MIAMI BUSINESS LITIGATION: TRADE SECRET LAWS APPLY OUTSIDE THE US

Most trade secret disputes arise intrastate or interstate. However, trade secret lawsuits are not limited actions occurring within a particular state or the United States. A trade secret plaintiff can assert a misappropriation claim for acts occurring outside the United Stated under certain conditions pursuant to the federal trade secret act known as the Defend Trade Secrets Act, or DTSA for short. In fact, DTSA creates a private cause of action for trade secret misappropriation when the “trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C. § 1836. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

DTSA contains an express provision extending its applicability to trade secret misappropriation conduct occurring outside the United States. This conduct is often referred to as extraterritorial conduct. However, not all extraterritorial trade secret misappropriation conduct is actionable because Congress limited DTSA’s extraterritorial applicability to two scenarios. In the first scenario, the trade secret offender must be a “natural person who is a citizen or permanent resident alien of the United States, or an organization organized under the laws of the United States or a State or political subdivision thereof”. 18 U.S.C. § 1837. In the second scenario, “an act in furtherance of the offense [had to be] committed in the United States.”

The enforceability of DTSA’s extraterritorial provision was tested about a year ago in a case of first impression in Motorola Sols., Inc. v. Hytera Communications Corp. Ltd. 108 F.4th 458 (7th Cir. 2024). The defendant tried to avoid liability for an act of extraterritorial trade secret misappropriation by arguing DTSA’s extraterritorial provision did not apply to private causes of action. Specifically, the defendant argued the extraterritorial provision was not contained within the section of DTSA providing litigants with a private cause of action for trade secret misappropriation and not contained within the statute’s definition of “misappropriation”. The court rejected the defendant’s arguments and its reasoning is explained below.   

The court began its analysis by determining that the law imposes a presumption against extraterritorial applicability. However, the court also determined the presumption can be rebutted if “the statute gives a clear, affirmative indication that it applies extraterritorially.” The question is not whether the court thinks Congress would have wanted the statute to apply to foreign conduct, but whether Congress affirmatively and unmistakably instructed that the statute will apply extraterritorially. After reviewing DTSA in totality, the court concluded DTSA’s extraterritorial provision applied to all trade secret misappropriation actions, including private causes of action because the extraterritorial provision references “this chapter.” The court construed reference to “this chapter” to mean that the extraterritorial provision applied to the entire DTSA chapter and not just parts of it.

Next, the court had to determine whether the limits Congress placed on DTSA’s extraterritorial provision precluded its applicability to the lawsuit’s facts and circumstances. The court concluded extraterritorial applicability was appropriate because the defendant “advertised, promoted, and marketed products embodying the stolen trade secrets at numerous trade shows in the United States.” As a result, the defendant satisfied the statutory criteria requiring that an act in furtherance of the trade secret misappropriation be committed in the United States.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.