Extra-Territorial Application of the Defend Trade Secrets Act

by Dennis Crouch

When U.S. courts interpret U.S. statutes, they tend to read an inherent territorial limitation into the law.   “It is a long-standing principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States,” Morrison v. National Australia, 130 S.Ct. 2869 (2010) (internal quotation omitted). However, when Congress clearly requires a longer reach, the courts oblige.

The Economic Espionage Act (EEA) includes a provision regarding its “applicability to conduct outside the United States.” 18 U.S.C. § 1837.  Section 1837 was left unchanged with DTSA’s amendments to EEA, but seemingly applies to the new private civil cause of action for trade secret misappropriation. The provision offers important insight on how the new cause of action can be applied in the foreign context.  Most importantly, a (1) U.S. corporation or citizen can be held liable for trade secret misappropriation under the DTSA regardless of whether the misappropriation occurred abroad; and (2) an entity can be held liable under the DTSA for foreign misappropriation if “an act in furtherance of the offense was committed in the United States.”

The provision:

This chapter also applies to conduct occurring outside the United States if—

(1) the offender is 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; or

(2) an act in furtherance of the offense was committed in the United States.

18 U.S.C. § 1837 (DTSA Amendments) (The EEA/DTSA is collectively codified in Chapter 90 of Title 18).   It will be interesting to watch this play-out, but I expect that we will see a number of extra-territorial and cross-border cases over the next few years.

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Notes:

  1. To be clear, a court would still need personal jurisdiction over the defendant. See International Shoe.  
  2. A possible but unlikely limitation on the extraterritorial application could occur if the courts read a territorial limitation into the definition of trade secret such that information is only protectable under the DTSA if created and/or stored in the U.S.

 

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

2 thoughts on “Extra-Territorial Application of the Defend Trade Secrets Act

  1. How would your note to be passable? That seems to imply that such a definition would negate the direct words of the statute – violating statutory construction norms rather vio1ently.

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