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In a press release last week, the U.S. Justice Department announced charges against a group of international conspirators for allegedly stealing trade secrets from an unidentified Houston company. Those charged include four U.S. citizens, two Chinese nationals, and a Canadian national. The beneficiary of the alleged theft appears to be a China-based company with funding from the Chinese government.

The trade secrets at issue concern a product known as “syntactic foam” – a material used in underwater military equipment (e.g. submarines) and other under water vehicles.  Sources report that the syntactic foam is rare, with only a handful of companies worldwide manufacturing the material.  Those same sources report high barriers to market entry: new market entrants need significant resources to develop the intellectual capital and technology to produce the foam. Here, the plot’s conspirators figured it easier to just steal the trade secrets.
Continue Reading U.S. Justice Department Announces Charges Against International Conspirators For Stealing Trade Secrets to Benefit China-based Company

About 5 years ago, the Federal Circuit held that the U.S. International Trade Commission (ITC) had the power to adjudicate trade-secret theft occurring wholly overseas. The case was TianRui Group Co. Ltd. v. ITC, 661 F.3d 1322 (Fed. Cir. 2011), and we blogged about it here. That decision is now under attack. Last week a Chinese company known as Sino Legend petitioned the U.S. Supreme Court for a writ of certiorari to review TianRui Group’s principle holding—namely, that Section 337 of the Tariff Act gives the ITC jurisdiction over trade-secret misappropriation, even if the predicate acts of misappropriation occur entirely outside the United States.

The background to this significant development sounds similar to many trade-secret stories. A New York company known as SI Group developed a process for producing a type of rubber component, a “tackifier,” commonly used in tires. To serve its overseas customers, the New York company set up a manufacturing operation in China; it created a Chinese subsidiary and hired Chinese nationals to manage the company. Eventually, two of the Chinese nationals left the subsidiary and began working for a competitor in China—Sino Legend. SI Group alleges that the Chinese nationals worked with Sino Legend to misappropriate SI Group’s trade secrets in the tackifier.
Continue Reading Chinese Company Challenges ITC’S Authority Over Trade-Secret Theft Occurring Outside the United States

A California appeals court recently reversed a trial verdict that had found trade secrets in an auction house’s customer information. The case is notable because it demonstrates when customer information falls short of warranting trade-secret protection.

Background

The case McCormack Auction Company, Inc. v. Hanks involved a now-defunct auction house known as the McCormack Auction Company. Operating in southern California, McCormack handled large-scale auctions, both online and in person. It had acquired several repeat customers during its 30-plus years of operation, including bankruptcy trustees, community colleges, and public utilities. McCormack maintained its customer information in electronic databases on its computers. As an advertising tactic, McCormack identified on its website some satisfied customers that it had served in the past, but it did not display the customers’ contact information.
Continue Reading When Customer Information Isn’t a Trade Secret – McCormack Auction Company, Inc. v. Hanks