CIPIL Evening Webinar: ‘Cross Border Misappropriation of Trade Secret’

Speaker: Professor Nari Lee, Hanken School of Economics, Commercial Law, Helsinki

Biography: Nari is professor of intellectual property at Hanken School of Economics, Finland, where she has worked since 2012. She studied law at Ewha Womans University in Seoul, Korea, and at Kyushu University, Japan, where she received master of laws (LL.M) and doctor of laws (LL.D) degrees. She also holds a postgraduate degree (Licentiate) in Business Administration and Economics from University of Vaasa, Finland and a Ph.D from University of Eastern Finland, Finland.

Abstract: Internationally, the standard for trade secret misuse is not uniform although Article 39(2) of the TRIPs agreement provides some minimum standards which is not uniformly implemented. As such, cross border trading of goods embodying trade secrets could raise issues of extra-territorial application of trade secrets law, using different standard of unlawfulness.  Of particular concern is the liability imposed on the third party traders of infringing goods. The EU Trade Secrets Directive extends the liability for trade secret misuse to the traders of infringing goods in Article 4(5). On the surface, the Directive seems to be harmonizing the regulation of importation of trade secret infringing good, including those that are traded within EU and those that are originating from outside of EU. Yet, the Directive does not contain separate choice of law rules, thus defer it to Rome II Regulation. Moreover, as the Trade Secrets Directive provides only a minimum standard of unlawfulness in civil wrongs, whilst leaving the member states to define unlawfulness of conduct. 

As Article 4(5) of the Directive may be implemented as an independent cause of action against third party actors’ trade secret misuse, framing trade secret misappropriation squarely as unfair competition allows the court to apply the laws of the country of importation, separating the question of unlawfulness of conduct of the primary actor from that of the third party, without having to rule on the question of unlawfulness of the primary actor’s conduct. 

To illustrate this point, this article comparatively examines the problem using fact patterns from three cases, Senior v Celgard* in UK and ITC’s on going investigation Medytox/Allergan** and Sino Legend*** in USA. As the knowledge of unlawfulness of importer is required for the liability under Article 4(5), finding of misuse under Article 4(5) would require the finding of unlawfulness and this opens a possibility to apply the laws of country of import to the conduct of unfair competition in the law of country of export, indeed extra territorially. While it may be viewed less controversial within EU where CJEU may later give uniform meaning to the autonomous concepts, it raises question of international comity for the goods originating from non-EU countries.

* Shenzhen Senior Technology Material Co Ltd v Celgard, LLC (Rev 1) [2020] EWCA Civ 1293 (09 October 2020) (Senior). Appealed from Celgard, LLC v Shenzhen Senior Technology Material Co Ltd [2020] EWHC 2072 (Ch) (30 July 2020) (Celgard); ** Certain Botulinum Toxin Products, Processes for Manufacturing or Relating to Same and Certain Products Containing Same, United States International Trade Commission Investigation No. 337-TA-1145. Preliminary Ruling. (2020.6) Final Ruling pending; *** Sino Legend (Zhangjiagang) Chem. Co. v. Int'l Trade Comm'n (Jan. 9, 2017) Cert. denied sub nom. 623 F. App'x 1016 (Fed Cir 2015)

Zoom Registration Link: https://us02web.zoom.us/webinar/register/WN_2yrY25elSOupKAvB7fQCJg