Trade Secret Enforcement after Tianrui: Fighting Misappropriation through the ITC

Abstract

Trade secrets have historically been difficult to enforce, and enforcement is even more difficult for U.S. companies when the violations occur in foreign countries over which the United States may not have jurisdiction. China, for example, has rates of intellectual property (“IP”) infringement that are “among the highest in the world,” yet provides little recourse for foreign IP owners. Ineffective criminal regulations for IP infringement, as well as a lack of necessary judicial training and a tendency to award insufficient damages, make China a difficult forum in which to litigate. Even when a U.S. court enters a judgment against a Chinese company who misappropriated or infringed a U.S. company’s IP, “[t]he prospects are not promising for having a judgment entered by a U.S. court enforced by a court in China.” In a recent significant case, the Court of Appeals for the Federal Circuit upheld the U.S. International Trade Commission’s (“ITC”) determination that the United States can block goods originating from a respondent that misappropriated trade secrets to make the items, even if the acts of misappropriation occurred entirely abroad and the misappropriated trade secrets are not being practiced by any U.S. entity. This avenue for blocking infringing products from entering the United States, based on the newly announced qualifications for a § 337 complaint, has increased the chances for domestic trade secret owners to meet the ITC’s jurisdictional requirements and prevail in an unfair competition investigation. Part II of this Note assesses the historical and modern landscape of trade secret enforcement. Section II.A lays out the unique traits of trade secrets that make them difficult to enforce, and Section II.B describes the functions and authority of the ITC that may make it a more viable forum than district courts for enforcing trade secret owners’ rights. Part III discusses the facts and significance of the Federal Circuit’s decision in TianRui v. USITC, in which the ITC and, subsequently, the Federal Circuit addressed two important questions of first impression — whether the ITC has authority over the unfair methods of competition caused by the alleged trade secret misappropriation occurring entirely abroad, and whether the importation of infringing goods would injure a domestic industry when the complainant was not using the trade secret domestically. Part IV analyzes the legal environment for trade secret enforcement after TianRui. Section IV.A provides a comparison of jurisdictional requirements for district courts versus the ITC, and Section IV.B compares the features and availability of remedies in these two different forums. Part V predicts that trade secret filings before the ITC will increase after TianRui due to the ITC’s liberal interpretation of the domestic industry requirement.