Here at TSW, we continue to watch closely developments in the Sino Legend v. ITC case. In September, Sino Legend petitioned the Supreme Court for a writ of certiorari to review whether Section 337 of the Tariff Act of 1930 allows the ITC to adjudicate cases involving allegations of trade secret misappropriation occurring entirely in a foreign country. This week, we summarize the relevant law, background, and the legal basis of Sino Legend’s petition. READ MORE
It’s been a hot year in the trade secrets field, with some huge verdicts and settlements, a renewed spotlight on cyberattacks, and an unusual flurry of trade secrets legislation. Trade Secrets Watch’s 2013 Year-in-Review highlights the notable trade secrets activity from the past year. READ MORE
Revised post available here.
They say politics stops at the water’s edge. Increasingly, so does the power of the United States to thwart trade secret theft.
As the nation struggles to bolster its defenses against cyberattacks, recent cases have highlighted legal loopholes in prosecuting foreign-based companies and individuals for the theft of trade secrets. Defendants have grown adept at exploiting American procedural rules governing such things as service of process to stall prosecutions indefinitely.
Late last month, a federal grand jury in Wisconsin returned an indictment charging Sinovel Wind Group Co. and two of its executives with stealing trade secrets from American Superconductor Corp. (AMSC). Sinovel is China’s third-biggest maker of wind turbines, and until March 2011, AMSC supplied Sinovel with turbine-control software.
According to the indictment, Sinovel owed AMSC more than $100 million for delivered software, products, and services, and had contracted to buy another $700 million worth. But instead of paying its debts and making good on its orders, Sinovel and two of its executives plotted with a former AMSC employee to steal AMSC’s turbine-control source code and use it in Sinovel’s turbines. READ MORE
On the same day last week, two rival rubber resin companies issued press releases — each claiming legal victory in the same trade secret dispute.
SI Group, a developer of rubber resins and tackifiers, touted its “significant victory” over Sino Legend before the U.S. International Trade Commission. On the same day, Sino Legend also claimed victory in a parallel Chinese action when the Shanghai No. 2 Intermediate People’s Court rejected SI’s claims concerning the same dispute.
SI ’s ITC complaint alleged that Sino Legend misappropriated SI’s secret manufacturing processes by poaching one of SI’s Shanghai-based employees, Xu Jie. Xu was allegedly the only person at the plant who had access to the entirety of SI’s secret manufacturing processes. Shortly after Xu’s departure from SI, Sino Legend began producing competing products. SI accused Sino Legend of using SI’s secret processes and of filing patent applications that contained misappropriated Sino Legend information.
Trade secret theft knows no borders in an age of cybertheft and global corporate espionage. But U.S. district courts are often too slow and procedurally ill-equipped to help in cases of international misappropriation, with several recent cases never getting off the ground because of problems serving foreign defendants. Increasingly, victims of foreign misappropriation are turning to the U.S. International Trade Commission — a body armed to hit back at trade secret thieves anywhere in the world.
For companies seeking to remedy the theft of trade secrets by overseas perpetrators, the options have been limited, especially if the thief or the products the thief produces are outside of the United States. Procedural hurdles like obtaining jurisdiction over a foreign company, or the perpetrator’s resident country being inhospitable to claims by an American victim, can thwart an American corporation’s ability to prosecute the foreign theft of its own trade secrets.
An ITC action doesn’t present these obstacles. READ MORE