The Federal Circuit handed down a far-reaching decision on October 11, 2011 affirming that Section 337 of the Tariff Act of 1930 gives the ITC authority to block the  importation of products based on trade secret misappropriation occurring outside  the United States.

The decision expands the reach of Section 337 beyond the territory of the United States in the context of trade secret misappropriation.  Section 337 prohibits unfair methods of competition and unfair acts in the importation of articles into the United States, when the threat or effect of which is to destroy or substantially injure an industry in the United States. While the majority of  Section 337 proceedings involve patent infringement, the statute covers all manner of unfair competition.  The decision affirms the ITC position that Section 337 authorizes the application of United States trade secret laws to conduct that occurs in part in a foreign county.

Generally, U.S. law applies only within the territorial jurisdiction of the United States. The decision holds that the presumption against extraterritoriality does  not govern in this circumstance because: (1) the focus of Section 337 is on importation - an inherently international transaction; (2) the trade secret misappropriation  at issue is not purely extraterritorial because it results in the importation of goods into the United States causing domestic injury; and (3) the legislative history of Section 337 supports its application to conduct abroad. The decision adds that the result is not the enforcement of United States trade secret law abroad, but  only sets the conditions under which products may be imported into the United States.  It is unclear at this moment whether the respondent in the case will appeal to the Supreme Court. Thus, the scope of the expansion of Section 337 may not be final. 

Nevertheless, this decision should serve to remind firms that the ITC is a powerful intellectual property enforcement/protection venue.