extraterritoriality

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The Defend Trade Secrets Act (DTSA) provides a private right of action under federal law for trade secret misappropriation. It extends to reach a foreign corporation’s conduct occurring outside the United States “if . . . an act in furtherance of the offense was committed in the United States.” 18 U.S.C. § 1837(2). However, the DTSA does not define “an act in furtherance” and until recently there was no case law addressing the question; absent such guidance there is uncertainty about the DTSA’s extraterritorial reach. This may be changing.

Luminati Networks, Ltd. v. BIScience, Inc. 2019 U.S. Dist. LEXIS 79843, at *21-22 (E.D. Tex. May 13, 2019) and Micron Tech., Inc. v. United Microelectronics Corp., 2019 U.S. Dist. LEXIS 74527, at *11 (N.D. Cal. May 2, 2019) appear to be among the earliest if not the first cases to define an “an act in furtherance” and their definitions support the broad extension of the DTSA to cover extraterritorial misappropriation.Continue Reading Extending Defend Trade Secrets Act to Reach Overseas Theft of Trade Secrets

The Defend Trade Secrets Act (“DTSA”), on its face, creates a private action in district court for misappropriation occurring abroad.  Filing a DTSA claim in district court may in certain circumstances provide the best remedy for foreign trade secret theft over other alternatives such as filing a complaint with the International Trade Commission.  But over…

Hidden Memory Card (inspired by ABC's Designated Survivor, 1:9, "The Blueprint," aired Dec. 7, 2016)
Hidden Memory Card (inspired by ABC’s Designated Survivor, 1:9, “The Blueprint,” aired Dec. 7, 2016)

Engineers from your China subsidiary just joined a competing company which has begun using your trade secrets.  Can you sue in the US and avoid the uncertainty and expense of seeking relief in a Chinese court?  The answer is that both federal Defend Trade Secrets Act (DTSA) of 2016 and California’s version of the Uniform Trade Secrets Act (CUTSA), under the right circumstances, may be extended extraterritorially to reach misappropriation outside of the US.

Perhaps surprisingly, it may be harder to do this under the federal law, which expressly provides that it applies to conduct outside the US, than under the California law, which is silent on the subject.  Let’s break this down.

Extraterritorial theft of trade secrets by insider employees or business partners in China is a significant problem as evidenced by the investigation in International Trade Commission cases Amsted v. TianRui (disclosure and use of US company’s trade secrets in China) [the 2011 Federal Circuit decision on appeal] and In re Certain Rubber Resins (same) [the 2014 ITC determination].  The problem reflects the reality of the current business environment, which is global and digital; technology owned by US-based companies is often shared with employees or business partners located outside of the US and it is not unusual for them to move between competitors.
Continue Reading Extending US Trade Secret Law to Reach IP Theft in China