By Eric Schweibenz
On March 10, 2011, the Federal Circuit is scheduled to hear oral arguments in Tianrui Group Co. v. ITC, (2010-1395).

On August 14, 2008, Amsted Industries Inc. (“Amsted”) filed a complaint alleging a violation of Section 337 in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain cast steel railways and certain products containing same by reason of misappropriation of its trade secrets (the “ABC Trade Secrets”).  The complaint named Tianrui Group Company Limited; Tianrui Group Foundry Company Limited; Standard Car Truck Company, Inc. and Barber Tianrui Railway Supply, LLC (collectively “Tianrui”) as respondents.  The ITC instituted an investigation entitled Certain Cast Steel Railway Wheels, Certain Processes For Manufacturing Or Relating To Same And Certain Products Containing Same (Inv. No. 337-TA-655).  An evidentiary hearing was held, and on October 16, 2009, ALJ Carl C. Charneski issued an Initial Determination (“ID”) finding a violation of Section 337 by Tianrui with respect to the ABC Trade Secrets.  See our October 19, 2009 and December 4, 2009 posts for more details.  On December 17, 2009, the Commission issued a notice determining not to review the ID.  See our December 18, 2009 post for more details.  On February 16, 2010, the Commission issued a notice of Issuance Of A Limited Exclusion Order and Cease and Desist Order; Termination of the Investigation.  See our February 19, 2010 post for more details.

According to Tianrui’s opening and reply briefs, Tianrui raises two primary issues on appeal.  First, Tianrui asserts that the “Commission exceeded it statutory authority when it applied Illinois law extraterritorially to find a violation of Section 337 based on acts of misappropriation that occurred entirely in China.”  In particular, Tianrui argues that Section 337 “contains no express language authorizing the ITC to apply U.S. state trade secret law extraterritorially to find an ‘unfair act’ within the meaning of subsection (a)(1)(A).”  Rather, as Tianrui argues, the only appropriate extraterritorial application of Section 337 relates to applying U.S. process patent law to acts overseas because Congress “enacted specific legislation for that purpose.”  Second, Tianrui asserts that the ITC erred in finding that a domestic industry exists because the ITC “improperly departed from its longstanding interpretation that a complainant in a Section 337 investigation seeking to enforce its IP rights must practice the asserted IP in the United States to satisfy the domestic industry requirement.”  Specifically, Tianrui argues that “the Commission, by adopting the ID, erroneously reinterpreted the statute to hold that a trade secret complainant seeking to enforce its IP rights need not practice the asserted IP domestically to establish the existence of a domestic industry.”

In its response brief, the ITC asserts that Tianrui’s appeal should be rejected for the following four reasons: (1) “the Commission’s established, unappealed jurisdiction renders moot any extraterritoriality assertions,” (2) “the Commission has not applied Illinois trade secret law extraterritorially because the illegal product (i.e., Tianrui wheels) have been imported into the United States” (emphasis in original), (3) Tianrui’s “misappropriation of [the] ABC Trade Secrets has included misappropriation in the United States, including unauthorized acquisition, disclosure and use of [the] ABC Trade Secrets in the United States” (emphasis in the original), and (4) “trade secret misappropriation is a proper basis for finding a violation of §337(a)(1)(A).”  Further, the ITC asserts that the “Commission properly applied §337(a)(1)(A)’s plain and unambiguous language and Commission precedent to determine that the domestic industry in this, or any, trade secret investigation is the industry in the United States that is the target of the unfair acts, taking into account marketplace realities.”

Finally, Amsted’s intervenor brief seeks affirmation of the ITC’s finding of a violation of Section 337 by the accused products for two reasons.  First, Amsted asserts that Tianrui “overlooks that some of the misappropriation actually took place in the United States and at the United States border.”  In support of this assertion, Amsted argues that under the governing Illinois statute “‘misappropriation’ of a trade secret comprises not only improper acquisition, but also unauthorized ‘use’ of the trade secret.”  Thus, according to Amsted, the “Commission correctly found that it has authority to bar importation of articles that misappropriate U.S. trade secrets, irrespective of where the articles are manufactured.”  Second, Amsted asserts that the Commission properly rejected Tianrui’s assertions with respect to the domestic industry requirement.  In particular, Amsted argues that Subparagraph (A) of §337(a)(1), as opposed to subparagraphs (B)-(D), is based on common law rather than statutory intellectual property rights.  Therefore, although §337(a)(2) “expressly creates a requirement that the domestic industry practice or exploit the asserted intellectual property right, [it] explicitly applies this requirement only to statutory-based intellectual property rights investigations covered by Subparagraphs (B)-(D) of Section 337(a)(1).”