Protection of Trade Secrets: The long Arm of the USA

As trade secrets are becoming more and more important for many companies, the question of how companies can enforce their rights against a foreign company is gaining in importance.

The laws and regulations for the protection of trade secrets vary widely in different countries. There is no common standard for common law countries or civil law countries, for example. In some countries, such as Mexico, theft of trade secrets is a criminal offence and civil action cannot be brought there. In China, however, civil and administrative actions are possible in addition to criminal proceedings. For courts confronted with the cross-border theft of trade secrets, this leads to complex questions of extraterritorial scope, personal jurisdiction and enforceability of the judgment.

In the United States, extraterritorial jurisdiction under the Defend Trade Secret Act (DTSA) can be applied in cases of trade secret theft not only if the suspected company is a U.S. company, but also if “the offence was promoted in the United States” under Section 1837 of the Economic Espionage Act (EEA). This means that if the trade secret was obtained, disclosed or used without authorization in the United States, a U.S. company can be awarded damages and punitive damages, regardless of the defendant’s country of origin. For example, the exhibition and promotion of a Chinese product based on stolen trade secrets at trade fairs in the USA is already considered use.

With judgements based on the EEA and DTSA, the USA is sending a clear signal against industrial espionage from China. However, the enforceability of claims for damages arising from such judgements remains questionable, as there is as yet no clear agreement between the US and China that would allow for the recognition of judgements in trade secret theft cases by US courts in China.




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