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ITC Litigation: Introduction to Trade Secret Protection at the ITC

February 5, 2021

ITC Litigation: Introduction to Trade Secret Protection at the ITC

February 5, 2021

Home » Resources » IP Law Essentials

We have covered several introductory topics about 337 Investigations at the International Trade Commission (ITC) through the lens of its most common context[1]—as another forum for patent litigation.[2] Recall that in a patent-based 337 investigation at the ITC, a complainant must prove 1) that there is a product that has been imported, sold for importation, or sold in the United States after importation; 2) that the product is “infringing”, i.e., falls within the claims of a valid and enforceable U.S. patent; and 3) that an industry with respect to articles protected by the patent exists or is in the process of being established.[3] However, patent litigation is but one potential use of this forum. The ITC can be utilized for other causes of action in addition to patent infringement, including trade secret misappropriation.

A 337 investigation based on trade secret misappropriation is governed by a different portion of the statute and has different requirements. In a trade secret-based investigation at the ITC, a complainant must prove that 1) there is an imported product; 2) the importation or sale of such product arises from an unfair act or method of competition (e.g., trade secret misappropriation); 3) there exists a U.S. industry that would be destroyed, substantially injured, or prevented from forming as a result of the unfair act;[4] and 4) a specific injury (or threat thereof) to the domestic industry.

While trade secret claims are on the rise, in 2020, ITC investigations based solely on trade secret claims accounted for less than 5% of active cases.[5] This represents a missed opportunity—and potentially a market inefficiency—for companies looking to enforce trade secrets that have been misappropriated abroad.

What are the Benefits of Litigating at the ITC?

In general, when litigating patent infringement claims at the ITC (as opposed to district court), the ITC can offer several benefits; these comparisons hold true for trade secret claims as well. First, the ITC has a compressed procedural schedule, so a case can proceed to the equivalent of a trial before an Administrative Law Judge in less than a year. Second, the ITC has unique remedy provisions that can be enforced quickly; a victory for a complainant at the ITC can result in blocking the importation of goods made with misappropriated trade secrets in as little as 16 months from the institution of an investigation. This is achieved through an exclusion order, which is typically “limited”, i.e., applying only to the named respondent.[6] For respondents with commercially significant inventory in the U.S., the ITC can also issue cease and desist orders to prevent further sales of the accused products. Third, a complainant does not necessarily need to prove that there is personal jurisdiction over respondents at the ITC, as the Commission only needs in rem jurisdiction over the accused products to exclude imported goods.

For investigations involving trade secret claims, a victory at the ITC has the additional benefit of possibly being preclusive in district court litigation.[7] This is different from patent cases, where ITC decisions are not considered binding authority on the parties for parallel claims in district court.[8]

Differences from Patent Infringement Claims at the ITC

While 337 investigations for trade secret misappropriation generally proceed in the same fashion as patent infringement investigations, one significant difference revolves around proving injury. In patent-based investigations, if a complainant proves infringement, injury to the complainant is presumed, and no specific finding of injury is necessary. However, with trade secret claims, the statute requires that complainants prove injury in addition to misappropriation, importation, and the existence of a domestic industry.

Differences from District Court Trade Secret Claims

Unlike in district court, trade secret claims at the ITC can be brought for misappropriation that has occurred entirely outside of the United States. While the Defend Trade Secrets Act, the federal statute governing trade secret claims, contains an extraterritoriality provision, this provision applies only if an act in furtherance of the misappropriation occurs in the U.S.[9] In contrast, an ITC exclusion order can be obtained without a related act in the U.S., i.e., even if the misappropriation occurs exclusively abroad.[10] The Federal Circuit has affirmed such exclusion orders, finding that Section 337 applies where unfair acts committed wholly outside of the U.S. harm a domestic industry by virtue of the importation of a respondent’s product, and that the presumption that U.S. laws do not govern extraterritorial behavior does not apply to Section 337.[11]

For these reasons, bringing trade secret claims at the ITC appears to be a vastly underutilized resource for companies considering litigation. Indeed, consideration of the ITC as a potential venue should be a part of any company’s strategy for enforcing trade secret rights against misappropriation abroad.

More questions? Contact the authors or visit Fish’s Intellectual Property Law Essentials.

 

[1] See “What is ITC Litigation and Why Should I Care?,” April 22, 2020, available at https://www.fr.com/itc-litigation-why-should-i-care/; “ITC Litigation: How Do I File an ITC Complaint?,” April 22, 2020, available at https://www.fr.com/fish-litigation/itc-litigation-how-do-i-file-an-itc-complaint/; “ITC Litigation: The Rise in Popularity of Section 337,” May 26, 2020, available at https://www.fr.com/fish-litigation/itc-litigation-rise-popularity-section-337/; “ITC Litigation: Can You Be Sued at the ITC?,” June 19, 2020, available at https://www.fr.com/itc-litigation-can-you-be-sued-at-the-itc/#:~:text=In%20short%2C%20probably.,as%20that%20in%20district%20court; “ITC Litigation: The Section 337 Investigation Timeline,” July 9, 2020, available at https://www.fr.com/itc-litigation-section-337-investigation-timeline/; “ITC Litigation: Domestic Industry Requirement,” July 13, 2020, available at https://www.fr.com/itc-litigation-domestic-industry-requirement/; “ITC Litigation: How Discovery in the ITC is Different from Federal Court,” July 31, 2020, available at https://www.fr.com/itc-litigation-discovery-itc-different-federal-court/.

[2] Patent claims are present in almost 90% of the active 337 Investigations brought in 2020. Section 337 Statistics: Types of Unfair Acts Alleged in Active Investigations by Fiscal Year (Updated Annually), USITC (last visited Dec. 4, 2020). https://www.usitc.gov/intellectual_property/337_statistics_percentage_investigations_given.htm (last visited May 8, 2020).

[3] 19 U.S.C. § 1337(a)(1)(B). These statutory criteria also apply to investigations based on other intellectual property rights specified in the statute, including registered trademarks, copyrights, and mask works.

[4] 19 U.S.C. § 1337(a)(1)(A)

[5] See Section 337 Statistics: Types of Unfair Acts Alleged in Active Investigations by Fiscal Year (Updated Annually), USITC (last visited Dec. 4, 2020).

[6] The ITC has the authority to issue “general” exclusion orders that apply to infringing products of any and all companies manufacturing the accused products abroad. However, as a practical matter, general exclusion orders are typically not available in a trade-secret based investigation. This is because one typically cannot determine from an inspection of the product whether it was made using a misappropriated trade secret.

[7] See Manitowoc Cranes LLC v. Sany Am. Inc., 125 U.S.P.Q.2d 1325, 1327, 2017 WL 6327551, at *3 (E.D. Wis. Dec. 11, 2017).

[8] See Texas Instruments Incorporated. v. Cypress Semiconductor Incorporated et al., 90 F.3d 1358, 1369 (Fed. Cir. 1996)

[9] See ProV International v. Rubens, No. 819-CV-978-Y-23AAS, 2019 WL 5578880 (M.D. Fl. Oct. 29, 2019) (discussing limits to what may qualify as an act in furtherance of misappropriation under the DTSA).

[10] See Certain Cast Steel Railway Wheels, Certain Processes for Mfg. or Relating to Same & Certain Prods. Containing Same, Inv. No. 337-TA 655, Initial Determination at 87 (Oct. 16, 2009).

[11] TianRui Grp. Co. v. Int’l Trade Comm’n, 661 F.3d 1322, 1329-1332 (Fed. Cir. 2011).

Authors: Elizabeth Connors, Esha Bandyopadhyay, and Monty Fusco


The opinions expressed are those of the authors on the date noted above and do not necessarily reflect the views of Fish & Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates. This post is for general information purposes only and is not intended to be and should not be taken as legal advice. No attorney-client relationship is formed.

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Esha Bandyopadhyay | Principal

Esha Bandyopadhyay, a principal in the Silicon Valley office of Fish & Richardson P.C., has been practicing intellectual property and technology-related commercial litigation and counseling in the Bay Area for close to two decades. She has successfully tried and...

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Thomas "Monty" Fusco | Of Counsel

Thomas S. “Monty” Fusco is of counsel in the Washington, D.C., office of Fish & Richardson P.C., where his practice focuses on Section 337 matters at the U.S. International Trade Commission (ITC). Prior to joining the firm, he worked at the ITC for 25 years, focusing for the majority of that time on Section 337 matters...

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