-TA-1145; Bone Cements, 337-TA-1153; and Lithium Ion Batteries, 337-TA-1159.
Why has there been an increase in trade secret misappropriation investigations? A likely explanation could be the Federal Circuit’s expansive interpretation of Section 337, as applied to trade secrets.
Why has there been an increase in trade secret misappropriation investigations? A likely explanation could be the Federal Circuit’s expansive interpretation of Section 337, as applied to trade secrets. In Tianrui Group Co. v. ITC, 661 F.3d 1322, 1325 (Fed. Cir. 2011), the alleged misappropriation of trade secrets for railway wheels occurred entirely in China. The Federal Circuit held that Section 337 could apply to those extraterritorial acts because the statute is triggered by importation. Moreover, Tianrui held that the domestic industry requirement for trade secrets does not require that a domestic product practices the trade secret, unlike for asserted patents, copyrights, and registered trademarks. It requires only that the unfair practices threaten to “destroy or substantially injure” a domestic industry. The fact that the complainant in Tianrui did not practice the misappropriated trade secrets in the United States therefore was not an obstacle to relief; it was enough that the imported wheels directly competed with wheels produced domestically by the Complainant.
The Commission took Tianrui’s holding a step further in Certain Rubber Resins, Inv. No. 337-TA-849, barring products from entering the US for conduct that not only occurred completely within China, but also was adjudicated in China to be lawful. The Federal Circuit affirmed the Commission’s decision without opinion and the Supreme Court rejected the respondent’s cert. petition, which was supported by an amicus brief from the Chinese government arguing that the ruling impugned the sovereignty of China.
Another reason for an increase in trade secret misappropriation investigations is the quick and strong injunctive relief issued by the Commission in recent cases. A survey shows that the shortest injunction (limited exclusion order, or LEO) the Commission has issued in such cases is 10 years and the longest 25 years:
- Cast Steel Railway Wheels, 337-655 (10-year LEO)
- Rubber Resins, 337-849 (10-year LEO)
- Opaque Polymers, 337-883 (25-year LEO)
- Crawler Cranes, 337-887 (10-year LEO)
- Stainless Steel Products, 337-TA-933 (16.7-year LEO)