I need 1500 words on MLA don't forget Proper Citation and ITC.

1500 words

ESSAY 

Talk about section 337 investigations (the exclusion order) 

 It has all the links and information you need. 

The paper should be 1500 words MLA

don't forget proper citation 

And how it’s being enforced 

By ITC 

, Then I want to add to new exclusion orders from the links provided 

So no Opinion no research is needed

this paper has more details and links 

(
Section 337 Investigations .docx 

)
 you can use other articles but not necessary 

(
file:///C:/Users/Baker/Desktop/The%20Long

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Attachment 1;

Section 337 investigations

(The exclusion order) and How it is enforced!

It is enforced by The United States International Trade Commission (USITC or Commission), ITC

What is section 337?

What is ITC?

ABOUT UNFAIR IMPORT INVESTIGATIONS 

https://www.usitc.gov/intellectual_property/about_section_337.htm

Unfair import (a.k.a., Section 337) investigations conducted by the U.S. International Trade Commission most often involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods. Both utility and design patents, as well as registered and common law trademarks, may be asserted in these investigations. Other forms of unfair competition involving imported products, such as infringement of registered copyrights, mask works or boat hull designs, misappropriation of trade secrets or trade dress, passing off, and false advertising, may also be asserted. Additionally, antitrust claims relating to imported goods may be asserted. The primary remedy available in Section 337 investigations is an exclusion order that directs Customs to stop infringing imports from entering the United States. In addition, the Commission may issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337. Expedited relief in the form of temporary exclusion orders and temporary cease and desist orders may also be available in certain exceptional circumstances. Section 337 investigations, which are conducted pursuant to 19 U.S.C. § 1337 and the Administrative Procedure Act, include trial proceedings before administrative law judges and review by the Commission.

Section 337 claims are heard by the International Trade Commission, and its findings enforced by the US Customs Service 

The Commission's exclusion orders are enforced by U.S. Customs and Border Protection, which also independently offers some services to intellectual property rights holders.

der.  

1. What is Section 337?  

Under Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337, the ITC is authorized to issue an order to exclude articles from entry into the United States that have been found to violate U.S.-based intellectual property rights, or where the respondent has committed other unfair acts relating to imported products. The exclusion order is enforced by the U.S. Customs and Border Protection (CBP).

Most Section 337 investigations allege violations of intellectual property-based rights involving claims of patent, copyright or trademark infringement. In such cases, the complainant must establish that a valid and enforceable U.S. patent, copyright or trademark is being infringed by the importation into the U.S., the sale for importation, or the sale within the U.S. after importation of an accused article, and that a domestic industry1 exists or is in the process of being established.

Section 337 also provides remedies for other unfair acts, such as theft of trade secrets and Lanham Act violations. Recent investigations have also involved allegations of price-fixing, computer hacking, and customs circumvention. In these cases, the complainant is required to show that the respondent’s unfair practices threaten to destroy or substantially injure a domestic industry.

https://www.foley.com/en/insights/publications/2017/05/section-337-and-the-new-trump-administration-your 

Section 337   

Section 337 of the Tariff Act of 1930, as amended, makes it unlawful to engage in unfair acts or unfair methods of competition in the importation of goods or sale of imported goods. Most Section 337 investigations concern alleged infringement of intellectual property rights, such as U.S. patents and trademarks.  

 
The United States International Trade Commission (USITC or Commission) conducts Section 337 investigations through adjudicatory proceedings under the Administrative Procedure Act. The proceedings normally involve an evidentiary hearing before a USITC administrative law judge who issues an Initial Determination that is subject to review by the Commission. If the USITC finds a violation, it can order that imported infringing goods be excluded from the United States and/or issue cease and desist orders requiring firms to stop unlawful conduct in the United States, such as the sale or other distribution  

V. Trade Enforcement Activities | 176

of imported goods in the United States. A limited exclusion order covers only certain imports from particular named sources, namely parties who are respondents in the proceeding. A general exclusion order, on the other hand, covers certain products from all sources. Cease and desist orders are generally directed to entities maintaining inventories of infringing goods in the United States. Many Section 337 investigations are terminated after the parties reach settlement agreements or agree to the entry of consent orders. The USITC is also authorized to issue temporary exclusion or cease and desist orders before it completes an investigation if it determines that there is reason to believe there has been a violation of Section 337.

 
In cases in which the USITC finds a violation of Section 337, it must decide whether certain public interest factors nevertheless preclude the issuance of a remedial order. Such public interest considerations include an order’s effect on public health and welfare, on U.S. consumers, and on the production of similar U.S. products. If the USITC issues a remedial order, it transmits the order, determination, and supporting documentation to the President for policy review. In July 2005, the President assigned these policy review functions, which are set out in Section 337(j)(1)(B), Section 337(j)(2), and Section 337(j)(4) of the Tariff Act of 1930, to the USTR. The USTR conducts these reviews in consultation with other agencies. Importation of the subject goods may continue during this review process if the importer pays a bond set by the USITC. If the President (or the USTR, exercising the functions assigned by the President) does not disapprove the USITC’s action within 60 days, the USITC’s order becomes final. Section 337 determinations are subject to judicial review in the U.S. Court of Appeals for the Federal Circuit, with possible appeal to the U.S. Supreme Court.  

 
In 2010, the USITC instituted 56 new Section 337 investigations, and one new enforcement proceeding. During the year, the USITC issued two general exclusion orders, six limited exclusion orders, and 20 cease and desist orders, covering imports from foreign firms, as follows: Certain Coaxial Cable Conductors, No. 337-TA-650 (a limited exclusion order and a general exclusion order); Certain Cast Steel Railway Wheels, No. 337-TA-655 (a limited exclusion order and four cease and desist orders); Certain Semiconductor Chips with Synchronous Dynamic RAM Controllers, No. 337-TA-661 (a limited exclusion order and eleven cease and desist orders); Certain Optoelectronic Devices, Components thereof, and Products Containing the Same, No. 337-TA-669 (a limited exclusion order and a cease and desist order); Certain Energy Drinks, No. 337-TA-678 (a general exclusion order); Certain Products Advertised as Containing Creatine Ethyl Ester, No. 337-TA-679 (a limited exclusion order and four cease and desist orders); and Certain Caskets, No. 337-TA-725 (a limited exclusion order). The USTR is currently engaged in the policy review of the USITC limited exclusion order issued in Certain Caskets, No. 337-TA-725. The other USITC orders issued in 2010 became final after expiration of the 60-day review period. 

https://ustr.gov/sites/default/files/uploads/gsp/speeches/reports/IP/ACTA/about%20us/press%20office/reports-publications/2011/Chapter%20V.%20Trade%20Enforcement%20Activities.pdf 

Use 2 recent examples from the following 337 info  

337Info - Unfair Import Investigations Information System

Section 337 declares the infringement of certain statutory intellectual property rights and other forms of unfair competition in import trade to be unlawful practices. Most Section 337 investigations involve allegations of patent or registered trademark infringement. Other forms of unfair competition, such as misappropriation of trade secrets, trade dress infringement, passing off, false advertising, and violations of the antitrust laws, may also be asserted. 

https://pubapps2.usitc.gov/337external/

Example  

1-

https://www.usitc.gov/intellectual_property/exclusion_orders/337-ta-1003_0.pdf

2-

https://www.usitc.gov/intellectual_property/exclusion_orders/337-ta-1005_0.pdf

LINKS…… 

https://ustr.gov/sites/default/files/uploads/gsp/speeches/reports/IP/ACTA/about%20us/press%20office/reports-publications/2011/Chapter%20V.%20Trade%20Enforcement%20Activities.pdf 

OUTSTANDING SECTION 337 EXCLUSION ORDERS 

https://www.usitc.gov/intellectual_property/exclusion_orders.htm

https://www.usitc.gov/intellectual_property/exclusion_orders//337ta69.pdf 

https://www.foley.com/en/insights/publications/2017/05/section-337-and-the-new-trump-administration-your 

LIL 

section 337 of the Tariff Act of 1930 

https://www.law.cornell.edu/cfr/text/19/210.9

prev | next  

§ 210.9 Action of Commission upon receipt of complaint.

Upon receipt of a complaint alleging violation of section 337 of the Tariff Act of 1930, the Commission shall take the following actions:

(a) Examination of complaint. The Commission shall examine the complaint for sufficiency and compliance with the applicable sections of this chapter.

(b) Informal investigatory activity. The Commission shall identify sources of relevant information, assure itself of the availability thereof, and, if deemed necessary, prepare subpoenas therefore, and give attention to other preliminary matters.

..........................................................................................................................................................................

Attachment 2;

American Business Law Journal

Volume 52, Issue 4, 621–671, Winter 2015

The Long Arm of Section 337:

International Trade Law as a Global Business Remedy

Marisa Anne Pagnattaro* and Stephen Kim Park**

INTRODUCTION

American companies are using international trade law as part of a broad-based legal strategy to protect their global commercial and investment interests. Among the most important interests are trade secrets, which encompass a broad spectrum of information (or “know-how”) that companies use to conduct their business.1 The protection of trade secrets is of critical importance to American companies in their global

*Josiah Meigs Professor of Legal Studies, Terry College of Business, University of Georgia. The author gratefully acknowledges funding from a Terry-Sanford research grant from the University of Georgia for this research project.

**Assistant Professor of Business Law, University of Connecticut School of Business.

†Certain portions of this article are drawn from Marisa Anne Pagnattaro & Stephen Kim Park, Employee Misappropriation: Using Section 337 to Combat Trade Secret Theft, in MANAGING

THE LEGAL NEXUS BETWEEN INTELLECTUAL PROPERTY AND EMPLOYEES: DOMESTIC AND GLOBAL CONTEXTS (Lynda J. Oswald & Marisa Anne Pagnattaro eds., 2015). 1

Trade secrets are defined in various federal statutes and state laws. See David Orozco, Amending the Economic Espionage Act to Require the Disclosure of National Security-Related Technology Thefts, 62 CATH. U. L. REV. 877, 884–89 (2013). The Economic Espionage Act (EEA) defines trade secrets as including “all forms and types of financial, business, scientific, technical, economic, or engineering information... if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.” 18 U.S.C. § 1839(3) (2012) (internal quotation marks omitted).

VC 2015 The Authors

American Business Law Journal VC 2015 Academy of Legal Studies in Business

621

operations.2 For American companies, the potential loss of trade secrets poses a substantial threat to their global operations and assets.3 The theft of trade secrets, which is often committed by current or former employees of a company, includes theft for the economic benefit of an individual or organization as well as economic espionage (including cyber espionage) on behalf of a foreign government.4 American companies incur hundreds of billions of dollars annually in estimated losses worldwide due to intellectual property (or IP) theft, among which includes the misappropriation of trade secrets.5 A large share of those losses is incurred in China, where American companies have reported

2 Although it is difficult to quantify the value of intangible intellectual property assets such as trade secrets, they can represent as much as eighty-five percent of a corporation’s value.

PRICEWATERHOUSECOOPERS, REDEFINING INTELLECTUAL PROPERTY VALUE: THE CASE OF CHINA 2 (2005), available at http://www.pwc.com/en_us/us/technology-innovation-center/assets/iprweb_x.pdf.

3

See WENDY S. LAZAR & GARY R. SINISCALCO, RESTRICTIVE COVENANTS AND TRADE SECRETS IN EMPLOYMENT LAW: AN INTERNATIONAL SURVEY, at xiii (2010).

4

See COMMISSION ON THE THEFT OF AMERICAN INTELLECTUAL PROPERTY, THE IP COMMISSION REPORT 41 (2013), available at http://www.ipcommission.org/report/IP_Commission_Report_ 052213.pdf (defining and comparing economic espionage and theft of trade secrets under the EEA). 5 Id. at 1.

$1.1 billion in annual losses due to intellectual property theft. The expansion of global supply chains and the growth of cross-border joint ventures and foreign affiliate and supplier relationships provide more opportunities for employees to misappropriate trade secrets. Concurrently, the increasing mobility of workers, portability of information,9 and changing social mores,10 coupled with ineffective enforcement of intellectual property rights, make it more difficult for American companies to monitor, deter, and combat such behavior.

This article focuses on the use of Section 337 of the Tariff Act of 1930 (Section 337) to combat offshore misappropriation of trade secrets. Section 337 is a trade remedy statute that provides companies with a private right of action to enjoin the importation and sale of goods in the United States that have been produced in violation of their intellectual property rights. While Section 337 has been accessible to American companies for over eighty years, it has only recently been employed as a powerful tool to combat foreign trade secret theft. Marked by the 2011 decision of the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) in TianRui Group Co. Ltd. v. International Trade Commission,13 American companies have successfully used Section 337 to combat the misappropriation of trade secrets committed overseas. In light of the paucity of legal remedies under intellectual property, tort, or contract laws in local jurisdictions, Section 337 has become an appealing means for American companies to protect their trade secrets worldwide.

In availing themselves of this enforcement technique, American companies use Section 337 as a de facto long-arm statute. The concept of “long-arm” jurisdiction is used to describe the exercise of jurisdictional authority over foreign nationals, companies, and activities. Various trade remedies under U.S. law—among which include antidumping duties, countervailing duties,17 and Section 301 actions, as well as Section 337—are justified as a response to unfair trade practices in order to create a level playing field for domestic producers. The act of importation establishes the jurisdictional nexus with the foreign conduct for which an American company seeks legal redress.

The use of Section 337 reveals the increasingly multipolar and pluralistic global regulatory system in which trade remedy laws are increasingly applied. This is driven by two interrelated factors: (1) the use of extraterritorial jurisdiction to project regulatory authority beyond national borders, which this article refers to as “extraterritorial regulation”; and (2) the convergence of distinct regulatory regimes to regulate substantively similar 

business conduct, which this article refers to as “regulatory pluralism.” While extraterritorial regulation and regulatory pluralism may often help American companies protect their global business interests, these phenomena also raise legitimacy, coherence, and stability concerns for international business regulation on a systemic level.

This article is organized as follows. Part I describes the use of trade remedy laws as a business strategy by American companies. Various kinds of trade remedies are available under U.S. law to respond to “unfair” foreign trade, each with its own limitations as a means to enforce cross-border commercial and investment interests. Section 337 stands alone as a uniquely effective means to combat foreign trade secret misappropriation. Part II addresses the broader implications of Section 337 as a manifestation of extraterritorial regulation and regulatory pluralism. Part III provides an in-depth, comparative analysis of cases to date before the U.S. International Trade Commission (ITC) that have applied TianRui. Drawing from the normative and doctrinal analysis in Parts II and III, Part IV identifies and examines the strategic and systemic implications of Section 337 as a quasi–long-arm statute. Part IV suggests specific strategies that American companies can adopt to maximize the value of Section 337, and outlines certain measures that regulators can adopt to address the systemic concerns raised by Section 337.

I. TRADE REMEDIES AS A BUSINESS ENFORCEMENT STRATEGY

The following discussion describes the various kinds of trade remedies, including Section 337, under U.S. federal law. Although private rights of action are limited under these laws, the express recognition of the economic interests of American companies that operate globally reflects the relevance of international trade law to business strategy.

A. Trade Remedies Under U.S. Law

International trade law consists of two coexistent legal frameworks: the global trade regime and the domestic trade regimes of individual countries. The global trade regime was established following World War II as the General Agreement on Tariffs and Trade (GATT). Arising out of the GATT, the World Trade Organization (WTO)21 is the principal legal institution for international trade. Domestic trade regimes are responsible for negotiating, implementing, and complying with the rules of the global trade regime as well as governing trade laws that fall outside of the global trade regime.23

An integral component of domestic trade regimes is trade remedy laws, which generally predate the WTO-based global trade regime. In the United States, trade remedies have been in place for nearly a century. Trade remedies consist of laws that permit the imposition of import restrictions to respond to the negative economic impact of international trade: most notably, antidumping duties and countervailing duties as well as other trade enforcement measures under Section 301 of the Trade Act of 1974. These laws seek to protect domestic firms from the most damaging effects of international trade by using the instruments of trade policy to address strategic threats attributable to trade. Many other countries have similar laws, and their use by developing countries in recent years has grown tremendously. 

21

See Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, 1867 U.N.T.S. 14.

Domestic laws governing trade remedies are subject to WTO rules as international treaty obligations.28 While the broad mandate of the global trade regime is to reduce cross-border trade barriers, trade remedies are permitted under the global trade regime as a de jure form of protectionism.29

The U.S. laws governing antidumping and countervailing duty actions are justified as a proportionate response to “unfair” trade practices on behalf of domestic producers. These measures are intended to identify and combat foreign trade practices that are deemed to be illegitimate. Antidumping law, in particular, is a powerful instrument of foreign

28

See GATT, supra note 20, art. VI; Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, 1868 U.N.T.S. 201; Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, 1869 U.N.T.S. 14; see also JACKSON, supra note 19, at 288–89 (noting that U.S. countervailing duty law was changed in 1979 to comply with the GATT Tokyo Round Subsidies Code). 29 See Reid M. Bolton, Anti-Dumping and Distrust: Reducing Anti-Dumping Duties Under the W.T.O. Through Heightened Scrutiny, 29 BERKELEY J. INT’L L. 66, 70–71 (2011) (describing antidumping laws as a nontariff barrier).

trade regulation.32 Antidumping duties are additional tariffs imposed on foreign imports “dumped” in the United States that cause material injury or the threat thereof to competing domestic producers.33 Dumping occurs when a foreign producer sells a product in the United States at a price below its sales price in its own home market or at a price that is lower than the cost of production (i.e., at a price below “fair value”).34 Additional tariffs may be imposed that are equal to the “dumping margin,” which is the difference between the price or cost in the home market (the “normal value”) and the price of the imported good in the U.S. market.35 Countervailing duties are additional tariffs that may be imposed on foreign imports benefiting from government subsidies that cause material injury or the threat thereof to competing domestic producers.36 Tariffs are imposed in order to offset (i.e., “countervail”) the amount of the unfair subsidy conferred by the foreign government.37

Section 301 of the Trade Act of 1974 is a closely related regulatory response to “unfair” trade.38 Under Section 301, the U.S. Trade Representative (USTR) must take retaliatory action against a foreign government if it determines that “the rights of the United States under any trade agreement are being denied,” or “an act, policy, or practice ... violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or is unjustifiable and burdens or restricts United States commerce.”39 In addition, USTR has discretionary authority to take action if it determines that “an

32

See Zheng, supra note 27, at 155 (describing the persistent use of antidumping duties worldwide and noting the rapid growth of this trade remedy instrument by developing countries); see also Raj Bhala, Rethinking Antidumping Law, 29 GEO. WASH. J. INT’L L. & ECON. 1, 20 (1995) (characterizing antidumping law as a “strategic weapon in the protectionist arsenal”).

33 See 19 U.S.C. § 1673 (2012) (defining the imposition of antidumping duties).

34

See JACKSON, supra note 19, at 251. 35

See 19 U.S.C. § 1673. 36

See id. § 1671(a) (defining the conditions under which countervailing duties may be imposed).

37

See JOHN H. BARTON & BART S. FISHER, INTERNATIONAL TRADE AND INVESTMENT: REGULATING INTERNATIONAL BUSINESS 335 (1986). 38 See generally 19 U.S.C. §§ 2411–2419 (2012). 39 Id. § 2411(a)(1).

act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce.” Section 301 lists a wide range of such “unreasonable or discriminatory” acts, among which include restrictive foreign market access or denial of worker rights. This broad-based authority under Section 301 to address foreign trade practices also includes so-called Special 301 procedures, which require USTR to identify foreign countries that deny adequate protection, or market access, to intellectual property rights. If, after informal consultations with the foreign country in question, USTR determines that the unfair trade practice persists, it may select from a range of measures such as suspending or withdrawing trade concessions under a trade agreement

with the United States or imposing additional tariffs or quotas. 

The common mandate of the laws governing antidumping and countervailing duties (individually referred to as AD and CVD, respectively, and collectively referred to as AD/CVD) and Section 301 is reflected in procedures that provide certain private rights to domestic producers. These procedures are initiated by the filing of a petition by a domestic producer that has reason to believe that it has suffered injury due to foreign trade. While the federal regulatory agencies may self-initiate investigations, generally most cases result from these privately filed industry petitions. Upon the initiation of an investigation, the imposition of AD/CVD duties is authorized in a two-part process, which involves (1) a determination by the International Trade Administration within the Department of Commerce that dumping or unlawful subsidization has occurred and (2) a determination by the ITC that the dumped or subsidized imports have caused material injury to domestic producers. Section 301 investigations are conducted solely by USTR.48

B. The Limited Utility of Trade Remedies as a Business Remedy

Regulatory responses to “unfair” trade under AD/CVD laws and Section 301 are justified on various economic and political grounds that revolve around the protection of domestic firms. However, many legal scholars and economists decry their protectionist underpinnings, often openly advocating for their abolition. These normative and empirical critiques, coupled with specific legal shortcomings described here, render the above-described trade remedy laws an inherently flawed means for American companies to enforce their global business interests.

In multiple respects, these trade remedy laws fall short as a global business remedy. First, although they will likely never be abolished, their scope and impact have been diminished by WTO dispute settlement. On numerous occasions, WTO panels and the WTO Appellate Body have rejected 

measures under AD/CVD laws as inconsistent with the United States’ WTO obligations.51 In response to WTO decisions, the United States has fundamentally changed the manner in which Section 301 is used.52 Section 301 is now used as a means for domestic industry groups to petition USTR to initiate WTO dispute settlement, which diminishes the direct participation of American companies seeking redress. 

Second, in addition to the two-stage administrative review by the Department of Commerce and the ITC, AD/CVD determinations are also subject to two-tier judicial review by the U.S. Court of International Trade (CIT) and the Federal Circuit. As a result, AD/CVD actions are often both very costly and time consuming. Further, judicial review

51 See Daniel K. Tarullo, The Hidden Costs of International Dispute Settlement: WTO Review of Domestic Anti-Dumping Decisions, 34 LAW & POL’Y INT’L BUS. 109, 113–18 (2002) (describing the general disregard for the special standard of review in AD cases decided by the WTO). 52

Prior to the establishment of the WTO, the United States took unilateral remedial actions under Section 301 at the request of domestic producers on multiple occasions. See JACKSON, supra note 19, at 131 (noting that until August 1996, the U.S. government imposed more than a dozen retaliatory sanctions under Section 301).

of AD/CVD actions has been criticized by certain observers for its lack of consistency and predictability.57

Third, the remedies provided under AD/CVD laws are inherently limited to the harm caused by foreign import competition, whether due to dumping or unlawful subsidies. This fundamental distinction between a “trade” issue and a “nontrade” issue is not always clear, however.58 In one prominent case under U.S. trade remedy laws, SolarWorld Americas, a domestic petitioner in parallel AD/CVD actions initiated against Chinese manufacturers of solar panels, has requested the Department of Commerce to investigate alleged cyber theft of SolarWorld’s proprietary business and trade information by the People’s Liberation Army (PLA) of China.59 In this case, the alleged cyber hacking concerns information related to the AD/CVD cases arising from illegal conduct that was the subject of the Department of Justice’s indictment of five PLA members for violation of the Economic Espionage Act (EEA).60

Finally and most importantly, neither AD/CVD laws nor Section 301 provide a true private right of action. Notwithstanding the right of private parties to petition the U.S. government to initiate investigations, these trade remedy laws are mechanisms to enforce what are essentially government-to-government commitments.61 The public qua governmental

resolution of AD/CVD cases to the prevalence of multiple CIT remands to the Department of Commerce and the ITC). 57 See Arun Venkataraman, Note, Binational Panels and Multilateral Negotiations: A Two-Track Approach to Limiting Contingent Protection, 37 COLUM. J. TRANSNAT’L L. 533, 547–49 (1999) (describing inconsistent enforcement of trade remedy laws due to conflicting CIT rulings). 58

See Mark Wu & James Salzman, The Next Generation of Trade and Environment Conflicts: The Rise of Green Industrial Policy, 108 NW. U. L. REV. 401, 436–42 (2014) (describing trade remedy cases that have challenged foreign green industrial policies).

59 See Shane Harris, EXCLUSIVE: U.S. Manufacturer Wants Commerce Dept. to Penalize China for Cyberattack, FOREIGN POL’Y (July 1, 2014, 3:11 PM), http://foreignpolicy.com/2014/07/01/ exclusive-u-s-manufacturer-wants-commerce-dept-to-penalize-china-for-cyberattack.

60 See Diane Cardwell, Solar Company Seeks Stiff U.S. Tariffs to Deter Chinese Spying, N.Y. TIMES, Sept. 2, 2014, at B1 (suggesting that the defendants’ cyber-hacking could lead to additional AD/CVD duties). The EEA, which criminalizes trade secret theft, does not provide a private cause of action. See 18 U.S.C. § 1836 (2012).

61

See JACKSON, supra note 19, at 273–74 (noting comparisons between trade remedy laws and civil liability laws and rejecting proposals to provide domestic producers with a private right of action under which they could directly sue foreign exporting producers); see also

nexus of authority that underlies trade remedy laws is reflected in the limitations on the participatory rights of domestic firms. AD/CVD petitions cannot be filed by a single firm acting on behalf of itself, but rather more resemble class action suits whereby petitions must be supported “by or on behalf of the industry.”62 Remedies available to domestic producers under AD/CVD laws are indirect insofar as they are not entitled to damages or any sort of monetary compensation.63 In the case of Section 301 petitions, USTR has the sole discretion on a variety of public policy grounds to determine whether to start an investigation or to take retaliatory action.64

The interrelationships among various trade remedies under U.S.

trade law, including Section 337, are shown in Table 1.

C. The Unique Promise of Section 337 as a Global Business Remedy

Section 337 has become a powerful enforcement tool for American companies that face global threats to their intellectual property rights. Unlike other trade remedy laws, Section 337 provides a direct cause of action against individual defendants. The following discussion examines how Section 337 has been expanded to provide a powerful global

generally Alan O. Sykes, Public versus Private Enforcement of International Economic Law: Standing and Remedy, 34 J. LEGAL STUD. 631 (2005) (contrasting international trade agreements with foreign investment agreements).

62 19 U.S.C. §§ 1671a(c)(1)(A)(ii), 1673a(c)(1)(ii) (2012). This requirement is met if petitioners represent (1) at least 25 percent of domestic production and (2) 50 percent of the domestic production produced by that portion of the industry expressing support for, or opposition to, the petition. See 19 U.S.C. § 1671a(c)(4)(A) (2012) (for AD petitions); id. § 1673a(c)(4)(A) (for CVD petitions).

63

Under the now-repealed Byrd Amendment, all AD/CVD duties paid by foreign importers were required to be distributed annually to “affected domestic producers” on the basis of “qualifying expenditures” incurred by these producers. See Continued Dumping and Subsidy Offset Act of 2000, Pub. L. No. 106-387, 114 Stat. 1549A-72–1549A-75 (codified at 19 U.S.C. § 1675c (2000)), repealed by Deficit Reduction Act of 2005, Pub. L. No. 109171, § 7601, 120 Stat. 4, 154 (2006). After the WTO Appellate Body ruled in 2003 that the Byrd Amendment violated the United States’ WTO obligations, the U.S. Congress repealed the law in 2006. See Appellate Body Report, United States—Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R (Dec. 17, 2002); see also Tudor N. Rus, The Short, Unhappy Life of the Byrd Amendment, 10 N.Y.U. J. LEGIS. & PUB. POL’Y 427, 435–38 (2007) (describing the repeal of the Byrd Amendment).

64

See 19 U.S.C. § 2411(a)(2)(B) (2012); see also GREGORY C. SHAFFER, DEFENDING INTERESTS: PUBLIC-PRIVATE PARTNERSHIPS IN W.T.O. LITIGATION 31 (2003) (noting that no Section 301 decision has ever been subject to judicial review).

Table 1: Response to “Unfair” Foreign Trade Under U.S. Law

Type Objective Procedure Remedy Private Right of Action

Antidumping duty Imported goods sold below

“fair value” Department of

Commerce,

ITC Additional tariffs Limited (only with domestic industry support)

Countervailing duty Unlawful subsidization of goods for export Department of

Commerce,

ITC Additional tariffs Limited (only with domestic industry support)

Section 301 Unfair foreign trade practices USTR Various (including suspending trade concessions) None (USTR initiates)

Section 337 IP infringement and “[u]nfair methods of competition

and unfair

acts” ITC Exclusion of infringing

goods from entering the United States; civil penalties Yes

remedy to American companies. For cases of trade secret theft occurring outside of the United States, Section 337 offers an avenue of redress, as it can be used to block goods produced with misappropriated trade secrets from entering the United States.65

1. “Unfair Practices” Under Section 337

Section 337 was established by the Tariff Act of 1930, otherwise known as the Smoot-Hawley Tariff.66 For more than four decades, Section 337 was scarcely used.67 Subsequent changes to Section 337 by Congress

65

19 U.S.C. § 1337 (2012). 66

See Tariff Act of 1930, Pub. L. No. 71-361, § 337, 46 Stat. 590, 703 (codified as amended at 19 U.S.C. § 1337 (2012)). Section 337 evolved from Section 316 of the Tariff Act of 1922, which prohibited “unfair methods of competition and unfair acts in the importation of articles into the United States, or in their sale by the owner, importer, [or] consignee... .” Tariff Act of 1922, Pub. L. No. 67-318, § 316, 42 Stat. 858, 943 (alteration in original). 67

See Michael Buckler & Beau Jackson, Section 337 as a Force for “Good”? Exploring the Breadth of Unfair Methods of Competition and Unfair Acts Under § 337 of the Tariff Act of 1930, 23 FED. CIR. B.J. 513, 517 (2014).

were largely driven by efforts to enable greater use of this remedy. The Trade Act of 1974 substantially amended the procedures of Section 337 in various ways, including implementing strict time limits on the duration of an investigation, permitting the ITC to halt the domestic distribution of previously imported goods as well as to prevent the importation of goods and granting the ITC the authority to directly issue remedies without presidential approval.68 The Omnibus Trade and Competitiveness Act of 1988 implemented further changes to Section 337.69 Most importantly, the 1988 amendments to Section 337 removed injury as an element of a prima facie case for alleged intellectual property infringement and relaxed the definition of domestic industry.70 In 1994, as part of the United States’ implementation of the international agreements establishing the WTO, Congress enacted several procedural changes to Section 337.71 Among these procedural changes were the narrowing of the conditions in which the ITC can issue a general exclusion order, the elimination of a strict time limit on the completion of a case, and the requirement that a federal district court stay its proceedings until a final determination by the ITC in the same dispute.72

Pursuant to Section 337, the ITC has the authority to review unfair trade practices involving imported goods.73 There are two distinct kinds of claims that may be brought under Section 337. The first kind of claim relies on the statutory text in Section 337 that specifically prevents the importation and sale in the United States of goods that infringe on

68 Elizabeth A. Rowe & Daniel M. Mahfood, Trade Secrets, Trade, and Extraterritoriality, 66 ALA. L. REV. 63, 84–85 (2014). 69

See Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, § 1342, 102 Stat. 1107, 1212–16 (codified as amended at 19 U.S.C. § 1337 (2012)). 70

Buckler & Jackson, supra note 67, at 518. 71

See Uruguay Round Agreements Act, Pub. L. No. 103-465, § 321, 108 Stat. 4809, 4943– 47 (1994).

72

Id. These changes were also in response to an adverse decision by a GATT panel in a case brought by the European Communities against the United States. See Report of the Panel, United States—Section 337 of the Tariff Act of 1930, L/6439–36S/345 (Nov. 7, 1989); see also Joel W. Rogers & Joseph P. Whitlock, Is Section 337 Consistent with the GATT and the TRIPs Agreement?, 17 AM. U. INT’L L. REV. 459, 479–81 (2002) (describing these amendments to Section 337). 73 19 U.S.C. § 1332(a)–(c) (2012).

a valid and enforceable patent, copyright, or trademark. A statutory claim under Section 337 must show that a domestic industry related to the protected articles “exists or is in the process of being established.” The use of Section 337 is well established to protect against these kinds of intellectual property infringement. These claims, particularly patent-related claims, comprise a significant portion of Section 337 cases. 

The second kind of claim that may be asserted under the broader rubric of “[u]nfair methods of competition and unfair acts” includes misappropriation of trade secrets as well as other violations of intellectual property rights such as trade dress infringement and false advertising.77 For such nonstatutory claims, it must be shown that “in the sale of such articles by the owner, importer, or consignee, the threat or effect of” is

i. to destroy or substantially injure an industry in the United States;

ii. to prevent the establishment of such an industry; or

iii. to restrain or monopolize trade and commerce in the United

States. 

To determine whether there is injury, a number of factors may be taken into account, including loss of customers, declining sales, decreased production and profitability, the volume of imports, the level of market penetration by imports, and the capacity of the foreign entity to increase imports. Unlike certain other jurisdictions with laws comparable to Section 337, the United States limits such actions to complainants that can demonstrate the existence of a domestic industry. 

Under Section 337, a private party, including any American company or foreign company with business operations in the United States that meets the above-cited requirements, may initiate a request for an ITC investigation by filing a complaint.81 The ITC is required to investigate any alleged violation of Section 337 and determine whether there is a violation.82 A Section 337 investigation is presided over by an ITC Administrative Law Judge (ALJ), who is responsible for rendering an initial determination. Notice of the commencement of an investigation is published in the Federal Register and the ITC is charged with concluding its investigation and making a determination at “the earliest practicable time after the date” of the notice.84 In all cases, within forty-five days after the investigation is initiated, the ITC must establish a target date for its final determination.85 After its investigation, if the ITC determines that there is a violation, it may direct that the articles at issue “be excluded from entry into the United States.” 

Generally, the ITC’s authority to order an exclusion of articles is limited to persons that it determines are violating Section 337, unless “a general exclusion from entry of articles is necessary to prevent circumvention of an exclusion order limited to products of named persons” or “there is a pattern” of Section 337 violations and “it is difficult to identify the source of the infringing products.” Upon finding a violation of Section 337, the ITC has the discretion to consider the effect that an exclusion order would have on (1) the public health and welfare, (2) competitive conditions in the U.S. economy and U.S. production of articles that are like or directly competitive with those that are subject to investigation, and (3) U.S. consumers. In addition to, or in lieu of, excluding articles from entry, the ITC may issue a cease-and-desist order preventing the party at issue “from engaging in the unfair methods or acts involved.” All remedial orders are sent to the president, who has sixty days to disapprove an order. If the president does not disapprove the ITC’s order during this review period, infringing articles may no longer be imported into the United States. Although the ITC may order civil penalties for violations, it does not have the authority to award monetary damages to complainants.

On its face, Section 337 offers companies a number of legal advantages for combating theft of intellectual property, including trade secrets, perpetrated outside of the United States. First, the ITC often has broader jurisdiction over foreign parties than U.S. federal district courts, as it has national in rem jurisdiction over the articles at issue in the complaint. Moreover, if the respondent does not respond to the complaint or otherwise fails to appear to answer before the ITC, and does not show good cause why it should not be held in default, the ITC may “presume the facts alleged in the complaint to be true” and has the power to issue an exclusion from entry, cease-and-desist order, or both.93 In addition, Section 337 provides expanded opportunities for discovery by complainants, as evidentiary standards are more liberal than in federal district courts.94 A second advantage is the speed of resolution. Section 337 investigations are typically resolved by the ITC within sixteen months, which makes these actions an attractive form of resolution. Responding to an increase in companies seeking investigations of alleged unfair trade practices, the ITC launched a pilot program in 2013 aimed at early disposition of Section 337 cases. Among its measures, the pilot program seeks to adjudicate crucial threshold issues, such as the “domestic industry” requirement, early in ITC proceedings in order to reduce costs and delays. 

Perhaps the most substantial advantage of Section 337 is the power of the ITC to prevent the alleged infringing party from profiting from the sale of infringing goods in the United States. The ITC can exclude infringing goods from being imported into the United States, as well as issue cease-and-desist orders that prohibit the person found in violation of Section 337 from selling, marketing, distributing, offering for sale, or otherwise transferring the articles concerned in the United States. Although the ITC does not award monetary damages, these remedies are powerful tools to protect the rightful owners of the trade secrets from unfair competition. The threat or actual entry of an exclusion order provides trade secret owners with powerful leverage against alleged violators.

2. The Federal Circuit’s Extraterritorial Expansion of Section 337 in TianRui

The Federal Circuit’s decision in TianRui Group Co. v. International Trade Commission, in affirming an ITC determination,98 established that Section 337 can be used to enjoin the importation of articles in cases in which the acts of trade secret misappropriation occurred entirely outside of the United States. In TianRui, the complainant Amsted Industries Inc. (“Amsted”) owned two secret processes for manufacturing steel railway wheels. One of those was the “ABC process,” which Amsted used at one time at its foundry in Alabama.101 Amsted took many steps to keep the ABC process confidential, including informing employees with access to the information that it was to be kept confidential, sharing the information in process manuals with a limited number of named individuals, keeping the manuals out of the general file system at the research

center, and limiting access to visitors at the foundry. 

Two Chinese companies, TianRui Group Company Limited and TianRui Group Foundry Company Limited (collectively “TianRui”), sought to license Amsted’s wheel technology but were unable to reach an agreement with Amsted.103 TianRui then hired nine employees away from one of Amsted’s Chinese licensees, including employees who had been trained at Amsted’s foundry in Alabama.104 Pursuant to its contractual obligations, this Amsted licensee took a number of reasonable steps to keep the information secret, including informing employees through a written code of conduct that the information was proprietary and must be kept confidential, notifying employees that they had a duty not to disclose the information, keeping the facility secure and gated, maintaining password-protected computers, and not connecting computers with key documents to the company intranet or the Internet. In its investigation, the ITC found that at the time TianRui began hiring employees familiar with the ABC process, there were reasonable measures in place to protect the trade secrets. Although the employees were notified that the ABC process was proprietary and confidential in accordance with the written employee code of conduct and eight out of the nine employees had signed confidentiality agreements, they revealed the details of the ABC process to TianRui, which then exploited that information in producing the goods at issue. 

Acknowledging that misappropriated trade secrets may be used in the manufacture of goods abroad, the Federal Circuit stated that barring the ITC from considering this activity because it had occurred outside of the United States would be “inconsistent with the congressional purpose of protecting domestic commerce from unfair methods of competition in importation such as trade secret misappropriation.”108 In reaching this conclusion, the Federal Circuit affirmed the ITC’s interpretation of Section 337, noting that the interpretation was consistent with prior ITC determinations and the purpose and legislative background of the statute. Moreover, the Federal Circuit stated that a determination of whether this kind of trade secret misappropriation constituted “unfair methods of competition” or “unfair acts” under Section 337 should be “one of federal law ... decided under a uniform federal standard, rather than by reference to a particular state’s tort law.” Although TianRui did not articulate a standard, the majority opinion referred to the general common law position, the federal statutory position, and the EEA as constituting the federal standard. Additionally, the Federal Circuit pointed to the salient facts in the case that in its view were sufficient to establish misappropriation: the obtaining of access to confidential information through former employees who were charged with keeping the information confidential and the exploitation of such confidential information in producing the goods at issue. 

Another important aspect of TianRui is the Federal Circuit’s determination that a complainant may obtain relief under Section 337, even if it is not currently engaged in manufacturing that uses the misappropriated trade secrets. TianRui contended that in order for the ITC to grant relief, “the domestic industry must practice the misappropriated trade secret.”116 Evidence indicating that “the imported TianRui wheels could directly compete with wheels domestically produced by the trade secret owner” was deemed sufficient to constitute injury to a domestic industry under Section 337. Central to the lasting importance of TianRui is that the ITC has the authority to use a federal standard to investigate and grant relief based on extraterritorial conduct if it is necessary to protect domestic industries from injuries arising out of unfair competition. TianRui articulated a new legal standard for American companies to use Section 337 to overcome uncertainty about the availability of local judicial or regulatory remedies in foreign jurisdictions.119

II. THE USE OF SECTION 337 IN A MULTIPOLAR, PLURALISTIC GLOBAL REGULATORY SYSTEM

The use of Section 337 as a global business remedy reflects two broader phenomena in international business regulation: extraterritorial regulation and regulatory pluralism. The following discussion describes these phenomena in the context of Section 337 and other trade remedies.

A. Section 337 as Extraterritorial Regulation

The use of Section 337 to enforce trade secrets globally raises profound questions about the appropriate application of trade remedies to regulate offshore conduct by foreign persons. The global extension of Section 337 jurisdiction is part of a broader phenomenon in international business regulation. In various areas of business, U.S. law is increasingly used to regulate business-related conduct outside of the United States. Other countries have followed suit. Far more than regulators in other countries, however, U.S. regulators have sought to extend their authority globally and unilaterally. 

1. The Doctrinal Foundations of Extraterritorial Regulation

The concept of extraterritoriality is defined as the extension of domestic law to activity outside of the country’s territory.123 Under principles of public international law, the exercise of extraterritorial authority by a regulatory agency, such as the ITC, falls under prescriptive jurisdiction. The use of Section 337 to address foreign trade secret misappropriation is an example of “direct” extraterritorial regulation: domestic regulation that applies directly to international actors and activities either through their effects on the regulating country (the “effects” test) or their contact with the regulating country (the “conduct” test). In the United States, the effects and conduct tests have been historically applied on a case-by-case basis by courts to determine whether a sufficiently strong jurisdictional nexus with the United States was presented in a given dispute. 

The scope of federal statutory authority is analyzed through the presumption against extraterritoriality, a judicial canon of interpretation that presumes, absent evidence of contrary congressional intent, a federal law is applicable only within the territory of the United States.127 Its purpose is “to protect against unintended clashes between our laws and those of other nations which could result in international discord.”128 Despite diverse scholarly critiques of the presumption against extraterritoriality,129 it has become the predominant 

interpretative framework through which regulatory authority abroad is circumscribed.130

The presumption against extraterritoriality has prominently featured in two recent Supreme Court decisions. In Morrison v. National Australian Bank Ltd., the Court applied the presumption to limit the scope of antifraud actions under Section 10(b) of the Securities Exchange Act of 1934.131 Morrison relied on the presumption in rejecting the longstanding effects and conduct tests in federal securities law and establishing in their place a transaction-based test.132 The presumption against extraterritoriality was also central to the holding in Kiobel v. Royal Dutch Petroleum Co.,133 which substantially narrowed the scope of corporate liability under the Alien Tort Statute.134 Citing Morrison, the Court in Kiobel found that the Alien Tort Statute lacked a “clear indication” of

Extraterritoriality, 84 NW. U. L. REV. 598, 655 (1990) (characterizing the presumption against extraterritoriality as an “unevenly applied, highly chauvinistic canon”).

130 See Katherine Florey, Bridging the Divide: The Case for Harmonizing State and Federal Extraterritoriality Principles After Morrison and Kiobel, 27 PAC. MCGEORGE GLOBAL BUS. & DEV. L.J. 197, 201–03 (2014). 131 130 S. Ct. 2869, 2881 (2010). The Dodd-Frank Act subsequently reaffirmed federal subject matter jurisdiction for public enforcement claims brought by the Securities and Exchange Commission and the Department of Justice. See Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 929P(b), 124 Stat. 1376, 1864

(2010); see also Richard W. Painter, The Dodd-Frank Extraterritorial Jurisdiction Provision: Was It Effective, Needed or Sufficient?, 1 HARV. BUS. L. REV. 195, 199–200 (2011).

132

Morrison, 130 S. Ct. at 2884 (holding that “the focus of the Exchange Act is not upon the place where the deception originated, but upon purchases and sales of securities in the United States”); see also Marco Ventoruzzo, Like Moths to a Flame? International Securities Litigation After Morrison: Correcting the Supreme Court’s “Transactional Test,” 52 VA. J. INT’L L. 405, 433–34 (2012) (criticizing the Supreme Court’s application of the presumption against extraterritoriality).

133

133 S. Ct. 1659, 1669 (2013). 134

28 U.S.C. § 1350 (1789). The Alien Tort Statute, which allows U.S. district courts to hear “any civil action by an alien for a tort only, committed in violation of the law of nations,” served for over three decades as a jurisdictional basis for foreign plaintiffs to seek readdress against multinational corporations for violations of international human rights law committed in foreign countries. See Eugene Kontorovich, Kiobel Surprise: Unexpected by Scholars but Consistent with International Trends, 89 NOTRE DAME L. REV. 1671, 1681 (2014) (noting the 155 cases filed against corporations under the Alien Tort Statute).

extraterritoriality that would be necessary to rebut the presumption. According to the majority opinion, the presumption may be overcome if the plaintiff ’s claims “touch and concern the territory of the United States ... with sufficient force to displace the presumption.”136

2. Assessing the Extraterritorial Application of Section 337

By seeking to regulate extraterritorially, the ITC implicates a broader set of doctrinal and public policy considerations about the scope of Section 337’s statutory authority and the role of national sovereignty in international business regulation. Therefore, from a doctrinal perspective, Section 337 should be first analyzed in a Morrison-based framework. Critics of Section 337 as extraterritorial regulation argue that TianRui failed to correctly apply the presumption against extraterritoriality. Citing Morrison, they argue that there is insufficient evidence that Congress intended to regulate foreign business conduct through Section 337. In addition, critics claim that the acts of misappropriation at issue in Section 337 cases lack sufficient contact with the United States due to the fact they took place in China. 

Contrary to critics of TianRui, the presumption against extraterritoriality as applied in Morrison and Kiobel is distinguishable from Section 337 on several grounds. First, the scope and application of the presumption are far from clear and undisputed. Indeed, legal scholars have noted the ambiguities and conflicts created by Morrison and Kiobel.139 Second, Section 337 may be outside of the scope of the presumption because the assumptions underlying the presumption do not apply.140 Third and most persuasively, while foreign trade secret theft occurs outside the borders of the United States, the act of importation itself is within the territorial jurisdiction of U.S. regulators. Under Morrison, the presumption against territoriality does not apply to “mixed” cases that are neither wholly domestic nor wholly foreign when such cases have a U.S.-oriented regulatory focus.141 Section 337 jurisdiction is triggered upon importation, not upon the act of misappropriation itself.142 Applying the Morrison transaction-based test, the statutory focus of Section 337 is on the products entering the U.S. markets.143 While Section 337 may in fact address extraterritorial conduct (i.e., actual acts of misappropriation occurring outside of the United States), its regulatory authority is in direct proportion to the defendant’s interaction with the United States.144 By confining

the presumption to a jurisdictional statute such as the Alien Tort Statute in Kiobel in light of the Court’s holding in Morrison that the extraterritorial reach of the Securities Exchange Act was not a matter of subject matter jurisdiction); David Keenan & Sabrina P. Schroff, Taking the Presumption Against Extraterritoriality Seriously in Criminal Cases After Morrison and

Kiobel, 45 LOY. U. CHI. L.J. 71, 76–87 (2013) (analyzing the conflict between Morrison and Kiobel and existing Supreme Court precedent that rejects the application of the presumption in federal criminal cases).

140 See Carlos M. Vazquez, Things We Do with Presumptions: Reflections on Kiobel v. Royal Dutch Petroleum, 89 NOTRE DAME L. REV. 1719, 1721–22 (2014) (describing certain categories of statutes that do not implicate the presumption); see also Anthony J. Colangelo, The Alien Tort Statute and the Law of Nations in Kiobel and Beyond, 44 GEO. J. INT’L L. 1329, 1340 (2013) (distinguishing Kiobel from Morrison due to the former’s application of the “law of nations” rather than a domestic economic regulatory statute).

141 See Lea Brilmayer, The New Extraterritoriality: Morrison v. National Australia Bank, Legislative Supremacy, and the Presumption Against Extraterritorial Application of American Law, 40 SW. L. REV. 655, 662 (2008). 142 See 19 U.S.C. § 1337(a)(1)(A) (2012) (referring to “[u]nfair methods of competition and unfair acts in the importation of articles... into the United States, or in the sale of such articles by the owner, importer, or consignee”); see also TianRui, 661 F.3d at 1330 (observing that the “determination of misappropriation was merely a predicate to the charge that TianRui committed unfair acts in importing its wheels into the United States.”). 143

See Keenan & Schroff, supra note 139, at 92–93 (identifying statutory focus as one of two steps under Morrison for determining whether the presumption against extraterritoriality applies to any given case); see also Brilmayer, supra note 141, at 663–67 (analyzing and critiquing Morrison’s statutory focus test).

144

See Rowe & Mahfood, supra note 68, at 100.

its jurisdiction to goods that enter the United States, extraterritorial regulation under Section 337 does not constitute an attempt by the ITC to “rule the world.” This sharply contrasts with the so-called F-cubed cases (i.e., a foreign plaintiff suing a foreign defendant on the basis of acts occurring wholly outside of the United States) at issue in Morrison and Kiobel.

In addition, from a public policy perspective, Section 337 as extraterritorial regulation should be viewed in the context of U.S. trade laws and their public policy rationales. The “border enforcement” purpose of Section 337 is similar to other “unfair” trade remedies for dumping or subsidies by foreign producers.147 In its current form, Section 337 does not facially discriminate against foreigners.148 While mostly American companies have filed complaints with the ITC, Section 337 does not distinguish between domestic and foreign companies whose trade secrets have been misappropriated: a foreign-based trade secret owner, such as a non-American company with operations in the United States, may also seek remedy from the ITC so long as it satisfies Section 337’s domestic industry requirement.149

B. Section 337 as Regulatory Pluralism

The use of Section 337 also demonstrates how international trade law is becoming increasingly pluralistic. Pluralism is defined as the existence of overlapping legal norms and legal systems that regulate any given activity or actor. In international law—rather than a single, unified legal authority embodied by sovereign states governing their respective territories—legal norms and rules are created, interpreted, and enforced by multiple state and nonstate actors acting at the local, national, and international levels. Numerous legal scholars have examined this dynamic, both ascertaining its causes and exploring its doctrinal and normative implications.152 Pluralism is also viewed as the fragmentation of international law, which may be manifested by multiple legal bodies interpreting the same body of law or multiple legal regimes governing the same type of conduct. 

Regulatory pluralism may be defined as regulators, either in the same national jurisdiction or acting across national jurisdictions, seeking to regulate the same conduct under their respective bodies of law and enforcement mechanisms. Regulatory pluralism is closely intertwined with extraterritorial regulation. The extension of regulatory authority beyond territorial boundaries permits states to impose their rules in other jurisdictions and, likewise, to have other states’ rules imposed in their own. 

In the context of international trade law, pluralism is evident in at least three distinct ways. First, the proliferation of bilateral and regional trade agreements has resulted in overlapping and competing legal frameworks that cogovern alongside the WTO. Second, the WTO’s own legal framework, implemented by the WTO’s Dispute Settlement Body, has addressed so-called “trade and...” issues that fall outside of international trade law per se.156

While regulatory pluralism is not inherently new in international trade law, the use of Section 337 as extraterritorial regulation reveals growing tensions resulting from it. Specifically in the context of Section 337, regulatory pluralism is evident in the multiplicity of legal responses available to intellectual property rights holders and their host governments. Although the WTO Agreement for Trade Related Aspects of Intellectual Property (TRIPS) recognizes the protection of trade secrets, global coordination on enforcement is inconsistent at best.157 Section 337 is a powerful instrument in the regulatory enforcement toolkit that overlaps with—but does not preclude or preempt—other remedies. In addition to the filing of a Section 337 claim, these potential remedies include regulatory and/or judicial enforcement in the foreign country where the trade secret was misappropriated, the filing of a civil action in U.S. federal district court, international commercial arbitration, and the filing of a Special 301 petition. 

Regulatory pluralism does not necessarily lead to fragmentation—in fact, it may facilitate convergence. This development is evident in a third example of regulatory pluralism in international trade law: the use of international trade law as a means to enforce private arbitral awards against foreign countries. Most notably, the United States suspended trade preferences in 2012 under its Generalized System of Preferences (GSP) in response to Argentina’s failure to comply with arbitral awards in favor of U.S. investors under the bilateral investment treaty (BIT) between the United States and Argentina. GSP, as a trade preference program under the Enabling Clause of the GATT, permits the United States to grant unilateral, nonreciprocal special treatment to developing countries through preferential tariff rates.160 Under U.S. federal law, a GSP beneficiary country must recognize and enforce arbitral awards in favor of U.S. nationals.161 While the private investors seeking to enforce their arbitral awards against Argentina did not have a private right of action, they were able to submit petitions requesting that the United States withdraw Argentina’s designation as a GSP beneficiary country and to engage in direct lobbying of the U.S. federal government.162 One of the private investors also filed a Section 301 petition against Argentina.163 The use of trade remedies to enforce arbitral awards is an inherently narrower business remedy than Section 337 to the extent that the subjects qua defendants are foreign governments.

III. ANALYSIS OF SECTION 337 AS GLOBAL TRADE SECRET ENFORCEMENT

TianRui established a new legal standard for Section 337 as a viable tool to combat global trade secret theft, and the TianRui standard has been followed in a number of ITC cases involving offshore misappropriation.

Table 2: ITC Foreign Trade Secret Cases Since TianRui

Case Location of Misappropriation Alleged Trade Secret Theft Outcome

In the Matter of

Certain DC-DC

Controllers and Products Containing the Same (“DC

Controllers”) Taiwan Information used to develop, market, and manufacture devices used to regulate power in electronic devices The parties entered into a consent order. Following investigation of allegations of a violation of the consent order, the ALJ issued a civil penalty and retained the consent order (with a modification to include affiliated companies). No other general or limited exclusion order was issued. The case is now pending on appeal at the Federal Circuit with respect to postconsent order products.

In the Matter of

Certain Electric

Fireplaces

(“Electric

Fireplaces”) China Retail customer lists, component supplier lists and

product manu-

facturing specifications for electric fireplaces Five-year limited exclusion order issued by the ITC

In all of the cases filed or decided after TianRui, the complainant has requested the ITC to find that trade secret misappropriation has occurred and that such misappropriation constitutes an unfair trade practice, which should result in blocking the entry and sale of the infringing products in the United States. Table 2 provides an overview of these cases.

TABLE 2. Continued

Case Location of Misappropriation Alleged Trade Secret Theft Outcome

In the Matter of

Certain Rubber Resins and Processes for Manufacturing the Same (“Rubber

Resins”)166 China Information related to the process for the manufacture of rubber resins Ten-year limited exclusion order issued by the ITC

In the Matter of

Certain Paper Shredders, Certain Processes for Manufacturing or Relating to Same (“Paper

Shredders”)167 China Processes for manufacturing paper shredders Settlement, following ITC vote to initiate

a Section 337

investigation

In the Matter of

Certain Robotic Toys and Components Thereof

(“Robotic

Toys”)168 China Process for the manufacture of robotic toys Settlement, following ITC decision to initiate a Section 337

investigation

These cases underscore the potential of Section 337 as a global remedy. To demonstrate the magnitude of the costs caused by trade secret misappropriation by foreign employees and highlight the capacity of Section 337 to remedy them, the following discussion examines several key aspects of the ITC cases to date. Although the number of cases is not yet large, the cases illustrate certain trends and outcomes in Section 337 actions. Taken together, TianRui and its progeny demonstrate the ways in which Section 337 can be used to address misappropriation in the international context, which is particularly important if adequate

166

Certain Rubber Resins and Processes for Manufacturing Same, USITC Inv. No. 337TA-849 (Feb. 26, 2014) [hereinafter Rubber Resins Opinion] (commission opinion). 167

Certain Paper Shredders, Certain Processes for Manufacturing or Relating to Same, USITC Inv. No. 337-TA-863 (Dec. 20, 2012) [hereinafter Paper Shredders Complaint]

(complaint).

168

Certain Robotic Toys and Components Thereof, USITC Inv. No. 337-TA-869 (Jan. 4, 2013) [hereinafter Robotic Toys Complaint] (complaint).

TABLE 2. Continued

Case Location of Misappropriation Alleged Trade Secret Theft Outcome

In the Matter of Crawler Cranes and Components

Thereof

(“Crawler

Cranes”) China Market research that led to development of a specific type of crawler crane; information about dealer discounts and profit margins; technical requirements used in manufacturing; and methods for fabricating and processing aspects of the cranes Ten-year limited exclusion issued by the

ITC

In the Matter of

Certain Stainless

Steel Products

(“Stainless

Steel”) Italy Know-how in connection with the manufacture of stainless steel and

confidential customer and sales databases Pending

remedies are not available in the foreign countries in which trade secret theft occurs.

A. Employer-Employee Context

Significantly, in each of the cases, the alleged misappropriation occurred as the result of disclosure by former employees working in a foreign jurisdiction. This can arise in a number of ways. One common scenario is when a single key employee is hired away by a competitor. In the Rubber Resins case, Xu Jie, who began working at the Shanghai facility owned by SI Group Inc., was a member of SI Group’s Manufacturing Integration Team, a select group of employees with access to the company’s global processing technology resources.171 Xu was the only employee at SI Group’s Shanghai plant with access to the entire trade secret processes for making two specific kinds of resins and tackifiers, including the one at issue in the case.172

After Xu resigned from SI Group, Sino Legend, a direct competitor, hired him. Not long afterward, Sino Legend began to market a resin and tackifier product substantially the same as the one produced by SI Group, using the trade secrets that Xu had access to during his prior employment.173 A similar situation occurred in Crawler Cranes. The complainant, Manitowoc Cranes, alleged that one of its high-ranking engineers, John Lanning, was recruited by competitor Sany Heavy Industry, Co.174 Lanning was involved in the development of the trade secrets for Manitowoc, allegedly providing Sany with information that gave Sany significant competitive advantages.175 In both instances, a single employee caused the alleged damage to his former employer.

In other instances, local competitors hired multiple employees. In DC Controllers, thirteen employees of respondent uPI Semiconductor Corp. of Taiwan, including its founders and management team, were former employees of the complainant Richtek.176 The employees were key participants in the design of Richtek’s product lines at issue.177 Importantly, the ALJ found that these employees had “access to Richtek’s most

171

Certain Rubber Resins and Processes for Manufacturing Same, USITC Inv. No. 337TA-849, ¶¶ 89, 91 (May 21, 2012) [hereinafter Rubber Resins Complaint] (complaint). See Thomas Stiebel, Protecting Trade Secrets in China: A Roadmap, in DEFENDING INTELLECTUAL

PROPERTY RIGHTS CASES IN CHINA: LEADING LAWYERS ON PROTECTING CLIENTS RIGHTS IN CHINA’S EVOLVING IP ENVIRONMENT 135 (2013) (discussing the significance and history of the SI Group case). 172

Rubber Resins Complaint, supra note 171, ¶ 92. 173 Id. ¶¶ 97–98. 174

Certain Crawler Cranes and Components Thereof, USITC Inv. No. 337-TA-887, ¶¶ 1.8 (June 12, 2013) (complaint).

175 Id. ¶¶ 1.16–1.17.

176 DC Controllers Initial Determination, supra note 164, at 93–94. 177

Id.

sensitive and confidential technical trade secrets and could not have been unaware of the importance of those secrets to Richtek’s business.” These allegations were supported by expert testimony stating that uPI had acquired “vast quantities of Richtek proprietary, tradesecret information without authorization from Richtek through former Richtek employees.” 

Similarly, Paper Shredders involved allegations that the respondents “hired away” employees of the complainant, Fellowes, Inc. (“Fellowes”) from an affiliated Chinese joint venture, Fellowes Manufacturing (Changzhou) Co. Ltd. (“Jinsen”). Following problematic attempts by an individual to gain access to Fellowes’ trade secrets through Jinsen, respondents hired Jinsen’s former operations manager as well as other Jinsen employees and engineers with knowledge of Fellowes’ trade secrets.181 Losing multiple employees to a competitor can be particularly problematic as the company suffering the loss of trade secrets must also contend with the problem of replacing multiple key employees.

Another problematic scenario involves the loss of a single employee who then launches a competitor company. In Electric Fireplaces, employee Yue Qui Sheng (“Yue”) had access to the complainant’s confidential information related to the manufacture of kinetic sculptures for electric fireplaces, as well as access to confidential retail customer lists, product manufacturing specifications, component suppliers, and specific cost information provided to its customers.182 Less than three years after he started working for the complainant, Yue left to work for Shenzhen Reliap Industrial Co. of China, a new company Yue established to compete directly with his former employer, by manufacturing, distributing, selling, and marketing electric fireplaces products to the same retail customers and exporting the fireplaces to the United States. The complainant claimed that Reliap wrongfully acquired its trade secrets through Yue. Access to a range of proprietary information from manufacturing secrets to customer information positioned Yue well to start a competitor company, something that should be taken into consideration before granting broad access to critical information.

In a currently pending case, Stainless Steel, complainants (collectively “Valbruna”) allege that respondent Viraj India induced a Valbruna employee in Italy to steal trade secrets and transfer them to Viraj.185 The trade secrets at issue fall into two categories: (1) detailed know-how for producing different specific types of stainless steel that are memorialized in Valbruna’s written operating practices; and (2) Valbruna’s customer lists, which contain commercially sensitive information about the identity of Valbruna’s customers, the customers’ specific needs, and the terms under which Valbruna supplied its customers.186 Viraj allegedly offered the former Valbruna employee over three times his salary, plus lost social security and cash bonuses, for the purpose of obtaining the trade secrets.187 Similar to Electric Fireplaces, one employee’s access to both categories of information created a tempting situation for personal gain in which he could be very valuable to a competitor and also highly detrimental to his employer.

One final example has a bit of a twist, attempting to hold the importing retailer liable for the alleged misappropriation. In Robotic Toys, three related entities collectively referred to as Innovation First alleged that CVS Pharmacy, Inc., a retailer, was importing and selling robotic toys that were manufactured in China by Zuru, Inc. using misappropriated trade secrets.188 An Innovation First engineer developed HEXBUGVR technologies for Innovation First in China, then provided Zuru with the trade secrets in violation of his separation agreement.189 CVS then imported and sold the robotic toys in the United States. Although the case was not fully litigated to determine liability on the part of CVS, the retailer–supplier relationship in this case illustrates yet another way in which employee misappropriation can lead to Section 337 actions. 

B. Measures Taken to Prevent Disclosures

In many instances, companies are vulnerable to trade secret theft despite taking necessary precautions to secure their trade secrets. The Section 337 cases discussed here appear to be no exception. Although the companies took a range of substantial ex ante measures, misappropriation still occurred. These cases show the various measures that companies take to deter trade secret theft in their worldwide operations while also underscoring the value of Section 337 as a global remedy when these deterrence measures fail:

Electric Fireplaces: The complainant Twin-Star articulated a number of steps it took to maintain the secrecy and confidentiality of its trade secrets, component supplier list, and customer lists, among which included maintaining manufacturing operations and production drawings in secured and access controlled facilities; adopting and publishing its employees confidentiality and nondisclosure obligations; limiting the number of manufacturing facilities used and keeping twenty-four–hour security on those facilities; restricting personnel with access to the trade secrets; and using password-protected computers that were not publicly accessible. 

Rubber Resins: The complainant SI Group claimed that it had adopted strict and vigorous measures to maintain its trade secrets, including marking key documents “confidential”; keeping a confidential schedule for different types of documents; granting only certain designated employees permission to access both online and written documents based on the degree of confidentiality; logging in and out of documents; reclaiming and destroying old documents; and maintaining records of the foregoing measures. SI Group also had multiple contracts with employees imposing confidentiality and nondisclosure requirements, and also had employee policies, handbooks, and training maintaining SI Group’s trade secrets. Pursuant to these policies, Xu, as an SI Group employee, had signed a labor contract containing nondisclosure provisions, a separate nondisclosure agreement, a supplementary agreement, and another agreement affirming that he would abide by the terms in the SI Group China employee manual. 

Paper Shredders: The complainant Fellowes undertook a number of steps to protect its trade secrets, including restricting access to Jinsen, a walled and guarded facility; requiring employees to sign confidentiality agreements; providing all employees with a written code of conduct, advising them that they had a duty not to disclose Fellowes’ trade secrets; labeling and restricting access to confidential information stored on Fellowes’ computers, including using a strict password policy; prohibiting employees from downloading unauthorized and/or personal software on their company-issued laptops to avoid security breaches; and requiring suppliers and vendors to enter into confidentiality agreements. 

Crawler Cranes: The ALJ held that a number of categories of information constituted trade secrets that were developed by the complainant Manitowoc and protected by multiple measures, specifically market research to identify a specific type of crane to meet market needs; information and expertise related to the development of that specific crane; information about dealer discount prices and profit margins; information related to minimum technical requirements of the metal alloys used in its cranes; and the method of fabricating booms and methods for processing large weldments. 

Stainless Steel: The complainant Valbruna asserted that, prior to the misappropriation and currently, it has implemented vigorous measures to protect its trade secrets, including a strict document control policy in its Italian plant; maintaining a list designating a limited number of employees with access to its operating procedures (only 11 of its approximately 2,500 employees worldwide); computer security measures; restricted employee access to customer lists; and employee confidentiality and nondisclosure agreements. 

C. Other Related Legal Actions

Although it is not a prerequisite to bringing a Section 337 action, in several of the Section 337 cases complaints were filed only after legal actions in local jurisdictions proved to be ineffective or untenable. This was notably the case in Rubber Resins. Before filing a complaint with the ITC, SI Group initiated both criminal and civil legal actions in China.198 In 2008, SI Group initiated a criminal investigation against employee Xu with the Shanghai Public Security Bureau (PSB).199 PSB officers allegedly encouraged SI Group to drop the criminal action, assuring SI Group that it had a “vast amount of evidence” that it would turn over if SI Group pursued a civil action.200 Despite this claim, after determining that there was a “lack of evidence,” the PSB terminated its investigation.201 Thereafter, in February 2010, SI Group filed two civil actions against respondents Sino Legend and Xu in the Shanghai No. 2 Intermediate People’s Court for misappropriation of trade secrets.202 SI Group’s legal actions in China, however, were to no avail,203 which led

SI Group to file a complaint under Section 337.204

Likewise, in Paper Shredders, action in China did not adequately address the alleged misappropriation. The complainant Fellowes filed an action in the Luwan District People’s Court of Shanghai alleging that certain respondents were using its molds and tools at issue.205 Although the Luwan Court issued preservation orders prohibiting the use of the molds and tools, this was willfully ignored. The lack of effective recourse in China created a situation in which the victims of the misappropriation sought other ways to address their harm. In Stainless Steel, a slightly different situation occurred. In that case, the complainant successfully pursued criminal action in Italy against its employee for crimes in connection with the theft of trade secrets. The conviction was presented by the complainant in support of its request for a remedy under Section 337.208 These three cases illustrate instances where civil and/or criminal actions in the jurisdiction where the harm occurred were initially undertaken in an attempt to address harm resulting from a loss of trade secrets.

D. Outcomes

From a business perspective, it appears that Section 337 is an effective remedy, and the ITC adjudication process reflects an effort to tailor remedies to the unique circumstances of individual cases. In two cases, Paper Shredders and Robotic Toys, the parties settled relatively early following the ITC decision to initiate a Section 337 investigation. In Robotic Toys, when the ITC instituted an investigation, it named both CVS (the retailer) and Zuru (the manufacturer) as respondents. This was the first instance of a retailer being a respondent in a trade secrets case brought under Section 337. A few months later, the ALJ issued an order granting Innovation First’s motion seeking issuance of a request for international judicial assistance pursuant to the Hague Convention. Thereafter, the parties settled, with CVS agreeing not to import or be involved in the importation of certain Zuru robotic toys into the United States. The consent order in Paper Shredders also included an agreement, which limited the importation of goods at issue.213 In both cases, the parties were able to negotiate an arguably reasonable resolution balancing the goal of the complainants of limiting the importation of goods manufactured using misappropriated trade secrets and the goal of respondents of circumscribing the scope of the goods addressed by the agreement.

Similarly, in DC Controllers, the parties entered into a consent order.214 In this case, however, subsequent action was required in connection with allegations that the consent order was violated. Based on this evidence, the ALJ concluded that “any importation, sale for importation, or sale after importation” of accused products after August 13, 2010, constituted a violation of the consent order, but the evidence did not establish that products developed after the consent order contained any misappropriated trade secrets.215 Accordingly, the ALJ recommended that, if a violation is found, the civil penalty “should equal $10,000 times the number of days on which an importation or sale occurred in violation of the consent order.”216 Inasmuch as the complainant did not allege circumstances warranting a general exclusion order, the ALJ recommended retaining the existing consent order (with a modification to include affiliated companies) and not replacing it with a limited exclusion order.217

In several of the cases, the ITC ordered exclusion orders. It appears that the issuance of a general exclusion order will be reserved for the most extreme cases. More narrowly tailored limited exclusion orders seem to be favored in the ITC cases to date. In Electric Fireplaces, to the extent that respondents Yue and Reliap failed to participate in the ITC investigation and also did not appear at the pretrial conference, both parties were found to be in default and in violation of Section 337. The ITC then determined that a limited exclusion order of five years was an appropriate measure of relief for the trade secret misappropriation. The duration of this remedy is directly related to the minimum amount of time estimated by the ITC to be “necessary to develop the trade secrets at issue.” In reaching its determination, the ITC also found that the issuance of the limited exclusion order would have no adverse impact on the statutory public interest factors. Likewise, in Crawler Cranes, the ITC determined that Section 337 respondents misappropriated trade secrets in violation of Section 337. Based on these findings of misappropriation of multiple trade secrets, the ITC imposed an exclusion order against Sany and its affiliates for a period of ten years.223

In Rubber Resins the ITC determined that there was a misappropriation of trade secrets and that respondents Sino Legend and Xu had violated Section 337 in the importation or sale for importation of the rubber resins at issue. In reaching its determination, the ITC cited TianRui and followed the Federal Circuit’s affirmation of the extraterritorial scope of Section 337.225 A significant aspect to this case is the remedy. The ALJ recommended issuance of a ten-year general exclusion order. In support of this remedy, the complainant SI Group argued “there would be no practical way to prevent circumvention” of a limited exclusion order “because of the ‘shifting sands’” of the respondents’ corporate names and forms and because it would be difficult to identify the source of the goods. Respondents argued that issuance of a general exclusion order would be contrary to precedent. The ITC disagreed with the ALJ’s determination, finding that there was a “likelihood of circumvention based on the convoluted corporate structure” of the respondents. Moreover, the ITC found that no pattern of violations was established. Accordingly, the ITC determined that the appropriate remedy would be the issuance of a limited exclusion order, which would also extend to those selling on behalf of the named respondents. To determine the appropriate duration of the limited exclusion order, the ITC considered the amount of time it would have taken to independently develop the trade secrets. There was wide disagreement on this point, with testimony ranging from six months to at least ten years and perhaps even twenty years to develop the confidential material. Stating that it did not find the six-month period credible, the ITC concluded that the most reasonable duration of the exclusion order was a ten-year remedy. 

In Stainless Steel, the complainant Valbruna is seeking a limited exclusion order on all stainless steel products manufactured or sold by or on behalf of the respondents. Valbruna also seeks issuance of a ceaseand-desist order requiring Viraj to destroy or export all unsold stainless steel being held in inventory in the United States that was manufactured using any of the trade secrets and prohibiting Viraj from marketing or selling the products in the United States. The ITC instituted an investigation in October 2014, setting a target date of October 12, 2015, for the final initial determination. 

IV. STRATEGIC AND SYSTEMIC IMPLICATIONS OF SECTION 337 AS A LONG-ARM STATUTE

The post-TianRui ITC cases that address foreign trade secret misappropriation highlight the use of Section 337 by American companies as a quasi–long-arm statute. While it is too early to predict the full impact of Section 337 in this context, its strategic implications for American companies and its systemic implications for regulators are becoming apparent. The following discussion analyzes these two broader dimensions of Section 337, and proposes responses that American companies and regulators should respectively adopt to optimize the use of Section 337 as a global business remedy.

A. How American Companies Can Use Section 337 for Strategic Advantage

Section 337 is just one component of a broad set of measures that American companies employ to address trade secret misappropriation by foreign employees and business partners. The ITC cases following TianRui show how American companies can use Section 337 to enforce legal remedies worldwide that are otherwise unavailable in other fora. By using Section 337 as the basis for enforcing global trade secrets, American companies are able to exploit the jurisdictional nexus between the legal interest at stake (i.e., the misappropriation of the trade secret) and international trade (i.e., the act of importing goods benefiting from the misappropriation). However, while Section 337 has become an appealing post hoc response to foreign trade secret misappropriation, relatively scant attention has been devoted to its ex ante integration into business strategy. To rectify this gap, American companies (as well as foreign companies that operate in the United States and have recourse to Section 337) can proactively integrate Section 337 into their business strategy as a means to preempt specific business-related risks arising from trade secret theft by foreign employees. 

Expressly stipulate Section 337 as a legal remedy and the ITC as the designated forum for trade secret disputes. American companies that enter into joint ventures, licensing agreements, and other foreign business relationships where trade secrets may be vulnerable should seek to ensure that Section 337 is available as a remedy in the event of employee misappropriation. In most instances, it is in the interest of a trade secret owner to seek redress from the ITC instead of a U.S. federal district court or a local court. While submission to jurisdiction is not necessary in order to initiate a Section 337 action, referencing Section 337 in the legal documentation may incentivize foreign business partners to take appropriate preventative and deterrence measures. A contractual term stipulating Section 337 as a mutually acceptable remedy, accompanied by a clause that indicates the basis for trade secret misappropriation under local law, might also be favorably viewed by the ITC and the Federal Circuit (if the ITC’s determination is appealed).

In addition, companies can negotiate the inclusion of an express waiver of conflict of laws or forum non conveniens claims. While ITC jurisdiction is conferred over the imported goods rather than the producer, this clause may address any counterclaims brought against the company by foreign business partners in local courts and under local law.

Require the implementation of internal controls and reporting mechanisms. American companies should require their foreign business partners to implement internal controls and reporting mechanisms in order to facilitate discovery in any potential Section 337 action. While the ITC can compel discovery through nationwide service of subpoenas for deposition, testimony, and documents,242 this investigative process may be costly and uncertain for complainants. Internal controls and reporting mechanisms may even preclude the need for the trade secret owner to compel production from the foreign business partner if it decides to initiate a Section 337 action (i.e., the company might already have this information). These operational measures may also help a trade secret owner to recognize and respond to potential or ongoing misappropriation without bringing a Section 337 claim.

Internal controls and reporting mechanisms complement various other private mechanisms—such as human resource and compliance systems, physical and electronic access restrictions, exit interviews of all employees to remind them of their ongoing legal obligations (under noncompete and nondisclosure agreements and applicable fiduciary duties)243—to prevent and deter trade secret theft. In many of the ITC cases to date, the companies had implemented many of these best practices.244 Although the Section 337 cases to date underscore the mixed success of these preventative measures, it appears that the ITC favorably views companies that have taken reasonable steps to prevent trade secret theft.245

Require arbitration that comports with Section 337 principles. In many instances, an American company may find it desirable to agree to commercial arbitration in contracts with a foreign business partner.246 Notwithstanding the fact that a Section 337 action may be brought whether or not the parties have agreed to international arbitration, there may be circumstances in which the trade secret owner might prefer arbitration over

242 See Flechsig, supra note 118, at 473–74. 243

See Kurt M. Saunders, The Law and Ethics of Trade Secrets: A Case Study, 42 CAL. W. L. REV. 209, 245–46 (2006). 244

See Rubber Resins Complaint, supra note 171, ¶ 87 (noting that the company conducted exit interviews reminding employees of their continuing obligations not to disclose any confidential information); Paper Shredders Complaint, supra note 167, ¶¶ 30, 38 (noting that the company had required vendors and suppliers to enter into confidentiality agreements). 245

See Rubber Resins Opinion, supra note 166, at 10 (citing Certain Sausage Casings, USITC Inv. No. 337-TA-148/169 (July 31, 1984) (initial determination)) (noting that the elements of misappropriation of trade secrets includes “that the complainant has taken reasonable precautions to maintain its secrecy”).

246 Pagnattaro, supra note 238, at 336 (referring to arbitration using the Chinese International Economic and Trade Commission).

Section 337. The ITC does not award monetary damages for trade secret misappropriation under Section 337, and a foreign jurisdiction may refuse to enforce a judgment for monetary damages issued by a U.S. federal district court in a trade secret enforcement case. Further, ITC exclusion orders do not prevent trade secret theft from continuing to occur.248 By agreeing to apply Section 337 rules and standards as substantive law, arbitration permits the trade secret owner to obtain and enforce damage awards while maintaining confidentiality over the proceedings.

B. How Regulators Can Address the Systemic Concerns of Section 337

Extraterritorial regulation and regulatory pluralism provide domestic firms with strategic opportunities to use trade remedy laws to protect their global business assets. However, this increasingly extraterritorial, pluralistic regulatory environment also raises systemic concerns.

Arguably first and foremost among them is the lack of democratic legitimacy of extraterritorial regulation and regulatory pluralism. This legitimacy gap may be procedural in nature and involve the process by which regulatory authority is exercised. For example, foreign persons are generally unable to influence the regulations with which they must comply.249 Alternatively, the legitimacy gap may be substantive and involve uncertainty or disputes about the universality of the regulatory objective.250 The use of territoriality as a self-defining concept may arguably be too unwieldy as a means to define what is legitimate in any given context.251 Nonetheless it may still be valuable as an expression of a specific understanding about fairness and legitimacy in cross-border business regulation.252

Perhaps nowhere are these concerns more starkly evident than in hypothetical cases that seek to address a wide range of “unfair methods of competition” under Section 337. This statutory text creates a potential slippery slope that may permit actions against imported products made with foreign child labor or through locally polluting production in countries where domestic laws and social standards differ.253

To address concerns about regulatory overreach, applications of Section 337 could be subject to a case-specific conflict of laws test. This test accords with the “dual illegality” rule for deciding the extraterritorial scope of U.S. statutes proposed by Jeffrey Meyer.254 Under this conflict of laws test, regulators and courts should presume that, absent a congressional statement to the contrary, Congress does not intend its law to apply abroad in a manner inconsistent with the law of the place where the conduct occurred. This would ensure that the regulatory norm at issue in a given Section 337 case is in fact a shared regulatory norm.255 This conflict of laws–based approach would also bolster Section 337’s legality under U.S. federal law by squarely addressing and overcoming an oft-cited justification for the presumption against extraterritoriality: the avoidance of conflicts between U.S. laws and foreign nations.256 The authority of the United States in regulating its internal markets and the interests of trade secret owners, on the one hand, would be balanced against the legal treatment of the offshore activity under local law. That is, the ITC could take into account whether the misappropriation was

 
to apply this test ex ante. See Ralph G. Steinhardt, Kiobel and the Weakening of Precedent: A Long Walk for a Short Drink, 107 AM. J. INT’L L. 841, 842 (2013). 252 Buxbaum, supra note 146, at 674; see also Austen L. Parrish, Kiobel, Unilateralism, and the Retreat from Extraterritoriality, 28 MD. J. INT’L L. 208, 231–35 (2013) (noting the various costs of extraterritorial regulation, including legitimacy and reciprocity concerns). 

253

See Buckler & Jackson, supra note 67, at 553–59 (describing how Section 337 could be hypothetically used to initiate investigations of conflict minerals, child labor, environmental degradation, and food and drug law violations); Vogel, supra note 92, at 673–74 (noting the difficulty of defining “unfair competition” under Section 337).

254 See Meyer, supra note 129, at 165. 255

See Buxbaum, supra note 120, at 299. 256 See Clopton, supra note 129, at 11.

illegal in the jurisdiction in which it occurred. Notably, the Federal Circuit took this step in TianRui in determining that there was no conflict between the principles of misappropriation applied by the ITC and Chinese trade secret law.258 The amount of deference that should be given to foreign legal determinations could be developed through a canon of statutory or regulatory interpretation.259 However, given the legitimacy concerns raised by extraterritorial regulation and the requirement established by Morrison and Kiobel that a federal statute must provide a “clear indication” of extraterritorial effect, arguably an amendment to Section 337 itself would be preferable.

CONCLUSION

The misappropriation of trade secrets by foreign employees poses a growing risk to U.S.-based companies in their global operations. Facing time-consuming and uncertain judicial processes in the multitude of local jurisdictions in which they invest and operate, American companies have turned to Section 337 as a business remedy of last resort. Enterprising international trade and intellectual property lawyers—in conjunction with the ITC’s exercise of jurisdiction over offshore conduct by foreign nationals—have transformed Section 337 into a de facto long-arm statute with substantial remedial powers. Our analysis underscores the benefits to American companies of integrating Section 337 into their global business strategies in light of the paucity of viable alternate legal venues.

From a systemic perspective, it is our expectation that the use of Section 337 will continue to grow. It is our hope that our analysis of Section 337 as a manifestation of extraterritorial regulation and regulatory pluralism will help guide regulators and policy makers to determine its optimal scope. Of potentially great future importance is how other countries may modify or implement domestic trade remedy statutes akin to Section 337. Another important question arising from this article is the extent to which Section 337 and other broad-based unilateral trade remedies might be affected by future multilateral and bilateral trade agreements, and how American companies will respond to these changes.

 
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