Crawler Cranes: 10-Year Exclusion Order for Misappropriated Trade Secrets

On May 6, 2015, the Commission found a violation of Section 337 based on misappropriation of trade secrets and patent infringement in Certain Crawler Cranes and Components Thereof (Inv. No. 337-TA-887).   With respect to the misappropriated trade secrets, the Commission issued a ten-year limited exclusion and cease-and-desist order barring the importation into, or sale in, the United States of crawler cranes manufactured using the misappropriated trade secrets.

The order issued against Respondents Sany Heavy Industry Co., Ltd. of Changsha, China, and Sany America, Inc. of Peachtree City, Georgia, as respondents (collectively “Sany”).  The trade secrets and patents are owned by Complainant Manitowoc Cranes, LLC (“Manitowoc”) of Manitowoc, Wisconsin.  These trade secrets and patents relate to mobile cranes used in construction and heavy industry. More specifically, Trade Secrets Nos. 1 and 6 related to an “unfilled need for certain types of cranes and Manitowoc’s plan to fill that specific need”; Trade Secret No. 3 related to “Manitowoc’s detailed embodiment of a crane incorporating certain Manitowoc technology”; Trade Secret No. 4 to “Manitowoc’s decision that certain Manitowoc technology was desirable for use in certain wind power applications”; Trade Secret No. 14 to “Manitowoc’s detailed cost and pricing information”; and Trade Secret No.15 to “Manitowoc’s manufacturing processes and procedures.” Commission Opinion at *9-10.

As background, on July 11, 2014, ALJ David T. Shaw issued a final initial determination (ID) finding misappropriation of Trade Secrets Nos. 1, 6, 14, and 15 and infringement of claims 1, 2, 5, 8, and 23-26 of U.S. Patent No. 7,546,928 (the “’928 patent”).  The ALJ found no violation with respect to Trade Secret Nos. 3 and 4 or claims 6, 10, and 11 of the ’928 patent and claim 1 of U.S. Patent No. 7,967,158 (the “’158 patent”).  The ALJ found that Trade Secret No. 3 was not protectable because it was unclear whether its scope extended beyond the two crane variations it explicitly described.  ID at *169.  The secret made reference to multiple additional variations, but provided little detail.  Id.  The ALJ further found that Trade Secret No. 4 was not protectable because it incorporated No. 3.  Id. at *171.

The Commission affirmed the ALJ’s findings of violation as to Trade Secrets Nos. 1, 6, 14, and 15, but reversed the ALJ’s findings that Nos. 3 and 4 were not protectable and instead found that these secrets had also been misappropriated.  The Commission partially reversed ALJ Shaw’s findings with respect to the ’928 patent, finding only that apparatus claims 23-26 were infringed.  The method claims were not infringed because, as Manitowoc conceded, the asserted methods were not performed in the United States.  Commission Opinion at *25-6.  The Commission affirmed the ID’s findings with respect to the ’158 patent.

The Commission found Sany liable for the actions of John Lanning, a former employee and vice president of Manitowoc, and other former Manitowoc employees who disclosed the protected trade secrets to Sany. Even though Lanning was a Manitowoc employee at the time, the Commission imputed his actions to Sany because Sany had reason to know that the secrets were “improperly obtained, specifically [by] the breach in Mr. Lanning’s confidentiality obligations.”  In this regard, the Commission found that “[a]lthough Sany instructed Mr. Lanning not to use Manitowoc information, it did nothing to prevent the use of Manitowoc’s information when it was shared.”  Commission Opinion at *55.  In determining the duration of the exclusion order, the Commission considered the time it would have taken Sany to develop the secrets at issue, and “based upon a balance of a totality  of the evidence presented” concluded that exclusion for ten years was appropriate.  Id. at *70-72.

Sany had argued that the trade secrets were unprotectable on multiple grounds, including that some had been disseminated via email to certain of Manitowoc’s customers.  However, the Commission agreed with the ALJ that Manitowoc took appropriate steps to preserve the confidentiality of its secrets and that dissemination of the email in question was limited and its contents were not publicly disclosed.  Commission Opinion at *38-41.  The protective steps included having Mr. Lanning and others sign confidentiality agreements, marking documents with sensitive information as “confidential,” and securing access to Manitowoc’s computer system.  Id.  The Commission also disagreed with the ALJ’s finding that Trade Secret No. 3 was too broad.  Instead the Commission found that there was sufficient detail to “distinguish the Trade Secret from what was generally known in the industry.”  Id. at *44-45.

Commissioner Rhonda Schmidtlein maintained that the duration of the trade secret remedy should have been longer than ten years.  Commission Opinion at *72-74.  Specifically, Commissioner Schmidtlein found that the length of the remedy should match the time it would have taken Sany to independently arrive at Manitowoc’s trade secret techniques.  In her view, the evidence warranted a remedy lasting 25 years.  Id. at *7218 n.18.