Trade secrets, ET and ITC

The US International Trade Commission (ITC) has broad powers to issue exclusion orders barring the importation of goods that have infringed or misappropriated the IP rights of complainants. Moreover, ITCs in rem Statutory misappropriation allows for the prohibition of importation of products modified by trade secret misappropriation, even if the misappropriation is extraterritorial (ET) and committed entirely outside the United States. Therefore, the ITC provides powerful injunctive relief to plaintiffs for trade secret theft occurring outside the US.

Late last month, Samsung Display Co. (SDC) filed a complaint (No. 337-3704) with the ITC, alleging that China’s BOE Technology Group stole trade secrets related to organic light-emitting diodes (OLEDs). For example, the complaint alleges that the Apple I-Phone 14 display uses BOE’s stolen SDC OLED technology. It also points to the criminal convictions of BOE executives in South Korea accused of stealing Samsung’s trade secrets:

The misappropriation of trade secrets led to a criminal indictment at the Suwon High Court in Korea, which recently charged 11 Toptec executives and employees with deliberately stealing SDC’s trade secrets and handing them over to Chinese display manufacturers.

Interestingly, the official version of the complaint does not allege that any specific conduct is taking place in the U.S. The only exception is that BOE’s alleged imports of OLEDs into the U.S. fall within the ITC’s jurisdiction.

Why ITC? firstAn action in federal court under the DTSA may not be available to Samsung. Under the DTSA, if (i) the wrongdoer is a citizen of an individual or an organization organized under US laws, or (ii) the act is committed in furtherance of the wrongdoing in the US.

A Section 337 investigation in the ITC does not face the same jurisdictional limitations as a DTSA action. in TianRui Group v. ITCThe federal court concluded that “the commission has the power to investigate and grant relief in part.” [ET] It shall act to the extent necessary to protect the domestic industry from injury caused by unfair competition in the domestic market. That is, as long as the product meets the ITC’s import criteria, the ITC has the authority to investigate and resolve the issue.

second, the ITC offers an expedited case schedule related to federal district courts. In general, the trial takes place within 8-9 months of investigation and the final decision of the commission is frequently given within 16 months.

third, the scope of discovery in the ITC may be broader than in federal district court. The ITC’s findings are not strictly governed by federal civil law rules. In some cases, this means there are fewer restrictions on what can be discovered and allowed during a trial. This holds the promise of greater and faster access to the alleged wrongdoer’s documents than in federal courts or actions outside the US.

fourth, the ITC’s exclusion order is a powerful remedy that literally stops a competitor’s products at their doorstep. While compensatory damages for trade secrets are not recoverable under the ITC, complainants are not barred from seeking monetary damages in parallel or subsequent court actions, at least for past actions, as long as all applicable statutes of limitations are met. Unlike district courts, the ITC is allowed to issue these exclusion orders when it finds that an infringement has occurred as long as it is not contrary to the public interest. It can do without analyzing the four factors Ebay test (or possibly a three-step test if irreparable harm is misappropriation of a trade secret), which serves as a gatekeeper for permanent injunctions in the district court.

The ITC is seen as an increasingly popular venue for bringing IP disputes. The ITC ET’s power to issue access and exclusion orders may be particularly inviting to trade secret owners who declare their illegal entry into the country after it has been stolen abroad.

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