Misappropropriation on a Global Scale: Extraterritoriality and Applicable Law in Transborder Trade Secrecy Cases

Abstract

In recent years, trade secrecy has come to the fore as changes such as value chain production methods, employee mobility, and cloud storage have increased the opportunity to take and use valuable information without authorization. The United States recently created a federal private right of action for trade secret misappropriation and a Directive of the European Union imposes on member states a requirement that they too enact trade secrecy protection. Other countries are similarly revising their trade secrecy laws. While these laws share a framework based on the TRIPS Agreement, they differ in significant respects, raising the question which law ought to apply to transnational cases. This paper, authored jointly by an intellectual property professor and a conflicts scholar, is among the first to consider the issue. We do so in the context of exclusion orders in the International Court of Trade (ITC) under the Tariff Act, actions under the new federal statute, and state trade secrecy claims. We suggest that because the ITC provides a remedy that affects only US markets, the United States can always apply its own law to US trade secrets—trade secrets developed in the United States. In other contexts, we believe courts should have the ability to apply US or foreign law based on the principle that the law of the place of development of the trade secret governs if it is foreseeable by the defendant. If not, the applicable law is likely to be the place where the defendant acted.

Keywords: intellectual property, trade secrets, conflicts of law, applicable law, extraterritoriality, ITC, DTSA

JEL Classification: K4, K33, K39