The Federal Circuit recently issued an opinion, Texas Advanced Optoelectronic Solutions, Inc. v. Renesas Electronics America, Inc., that addressed several interesting issues impacting the calculation of damages in trade secret actions. Perhaps the Court of Appeals’ ruling of greatest consequence involved its determination that there is no Seventh Amendment right to a jury decision on disgorgement of profits – a remedy also often commonly described as “unjust enrichment.” The Federal Circuit instead ruled that the calculation of disgorgement damages is for the trial court to decide after making findings of fact and conclusions of law. If the decision is extended by other federal courts, it could have wide-reaching implications for claims under the Defend Trade Secrets Act, which allows for unjust enrichment damages as a remedy for misappropriation of trade secrets. 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