The United States International Trade Commission (“ITC”) is an independent, quasijudicial Federal agency with broad oversight over trade matters. In addition to trade practices such as dumping and subsidies, the ITC adjudicates matters involving the misappropriation of trade secrets and theft of intellectual property. Specifically, Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337(a)(1)(A), prohibits “unfair methods of competition and unfair acts in the importation of articles … into the United States.”
In 2012, the Federal Circuit—which has jurisdiction over all ITC matters—was asked to consider whether the ITC had authority to investigate the misappropriation of trade secrets protected by domestic law when the misappropriation occurred exclusively in China. See Tianrui Group Co. Ltd. v. ITC, 661 F.3d 1322 (Fed. Cir. 2011). The Federal Circuit answered in the affirmative and held that the ITC had authority 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.” Tianrui, 661 F.3d at 1324. Following Tianrui, domestic companies have used the ITC to redress misappropriation of trade secrets far from American shores so long as the misappropriation resulted in the importation of products into the US causing domestic injury. For further background on the Tianrui decision, please see our prior post here.
The ITC’s extraterritorial authority established in Tianrui is once again being challenged. Recently, in another case involving the misappropriation of American trade secrets in China, the Supreme Court was asked to decide whether Section 337 of the Tariff Act does, in fact, authorize the ITC to investigate misappropriation that occurred entirely outside the United States. See Sino Legend (Zhangjiangang) Chemical Co. Ltd. v. ITC, cert petition available here. The crux of Sino Legend’s argument is that for a statute to apply abroad, there must be express congressional intent. Not surprisingly, Sino Legend argues that such intent is missing from Section 337 of the Tariff Act. In Tianrui, the Federal Circuit held that such intent was manifest in the express inclusion of “the importation of articles .. into the United States” which evidenced that Congress had more than domestic concerns in mind. Tianrui, 661 F.3d at 1329. To prevail, Sino Legend must convince the Supreme Court to not only hear its case, but to overrule Tianrui’s holding that such intent is evident from the “importation of articles” clause in the Act.
Sino Legend’s petition comes at an interesting time. The Supreme Court is only 8 justices following the death of Justice Scalia, perhaps making it even more difficult for cert to be granted. At the same time, trade with China was a repeat theme of President-Elect Trump’s presidential campaign. Companies with operations abroad should closely monitor the progress of Sino Legend, as reversal of Tianrui will result in the removal of a powerful tool in a trade secret owner’s arsenal against extraterritorial misappropriation of trade secrets.