Academic journal article American University Law Review

Tianrui Group Co. V. International Trade Commission: The Dubious Status of Extraterritoriality and the Domestic Industry Requirement of Section 337

Academic journal article American University Law Review

Tianrui Group Co. V. International Trade Commission: The Dubious Status of Extraterritoriality and the Domestic Industry Requirement of Section 337

Article excerpt

INTRODUCTION

In 2007, one journalist, Dirk Lammers, undertook a seemingly innocuous task: to avoid anything "Made in China" for just one week.1 He was not the first to undertake such a challenge in consumerism. Others before him declared a boycott on Chinese products for an entire year,2 acting either out of concern for safety regarding allegations of Chinese food contamination and faulty assembly-line production of tires and toys,3 or simply reacting to the realization that everything they owned-or close to it-was Chinese.4 Lammers wanted to see if a boycott on Chinese goods was even feasible-whether an American consumer who wanted to buy strictly American products could succeed.5 In a word, the answer was no. Lammers, like those before him, failed.6 Sneakers, tennis rackets, toothpaste, and obscure ingredients in most food staples are all "Made in China."7 This ubiquitous phrase is here to stay and will continue to represent a formidable competitor in the American market because it signals products that are cheaper and virtually indistinguishable from their American or European prototypes.

The results of Lammers' experiment reflect the larger economic reality that the United States has increased its imports from China more than two hundred percent since 2001.8 Federal courts have responded to this changing dynamic in the area of trade secrets with jurisprudence that carries serious implications regarding extraterritorial jurisdiction and international trade law. Facts in cases involving trade secret misappropriation are generally similar: inventor-company develops a new process for the production of widgets, and then competitor-company hires away inventorcompany's employees and steals the process.9 The question in these cases usually turns on whether all the elements of a trade secret cause of action are met, and jurisdictional issues are rarely determinative.10 The facts are more complicated, however, when the competitorcompany is a foreign corporation, and the misappropriation occurs entirely abroad. In a recent case, the United States Court of Appeals for the Federal Circuit grappled with this very issue. In TianRui Group Co. v. International Trade Commission,11 the Federal Circuit affirmed the International Trade Commission's authority under section 337 of the TariffAct of 193012 to investigate conduct that allegedly amounted to unlawful misappropriation of trade secrets that occurred entirely in China.13 This decision complicates Supreme Court precedent on the issue of extraterritorial jurisdiction and stretches a key element of a section 337 case beyond reasonable limits.

This Note asserts that the Federal Circuit inappropriately expanded its jurisdiction in TianRui for two main reasons. First, an established presumption that U.S. laws do not apply extraterritorially should have prevented jurisdiction because the conduct in this case occurred entirely outside of the United States.14 Second, section 337 requires that the unfair act threaten to destroy or substantially injure an industry in the United States.15 The actions in TianRui cannot satisfy this requirement because there can be no domestic industry where a United States inventor no longer employs the misappropriated process in its production of widgets.

Part I of this Note will provide background about the elements of a trade secret claim and a section 337 cause of action. Part I will then introduce TianRui and provide a description of the facts of the case, its procedural posture, and the major holdings of the Federal Circuit. Part II of this Note will critique the Federal Circuit's reasoning and argue that TianRui was incorrectly decided because it contradicted Supreme Court precedent regarding extraterritoriality and compromised the domestic industry requirement of a section 337 claim under the TariffAct of 1930.

I. BACKGROUND

A. Elements of a Trade Secret and of a Section 337 Case

In general, there are two approaches to determining whether a plaintiffpossesses a trade secret. …

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