Combating Trade Secret Theft Abroad Through Legal Action at Home

A federal appeals court recently determined that the International Trade Commission has authority to bar importation of products made abroad using misappropriated trade secrets developed in the United States.

The case involved Amsted Industries, which owned a secret process for manufacturing cast steel railway wheels, but no longer used it in the United States. It licensed the process to several foundries in China, but could not come to terms with Chinese manufacturer TianRui Group, which also had sought a license. TianRui later hired employees from one of Amsted’s Chinese licensees, Datong. Amsted proved before the ITC that some of those employees had disclosed the process, and that TianRui had imported the wheels it had manufactured into the United States.

The appeals court rejected TianRui’s contention that ITC jurisdiction cannot reach trade secret misappropriation outside the United States. The statute at issue focused on the inherently international transaction of importation, the appeals court explained.

Domestic corporations that learn of trade secret theft abroad can now get an ITC order excluding from importation into the United States goods that are made using the stolen trade secrets.

An exclusion order from the ITC is not the only U.S. legal tool to combat the theft of trade secrets abroad. The Economic Espionage Act, passed by Congress in 1996, makes theft of trade secrets a federal crime. The author addresses the question of how to determine which is the best remedy to invoke under various circumstances.