Seventh Circuit Affirms Global Reach of US Trade Secret Law
A landmark appellate decision establishes that the Defend Trade Secrets Act can apply to foreign conduct and allows for damages based on worldwide sales, dramatically raising the stakes in cross-border disputes.
In a question of first impression for any federal appellate court, the Seventh Circuit held in Motorola Solutions v. Hytera Communications that the Defend Trade Secrets Act (DTSA) applies to conduct occurring outside the United States. The Supreme Court denied certiorari, making this the leading authority on the issue.
The ruling significantly expands potential liability in cross-border trade secret disputes. A plaintiff can now potentially recover damages based on a defendant's worldwide sales, not just those made in the US. The court held that the DTSA’s extraterritorial reach is triggered so long as at least one "act in furtherance of the offense" was committed in the US. The court interpreted this domestic-act requirement broadly, finding that Hytera’s advertising and promotion of products incorporating the misappropriated trade secrets at US trade shows was sufficient. District courts have already begun applying this reasoning.
Counsel for multinational companies must now consider that even primarily foreign-based misappropriation can lead to massive US judgments. The key development to watch is whether other circuit courts adopt the Seventh Circuit’s reasoning or create a split that could prompt future Supreme Court review.