Sino Legend v. ITC – Update: Certiorari Petition Seeks to Preclude ITC Actions Based on Foreign Theft of Trade Secrets

Sino Legend v. ITCSino Legend petitioned the Supreme Court for a writ of certiorari to review the Federal Circuit’s decision in Sino Legend Chemical Co. v. International Trade Commission, 623 F. App’x 1016 (Fed. Cir. 2015), which affirmed the ITC’s determination that Sino Legend violated Section 337 by importing goods that utilized trade secrets stolen from a U.S. company in China.

Although the Federal Circuit did not issue a written opinion in Sino Legend, it had previously determined in TianRui Group Co. Ltd. v. ITC, 661 F.3d 1322, 1327 (Fed. Cir. 2011), that a Section 337 violation can be based on acts of trade secret misappropriation that occur overseas. See our prior post here. The TianRui decision, which was decided by a divided panel, was raised during the Sino Legend oral argument at the Federal Circuit and was argued in the briefing.

Sino Legend’s petition, filed on September 30, 2016, asks the Supreme Court to overrule TianRui, arguing that Section 337(a)(1)(A) contains no clear indication that it should apply extraterritorially. The Supreme Court’s decision in Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659, 1664 (2013), held that statutes are presumed not to apply extraterritorially unless the statute clearly indicates its extraterritorial reach. Sino Legend contends that an exclusion order barring the importation of Sino Legend’s goods made using trade secrets misappropriated in China constitutes the impermissible regulation of conduct occurring overseas. When Sino Legend raised the Kiobel decision during its appeal to the Federal Circuit, the ITC countered that Kiobel was not relevant because Section 337 applies to importation and economic injury in the United States and does not regulate foreign conduct or apply extraterritorially.

Under TianRui, owners of trade secrets have a U.S. remedy through the ITC for foreign trade secret misappropriation, and are not limited to pursuing their claims in foreign courts. If the Supreme Court grants certiorari in this case, it will consider whether that remedy should remain in effect.