In a case of first impression, Manitowoc Cranes v. Sany America, the U.S. District Court for the Eastern District of Wisconsin held that an International Trade Commission determination regarding trade secret misappropriation has preclusive effect in subsequent litigation.
On June 12, 2013, Manitowoc Cranes sued Sany America and Sany Heavy Industry for patent infringement and misappropriation of trade secrets in violation of Wisconsin law. On the same day, Manitowoc filed a complaint with the ITC alleging that Sany committed unfair trade practices by misappropriating Manitowoc's trade secrets in violation of § 337 of the Tariff Act (codified at 19 U.S.C. § 1337). The court stayed the case pending resolution of the ITC proceedings. Manitowoc then filed a second complaint asserting a claim for tortious interference with contract. The court consolidated the cases and continued the stay.
On April 16, 2015, the ITC issued a Notice of Final Determination, finding that Sany violated § 337 by misappropriating Manitowoc's trade secrets and infringing one of Manitowoc's patents. On October 11, 2016, the U.S. Court of Appeals for the Federal Circuit affirmed the ITC's decision, and the district court lifted the stay. Manitowoc then moved for partial summary judgment as to Sany's liability for misappropriation of trade secrets, arguing that the ITC's trade secret misappropriation determinations are entitled to preclusive effect.
The district court's opinion first surveyed how federal courts analyze the preclusive effect of ITC determinations in other contexts. The court concluded that federal courts have found that ITC determinations are given preclusive effect in other areas of unfair trade practices, including trademark infringement, as well as antitrust claims. In addition, the court flatly rejected Sany's argument that Texas Instruments v. Cypress Semiconductor created a general rule against preclusion with respect to all ITC determinations. In Texas Instruments, the Federal Circuit examined the legislative history of § 337 and determined that Congress intended a preclusive effect for cases involving patent determinations. Because the Manitowic case did not involve a patent determination, the court found that ITC determinations on trade secret misappropriation are entitled to preclusive effect in later proceedings.
After finding that ITC determinations regarding trade secret misappropriation are preclusive, the court turned to whether Sany was collaterally estopped from disputing that it misappropriated Manitowoc's trade secrets. Sany argued that there was no preclusive effect because the ITC determined that it was liable for misappropriation under federal law, not Wisconsin law. The court disagreed and concluded that a Wisconsin court would not apply a different standard under the Wisconsin Uniform Trade Secrets Act than the standard applied by the ITC. Specifically, the ITC relied on both the Uniform Trade Secrets Act and Restatement of Unfair Competition. While the court noted that there are slight variations between the UTSA and the WUTSA, they are minor differences that do not defeat preclusion.
The Manitowoc decision paves the way for litigants to adjudicate trade secret misappropriation claims on an expedited basis before the ITC, potentially saving time and money. While litigants seeking preclusive effect of an ITC determination regarding trade secret misappropriation should be mindful of the differences between federal law applied by the ITC and state law applied in the district court, the enactment of the Defend Trade Secrets Act may provide trade secret plaintiffs with a uniform law to be applied by both the ITC and district courts. Although the Manitowic decision is good news for those seeking fast-track trade secret determinations, it remains to be seen whether other jurisdictions will follow suit.
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