ITC Trade Secrets Claims: Why Are They Not Used More by Companies in the USA?

The United States International Trade Commission (ITC) is a popular forum for litigating patent infringement claims, albeit significantly under-utilised for trade secrets claims historically. According to its publicly available statistics, the ITC was involved in a record 127 active patent infringement investigations in 2022.

However, while the ITC has recently seen a modest increase in trade secret investigations (to nine active investigations in 2021 and six in 2022, along with several cases alleging both patent and trade secret violations), the number of trade secret cases remains well below 10% compared to patent cases. This is in contrast with the federal district court, where 1,156 federal trade secret cases and 3,821 patent infringement cases were filed in 2022 (according to Lex Machina’s 2023 Patent and Trade Secret Litigation Reports). Trade secret cases, therefore, make up more than three times the percentage of cases in district court than at the ITC.

It is worth looking at why there are not more companies using the powerful remedies and other advantages of the ITC to litigate trade secret misappropriation claims, particularly those involving foreign companies and products.

Often, the ITC’s procedural requirements may lead companies to look elsewhere. Section 337 (19 USC Section 1337(a)) requires trade secret complainants to show that:

Thus, not only does a trade secret complainant need to show that there is a competing US industry, they also need to demonstrate that this industry has suffered either actual or threatened injury.

This hurdle can be difficult. In Certain Bone Cements, Components Thereof and Products Containing Same, 337-TA-1153, Comm’n Op (25 January 2021), Heraeus brought a trade secret complaint against its competitor Zimmer Biomet. Before both the Administrative Law Judge (ALJ) and the ITC, Heraeus was found to have successfully proved that it had protectable trade secrets, that Zimmer Biomet misappropriated those trade secrets, and that Zimmer Biomet used those trade secrets in the production of its competing, imported products. Nevertheless, the ALJ found that the respondents’ unlawful importation did not actually cause any injury to Heraeus’ domestic activities and therefore declined to issue a remedy. The ITC similarly found Heraeus was not entitled to relief, reversing the ALJ’s findings that Heraeus had established a domestic industry at all – given that its products were manufactured overseas and its only activities in the USA were found insufficient.

Despite some unique hurdles for complainants, the ITC is still an extremely powerful forum for litigating trade secret claims. One particular area that is often overlooked by companies is the extent of discovery available to complainants. The ITC typically permits:

Aside from pure numbers, the ITC also enforces discovery strictly, which can lead to significant victories for complainants. In Certain Opaque Polymers, Inv 337-TA-883, Comm’n Op (30 April 2015), which was a trade secret misappropriation case filed by Dow, the ITC found that the respondent had committed spoliation by destroying relevant evidence and violating orders compelling discovery. As a result, the ITC affirmed a finding of default judgment and issued a consent order and a cease-and-desist order.

Similarly, discovery of spoliation resulted in a complainant victory in recent litigation between LG and SK Innovation over batteries for electric vehicles (see Certain Lithium Ion Batteries, Battery Cells, Battery Modules, Battery Packs, Components Thereof, and Processes Therefor, Inv 337-TA-1159, Comm’n Op (4 March 2021)). There, the ITC issued a finding of default judgment against SK Innovation as a sanction for spoliation of evidence, followed by an exclusion order in favour of LG as a remedy, which would have barred SK from importing batteries and components for a ten-year period. Just before the exclusion order went into effect, the parties settled for what was publicly reported to be USD1.8 billion.

As these examples show, the ability to discover spoliation and other discovery abuses is particularly important in trade secret misappropriation cases – where theft and injury are elements of the claim (unlike in patent cases) – and can even be dispositive.

In addition to these discovery benefits, the ITC also offers other, well-documented advantages for trade secret complainants.

One well-documented advantage of the ITC is its fast path to resolution. Most investigations proceed to an evidentiary hearing in around one year or less, which can be much faster than a similar schedule in district court.

The ITC also offers the ability to bring misappropriation claims for actions occurring entirely outside of the USA. In TianRui Grp Co v Int’l Trade Comm’n, 661 F.3d 1322, 1329-1332 (Fed Cir 2011), the Federal Circuit made clear that the ITC’s authority to prevent unfair competition reached misappropriation that took place entirely abroad.

The ITC offers a powerful remedy that can be difficult to obtain in district court – namely, an exclusion order. That is, if a company can successfully meet the ITC’s statutory requirements and obtain a finding of violation, the default remedy issued by the ITC is an order barring importation of products into the USA.

The ITC remains an under-utilised forum for litigating trade secret claims, owing to its procedural hurdles. Nonetheless, its unique and powerful discovery process and other advantages should put the ITC on the radar for companies seeking fast and effective relief against trade secret misappropriation.