ITC Can Block Imports for Trade Secret Misappropriation Outside the United States

ITC can block imports for trade secret misappropriation outside the United States

In Tian Rui Group v. ITC, the Court of Appeals for the Federal Circuit ruled that the International Trade Commission (ITC) can prevent the importation of products made by a trade secret process misappropriated abroad, if the trade secret was developed in the United States.

In this case, Amsted (and American company) uses a trade secret process to make railway wheels. They license a different process to companies in China and elsewhere. Tian Rui hired former employees of Amsted, in China, to learn Amsted’s secret process. They made wheels, using the secret process, and shipped them to the U.S.

Amsted asked the ITC to block Tian Rui’s importation of the wheels produced by this trade secret method. The ITC issued an exclusion order, which was appealed to the CAFC.

The ITC relied on 19 U.S.C. § 1337(a)(1)(A) which provides the ITC authority over “Unfair methods of competition and unfair acts in the importation of articles . . . into the United States” if it will substantially injure and industry in the U.S. The ITC previously has used this section to bar products based on a variety of non-statutory unfair acts, including trade secret misappropriation. However, this was a case of first impression, with respect to actions taking place entirely outside the United States.

The CAFC, in a 2-1 decision (Bryson & Schall for the majority, Moore dissenting) ruled that while U.S. laws generally do not apply extraterritorially (e.g. outside the United States), the prevention of domestic injury from importation of products made using unfair methods justifies applying the statute to such acts.

The court further held that unfair competition bed actions are Federal, and thus ruled by federal law. Since the statute addresses importation, and provides a remedy in the ITC, federal rules should apply. By federalizing trade secret law, they could reach the conclusion, without expressly suggesting that U.S. trade secret law has extraterritorial reach. The court also noted that the statute does not require the use of the trade secret in the United States.

This ruling, which may yet be appealed, gives a powerful new weapon to U.S. companies, who face unfair competition from abroad. Since the law relied upon is not limited to trade secret misappropriation, the impact of the ruling may be quite broad.

If you believe that a product that is being imported by a competitor was produced using unfair acts, you may consider going to the ITC for a faster path to removing that competing product from the U.S. market. Keep in mind that the ITC judgment does not result in damages awards, but in exclusion orders.

Interesting Lecture on doing business in Germany

I couldn’t find a description of this lecture, which I received via email invitation from an accountant my family in Germany has worked with over many years. I thought it was interesting enough to repost, so here it is.

Haeckl & Partner GmbH,
The Munich Network e.V. and
YES Partners
Cordially invite you to a discussion on

Doing Business in Europe
Bavaria – Your Key to Success

Followed by a networking reception with Bavarian specialties

When: Tuesday, November 1st, 2011, 5.00 pm – 8.00 pm

Stanford University Faculty Club
439 Lagunita Drive
Stanford, CA 94309
Red Lounge

Admission: $25 prepayment or $35 at the door

To make payment: Go to and
To register: Contact
or contact Samantha at 818.988.2233



5:00pm Welcome & Introduction (Moderation)
Introduction of the “German” team
E. J. Dieterle – Global Executive Search – YES Partners
John Gosch, CPA – Bridge, llp
Achim Hoelzle – FeldbergPacific Law Group

5:10pm Business Location Bavaria: Facts and Figures
Lucie E. Merkle| Executive Director,
Bavarian U.S. Offices of Economic Development, LLC

5:20pm Tax and Legal Aspects of Doing Business in Germany
Reinhard Häckl | CEO, Häckl und Partner GmbH

5:40pm Mobile Security: How to collaborate with Giesecke & Devrient
Thorsten Roeske | Head of Innovation and Alliances,
CTO Office, Giesecke & Devrient

5:50pm Enabling Technologies: How to collaborate with Robert Bosch
Cyril Vancura | Investment Director, Robert Bosch LLC

6:00pm Test & measurement, communications and broadcasting
equipment: How to collaborate with Rohde & Schwarz
Chris Eriksen, Region Sales Manager, Rohde & Schwarz

6:10pm How Silicon Valley TechVentures can benefit from
Munich Network´s strong TechIndustry members
Curt Winnen | General Manager, Munich Network e.V.

6:20pm How the German Silicon Valley Accelerator works
Dirk Kanngiesser | CEO
German Silicon Valley Accellerator Inc.

Reception with traditional Bavarian specialties

Legal Challenge to End of False Marking Claims in America Invents Act

The first challenge to the America Invents Act is against the termination of the private right to enforce false marking. The end to false marking, providing that the only private litigants with a claim are competitors who can show actual harm, became effective immediately after President Obama signed the America Invents Act. It applied to all cases, including those pending. Since then, numerous cases have been dismissed, including some sua sponte.

Ken Brooks had a pending case against Dunlop Manufacturing, in the Northern District of California, San Francisco for false marking, filed back in 2010. In response to Dunlop’s Motion to Dismiss, under the new America Invents Act rules, Mr. Brooks brings a constitutional challenge to the AIA. In his memorandum Mr. Brooks states that he relied upon the statutory right which existed prior to the passage of the AIA, and that this destroyed an existing property interest. He cites to U.S. ex re. Stevens v. State of Vermont Agency of Natural Resources (162 F.3d 195, 2nd Circuit 1998) which held that qui tam plaintiffs have a private property interest in the outcome of such cases.

While the brief is written rather flamboyantly, and likely to appeal to lay readers not the judge, the point is interesting. Mr. Brooks did in fact invest some amount of money in pursuing this case, in the clear expectation of recovery, if he could prove a violation of the false marking act.

Of course, the Supreme Court held unanimously in the United States v. Carlton that retroactive tax laws were constitutional, thus making it unlikely that Brooks would succeed in his claim.

Furthermore, there are at least two cases that held that qui tam actions for false marking are unconstitutional, prior to the passage of the America Invents Act. This may mean that the court would find the act a mere clarification of an existing standard.

The more interesting question is whether, if any challenge is successful, the entire statute would be thrown out, since the America Invents Act does not include a severability clause.

Via Greg Aharonian‘s eponymous newsletter.