Is the ITC the right venue for trade secrets theft?
Imagine this scenario: you suspect that an employee has walked out with your trade secrets or that a development partner has decided to make their own product using your IP. It seems increasingly likely you’ll need to file a lawsuit to get your trade secrets back or prevent your competitor from using them.
You might consider filing in state court, likely under a version of the Uniform Trade Secrets Act (UTSA). But state court’s reach is limited, and if there is an international aspect to your trade secret problem, you may want to file in federal court under the Defend Trade Secrets Act (DTSA).
The DTSA, however, requires that at least some act in furtherance of misappropriation takes place in the US, and you’ll need to establish personal jurisdiction over the defendant. What if the perpetrator is located abroad, or the misappropriation took place abroad, with the fruits of that misappropriation sold in the US?
There is a third option: the US International Trade Commission (ITC). The ITC investigates unfair acts relating to the importation or subsequent sale of products into the US. Although the vast majority of ITC investigations involve patent infringement, the ‘unfair competition’ under the ITC’s purview includes trade secret misappropriation that has injured (or may injure) an industry in the US.
In this article, we discuss the differences between litigating trade secret cases in federal court and the ITC.
The ITC versus the federal route
A plaintiff (called a complainant in the ITC) can bring a trade secret claim at the ITC, even if no misconduct occurred in the US. This is because the ITC’s jurisdiction is based on imported articles resulting from the unfair acts.
There is no personal jurisdiction requirement, and complainants can name unrelated parties—such as other companies in the supply chain—as respondents. In federal court, however, plaintiffs must establish the court’s personal jurisdiction over the defendants, and the DTSA requires “an act in furtherance of the offense” be committed in the US.
At the ITC, the only relief is injunctive; money damages are not available (however, a trade secrets complainant who prevails at the ITC can later file in district court, and district courts have given preclusive effect to ITC decisions—unlike in patent investigations).
Injunctions
Unlike in federal court, where injunctions can be difficult to obtain, the ITC issues mandatory exclusion orders barring the importation of goods resulting from the misappropriation.
These are typically limited exclusion orders targeting imports from a specific source, but a complainant can also seek a general exclusion order (GEO), which bars all imports of the adjudicated articles—including from importers that are not respondents in the investigation.
GEOs may be available where the source of the goods is difficult to identify, or if there is a pervasive pattern of misappropriation and resulting importation from multiple sources.
The length of an exclusion order is defined by the ‘independent development time’ or ‘reasonable research and development period’ that would be required to reproduce the trade secrets using lawful means, and can vary from a few months to several years.
If, before the effective date of an exclusion order, a respondent imported and maintained a commercially significant inventory of violative product in the US, a complainant can also obtain a cease-and-desist order barring certain activities (such as marketing and sales) under threat of monetary penalties.
Timeframes and discovery
At the ITC, the Commission usually issues its final determination around 16 months after institution. This means that ITC complainants can expect a hearing within seven to nine months, whereas plaintiffs in federal court might wait two or more years for trial.
In addition, exclusion orders from the ITC go into effect after the presidential review period (which expires 60 days after the final determination), and are highly unlikely to be stayed pending appeal. Because the ITC proceeds to a final decision so swiftly, however, obtaining interim relief (like a temporary restraining order) is more difficult and rare.
