Just over four years ago, in January 2014, a court sentenced former Korn/Ferry regional director David Nosal to one year and one day in prison for violations of the federal Computer Fraud and Abuse Act and the Espionage Act. Nosal appealed the sentence, but his appeals ultimately failed: the U.S. Court of Appeals for the Ninth Circuit upheld Nosal’s sentence, and the U.S. Supreme Court denied review of the case. Luckily for Nosal, his 2014 motion for release pending appeal was granted, so he has not served any time during the four years of appeals. READ MORE
In trade secret cases, it is often the case that a defendant company and employee accused of trade secret misappropriation enter into a joint defense agreement. Often under such JDAs, facts, strategies and documents are shared with the understanding that they will remain confidential. READ MORE
On Monday, January 9, the Supreme Court denied a petition for certiorari from Sino Legend Chemical Co., Ltd., concluding litigation that began with a Section 337 complaint filed more than four‑and‑a‑half years ago by SI Group, Inc. In January 2014, the International Trade Commission found that Sino Legend, a Chinese company, misappropriated SI Group’s rubber resin trade secrets and issued an exclusion order, barring the importation of Sino Legend products made using these trade secrets for 10 years.
The TSW has extensively covered this case with posts on the ITC Administrative Law Judge’s Initial Determination, the Commission’s decision, the Federal Circuit’s Rule 36 affirmance, and Sino Legend’s cert petition.
The case attracted the attention of the Chinese government, which filed an amicus brief in support of Sino Legend’s cert petition—the first amicus brief ever filed by the Chinese government in the U.S. Supreme Court, according to Sino Legend. The Chinese Trade Remedy and Investigation Bureau (“TRB”), a branch of the Ministry of Commerce, forcefully argued that the Supreme Court should grant Sino Legend’s petition and reverse the ITC’s decision:
The TRB is disappointed by recent actions of the ITC. In wrongly interpreting Section 337 of the Tariff Act to allow the ITC to bar imports into the United States based on alleged actions conducted, and adjudicated, wholly within the borders of China, the ITC has impugned the sovereignty of China and refused to accord the comity expected of a trade partner.
TRB Brief at 2.
The TRB criticized the ITC’s “expansion” of the Federal Circuit’s TianRui decision “to bar products from entering the United States for conduct that not only occurred completely within China’s borders by Chinese citizens working at Chinese companies, but also conduct that was adjudicated in China to have been lawful.” (Id. at 1.) Citing Judge Moore’s dissent, Sino Legend’s petition also criticized TianRui as incompatible with the presumption against extraterritorial application of federal statutes.
The Supreme Court’s denial of Sino Legend’s petition for certiorari is significant because it appears to cement the extraterritorial reach of Section 337 inasmuch as the offending conduct relates to products that are imported into the United States. Thus, the ITC remains a powerful forum for companies with significant operations in the United States to seek redress for misappropriation of trade secrets. Read more broadly, TianRui and its progeny may provide the ITC with the authority to investigate other types of “unfair acts” that occur outside the United States, provided—again—that those acts pertain to products that are imported into the United States.
The ITC Investigation was captioned Certain Rubber Resins and Processes for Manufacturing Same, Inv. No. 337-TA-849.
The Supreme Court docket was captioned Sino Legend (Zhangjiagang) Chem. Co. Ltd. et al. v. Int’l Trade Comm’n et al., No. 16-428.
The Federal Circuit recently issued another Rule 36 affirmance of an International Trade Commission order barring the importation of products made using misappropriated trade secrets. (See our previous post about another Rule 36 affirmance of an ITC trade secrets order here.) This time, the Commission barred for ten years the importation into the U.S. of crawler cranes that relied on the trade secrets at issue. READ MORE