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International Litigation and the New Federal Trade Secrets Act
by Peter S. Selvin1
The recently passed federal statute, the Defend Trade Secrets Act (“DTSA”),
changes the landscape for the civil enforcement of trade secret protection in the U.S. But
the statute not only provides a uniform federal standard for the determination of disputes
between domestic parties. It also has implications for companies based overseas, even
those without U.S. operations.
Prior to the enactment of DTSA, the civil enforcement of trade secret protection
was governed exclusively by state statutes. Although most states had adopted their own
version of the Uniform Trade Secrets Act, there are substantive differences between and
among the states concerning the applicable law and available remedies in this area.
Although DTSA does not purport to preempt these state statutes, Congress’
intention underlying the enactment of DTSA evidently was to establish a national regime
for the civil enforcement of trade secret protection. In this regard DTSA provides for
original federal court jurisdiction, and hence provides a federal court forum, for the
determination of trade secret claims. As the federal courts are generally considered to be
better suited than state courts for the handling of international litigation, it is expected that
DTSA will be a key tool in trade secrets litigation involving non U.S. parties.
In this regard, DTSA comes into play if the trade secret is used in, or intended for
use in, "interstate or foreign commerce”2
.; emphasis added. Accordingly, the statute on its
1
Peter S. Selvin is a member of Los Angeles based TroyGould PC.

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face applies to trade theft issues arising out of commerce between U.S. based companies
and individuals on the one hand and their foreign based counterparts on the other.
The emphasis on conduct outside the U.S. is reflected throughout the statute. For
example, Section 4 of the statute entitled “Report on Theft of Trade Secrets Occurring
Abroad,” charges the Attorney General with periodic reporting to Congress about “the
scope and breadth of the theft of trade secrets of United States companies occurring
outside of the United States” (emphasis added). Section 5 of the statute recites Congress’
conviction that “trade secret theft occurs in the United States and around the world” and
that “wherever it occurs, [such conduct] harms the companies that own the trade secrets
and the employees of the companies” (emphasis added).
It is expected that the cases interpreting DTSA will determine whether its
provisions will be given extraterritorial effect. This question is especially important in
circumstances where a violation is held to have had a “substantial effect” on U.S.
commerce. Thus, although there is a presumption against the extraterritorial application of
federal law3
, cybercriminals and hackers operating outside the U.S. routinely infiltrate
domestically based computer systems. For this reason, the physical location of an “act” of
trade secret misappropriation is no longer necessarily determinative as to whether U.S.
trade secret law should be given exterritorial effect4
. .
There is also an extraterritorial dimension to the enforcement of trade secret rights.
This is because misappropriated trade secrets may reside inside the brains of a U.S.
2
18 U.S.C. § 1836(b)(1)
3
Morrison v. Nat’l Austl. Bank, Ltd., 561 U.S. 247 (2010)
4
See Calvin Klein Industries, Inc. v. BFK Hong Kong Ltd., 714 F. Supp. 78, 80 (S.D.N.Y. 1989); McBee v.
Delica Co., Ltd., 417 F.3d 107, 119 (1st Cir. 2005) (“[o]ne can easily imagine a variety of harm to
American commerce arising from wholly foreign activities by foreign defendants”)

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company’s former employees or business partners, and those individuals may themselves
reside in, or relocate to, jurisdictions outside the U.S. For this reason federal courts have
previously upheld the issuance of injunctions in the trade secret cases having a geographic
scope extending beyond the U.S5
. .
Even apart from these pre DTSA decisions, however, the statute itself provides
support for a U.S. litigant to argue in appropriate circumstances that DTSA subjects
companies operating outside the U.S. to civil liability under the statute.
• First, DTSA amends certain provisions of the Economic Espionage Act
(“the EEA”), a federal criminal statute6
. Section 7 of the EEA, provides that the statute
applies to conduct occurring outside the U.S. if, among other circumstances, “an act in
furtherance of the offense was committed in the United States”7
.. This section was not
modified or amended by the enactment of the DTSA.
• Second, DTSA amends the definition of “racketeering activity” in 18
U.S.C. § 1961 to include violations of the EEA specifically §§ 1831 and 1832 relating
to economic espionage and the theft of trade secrets. This means that trade secret theft that
amounts to a criminal violation under the EEA now qualifies as a “predicate offense” for
5
See, e.g., Nordson v. Plasschaert, 674 F. 2d 1371 (11th Cir. 1982) (court upholds injunction barring
plaintiff's former foreign employee from disclosing confidential information the geographical scope of
the injunction included the US but also extended to prohibit acts taking place in Canada or Western
Europe); Lamb$Weston, Inc. v. McCain Foods, Ltd., 941 F. 2d 970 (9th Cir. 1991) (court upholds
injunction barring defendant from producing or selling the products at issue anywhere in the world); E.I.
DuPont de Nemours and Co. v. Kolon Indus., 894 F. Supp. 2d 691 (E.D. Va. 2012) (worldwide
injunction barring South Korean company from manufacturing body armor fiber where the defendant’s
know how arose from its misappropriation of DuPont’s trade secrets)
6
18 U.S.C. § 1831 et seq
7
18 U.S.C. § 1837(2)

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purposes of the federal RICO statute. As a result, trade secret theft can now serve as the
basis of a civil RICO claim under 18 U.S.C. § 1964(c)8
.
• In the latter regard, the U.S. Supreme Court just issued on June 20, 2016, its
decision in RJR Nabisco, Inc. v. European Community, 2016 U.S. LEXIS 3925 (2016)
concerning whether a civil RICO claim may be based on injuries sustained outside the U.S.
Although the court in RJR held that a private RICO plaintiff must allege and prove
domestic injury, the Court reaffirmed the principle that the presumption against
extraterritoriality may be rebutted by “a clear, affirmative indication that [a statute] applies
extraterritoriality”.
• In view of the express extraterritorial application of the EEA as authorized
under 18 U.S.C. § 1837(2), the decision in RJR leaves open the likelihood that in cases
involving domestic injury DTSA may be applied against foreign parties, especially if a
U.S. based plaintiff is involved and a violation of the EEA, its criminal law counterpart, is
invoked as a predicate offense for a civil RICO claim.
8
See Sedima, S.P.R.L. v. Imrex Co. 473 U.S. 479, 500 (1985) (federal criminal offenses satisfy the “predicate
offense” requirement under civil RICO)