The U.S. Supreme Court denied a petition for writ of certiorari in Sino Legend (Zhangjiagang) Chemical Co. Ltd. v. International Trade Commission & SI Group, Inc., thereby rejecting an attempted challenge to the U.S. International Trade Commission's authority to adjudicate complaints based on trade secret misappropriation that occurs abroad.
Section 337 of the Tariff Act of 1930 confers authority on the ITC to investigate unfair competition in connection with articles imported into the United States. See 19 U.S.C. § 1337(a)(1)(A). If the ITC determines that such unfair competition occurred, it may, among other remedies, order the infringing articles "excluded from entry into the United States" and impose civil penalties for violations of that order. The U.S. Court of Appeals for the Federal Circuit interprets the statute as permitting the ITC "to investigate and grant relief based in part on extraterritorial conduct insofar as it is necessary to protect domestic industries from injuries arising out of unfair competition in the domestic marketplace." See TianRui Group Co. v. International Trade Commission.
Sino Legend, a resin manufacturer in China, challenged that interpretation after the ITC entered a 10-year exclusion order against it. A U.S. competitor, SI Group, filed a complaint against Sino Legend alleging that two former employees of SI Group's Chinese affiliate misappropriated SI Group's trade secrets after leaving to work for Sino Legend. SI Group had unsuccessfully pursued the matter through proceedings in China before bringing a complaint before the ITC. The ITC determined that misappropriation occurred with respect to some protectable trade secrets and found sufficient injury and threat of injury to the domestic industry for rubber resins. Accordingly, it issued an exclusion order for Sino Legend's infringing products. See In the Matter of Certain Rubber Resins & Processes for Manufacturing Same. Sino Legend appealed, but the Federal Circuit affirmed the ITC's determination without a written opinion and subsequently denied en banc review. See Sino Legend (Zhangjiagang) Chemical Co. v. International Trade Commission.
In its petition to the Supreme Court, Sino Legend argued that the Federal Circuit incorrectly interpreted § 337—more specifically, that its interpretation of the statute was inconsistent with Supreme Court jurisprudence regarding extraterritoriality of statutes and that the policy implications of the U.S. adjudicating foreign conduct further counsels against its interpretation. Signaling the importance of the issue, the Chinese government's trade agency—which had also appeared to urge en banc review by the Federal Circuit—filed an amicus brief stressing the importance of comity and China's sovereignty. The ITC, in opposition to further review, noted that the statute focuses on importation into the United States and resulting domestic effects, even if the actual trade secret misappropriation occurred abroad.
The Supreme Court's denial of Sino Legend's petition for review leaves the Federal Circuit's TianRui decision, and trade secret owners' resulting recourse against misappropriation abroad, intact. Moreover, the Defend Trade Secrets Act of 2016 created a private right of action—with the ability to obtain damages—for trade secret misappropriation occurring abroad, in certain circumstances. See 18 U.S.C. §§ 1836, 1837 (conferring jurisdiction over conduct outside the United States if the offender is a person or entity in the U.S., or if an act in furtherance of the offense was committed in the U.S.). Accordingly, trade secret owners maintain the option and forum to determine which enforcement avenue best suits their respective needs.
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