Court Ruling Extends Reach of the DTSA

In a landmark decision, a federal appellate court held for the first time that a defendant who misappropriated trade secrets can be held liable under the federal Defend Trade Secrets Act (“DTSA”) for misappropriation that occurs outside of the United States so long as the defendant “committed an act in furtherance of misappropriation” in the United States.¹ Motorola Sols., Inc. v. Hytera Commc’ns Corp. Ltd., 108 F.4th 458, 484 (7th Cir. 2024), reh’g and reh’g en banc denied, Nos. 22-2370 & 22-2413, 2024 WL 4416886 (7th Cir. Oct. 4, 2024).

As a result of this decision, owners of trade secrets should consider whether they are able to bring DTSA claims even if nearly all of the alleged misappropriation occurred outside of the United States. Motorola is a significant decision in the global context of trade secrets, where cross-border litigation is increasingly common.

What Happened in Motorola?

Motorola and Hytera were direct competitors in the market for two-way digital mobile radios. In 2007, after struggling to produce a superior radio, Hytera poached three engineers from Motorola. Before their departure, the engineers downloaded thousands of Motorola documents— which contained trade secrets and source code—which they took to Hytera at Hytera’s direction. Hytera then used this stolen material to produce radios that were “functionally indistinguishable” from Motorola’s radios, which were then marketed and sold worldwide.

After the passage of the DTSA in 2016, Motorola sued Hytera, alleging that Hytera violated the DTSA, among other things, and sought to recover Hytera’s profits stemming from the misappropriation of Motorola’s trade secrets. The district court held that DTSA applied extraterritorially and awarded Motorola $135.8 million in compensatory damages and $271.6 million in punitive damages on the DTSA claim. The district court’s damages award included damages for sales outside the United States. The district court also found that the Hytera’s use of the “alleged trade secrets occurred in the United States because Hytera had advertised, promoted, and marketed products embodying the stolen trade secrets at numerous trade shows in the United States.”

Seventh Circuit’s Ruling

In a case of first impression, the Seventh Circuit affirmed in part, reversed in part, and remanded the case. In relevant part, the court of appeals affirmed the district court’s determination that the DTSA applies to conduct outside of the United States after applying conventional tools of statutory interpretation. The court of appeals also determined that 18 U.S.C. § 1837(2) imposes the only limit on DTSA’s extraterritorial reach: “[A]n act in furtherance of the offense [must have been] committed in the United States.” Thus, after finding that Hytera’s marketing of its products at trade shows in the United States constituted domestic acts of misappropriation, the Seventh Circuit concluded that the district court properly awarded Motorola damages based on “Hytera’s worldwide sales of products furthered by that misappropriation, regardless of where in the world the remainder of Hytera’s illegal conduct occurred.”

Implications for Trade Secret Owners

The Seventh Circuit’s extraterritorial application of the DTSA provides owners with a powerful tool for enforcement even when the core acts of misappropriation take place abroad. As long as a defendant takes some action in the United States in furtherance of the misappropriation—such as marketing, selling, or promoting products that were produced from stolen trade secrets—DTSA claims may be brought in U.S. courts.

This decision underscores the growing importance of safeguarding trade secrets in an increasingly interconnected global economy, where cross-border trade secret litigation is becoming more common. Moreover, a plaintiff may also be able recover damages based on a defendant’s foreign sales as long as the U.S. acts are “in furtherance” of the misappropriation.

Conclusion

The Seventh Circuit’s ruling in Motorola could have significant effects, especially for multinational companies, as it offers a practical option for addressing trade secret misappropriation that occurs in the global marketplace.

We Can Help

If you have questions about how to protect your business interests, confidential information, and trade secrets in the midst of fierce global competition, please contact Maslon’s competitive practices and intellectual property attorneys.

¹ As noted in Motorola, the First Circuit previously acknowledged in dicta that “Congress was concerned with the theft of American trade secrets abroad and intended to have extraterritorial reach.” Motorola, 108 F.4th at 480 n.7 (quoting Amyndas Pharms., S.A. v. Zealand Pharma A/S, 48 F.4th 18, 35 (1st Cir. 2022)).