Inventus Power v. Shenzhen Ace: Trade Secrets

A federal court kept a trade-secret suit against a Chinese competitor in Illinois, finding the defendant had not shown China an available and adequate forum, against the backdrop of the DTSA's reach and a worldwide TRO.

The decision is Inventus Power, Inc. v. Shenzhen Ace Battery Co., No. 1:20-cv-03375, issued by Judge Robert M. Dow, Jr. of the U.S. District Court for the Northern District of Illinois on May 18, 2021. The opinion denied the Chinese defendant’s motion to dismiss on forum non conveniens grounds, keeping in an American courtroom a Defend Trade Secrets Act case whose factual center of gravity lay in China. The ruling is a working illustration of how the DTSA reaches across borders, not through a sweeping pronouncement on extraterritoriality, but through the statute’s “act in furtherance” hook in 18 U.S.C. § 1837, a clear-eyed forum analysis, and a temporary restraining order that operated worldwide and with which the defendant complied.

At a glance

Case: Inventus Power, Inc. v. Shenzhen Ace Battery Co., Ltd., No. 1:20-cv-03375
Court: U.S. District Court for the Northern District of Illinois
Judge: Robert M. Dow, Jr.
Decided: May 18, 2021 (order denying motion to dismiss for forum non conveniens)
Claims: Defend Trade Secrets Act, 18 U.S.C. § 1836(b); Illinois Trade Secrets Act
Plaintiffs: Inventus Power, Inc. and ICC Electronics (Dongguan) Ltd., its Chinese subsidiary
Defendant: Shenzhen Ace Battery Co., Ltd. (“ACE”), a Chinese competitor
Holding: ACE failed to carry its heavy burden of showing that China is an available and adequate alternative forum, and the balance of private and public interest factors favored retaining the case in Illinois; the court had earlier issued a worldwide TRO with which ACE confirmed compliance
Significance: A practical model for keeping cross-border DTSA litigation in U.S. courts and for using the statute’s extraterritorial reach against a foreign defendant

The statutory hook: Section 1837

The DTSA’s federal civil cause of action does not stop at the water’s edge. Section 1837 of Title 18 supplies the reach: the chapter “also applies to conduct occurring outside the United States” if either the offender is a U.S. citizen or permanent resident alien, or an organization organized under U.S. law, or “an act in furtherance of the offense was committed in the United States.” 18 U.S.C. § 1837. That second clause is the workhorse in cross-border misappropriation cases. It means that even where a foreign competitor does most of its damage abroad, a single qualifying domestic act can pull the entire scheme within the statute’s grasp.

Inventus, a U.S.-based maker of advanced battery systems, alleged that ACE engineered a recruitment campaign to lure away high-ranking Inventus employees who held deep access to the company’s proprietary battery technology, and that those departing employees downloaded more than 100,000 confidential technical documents on their way out the door. As the court described the record, the evidence was that “ACE employees, while working for Plaintiff and for the purpose of aiding Defendant, downloaded en masse volumes of documents that originated at Inventus’s facilities in this District, and were either placed on a shared network drive accessed by the employees or emailed to them, at their request.” Allegations of that kind, trade secrets developed and held in Illinois and taken from there before the employees decamped to a foreign rival, supply the sort of U.S.-based “act in furtherance” that Section 1837 contemplates. Where that hook is satisfied, misappropriation that continues in China does not place the conduct beyond the DTSA’s reach.

A caveat on what the opinion actually did with the statute: Judge Dow did not adjudicate the Section 1837 hook or decide an extraterritoriality question. His single citation to the section came in the adequacy discussion, for the proposition that “the DTSA, under which Plaintiffs bring suit here, provides for worldwide injunctive relief and remedies.” The hook analysis set out here is the statutory background that makes such a case possible, not a holding the court announced.

The real battle: forum non conveniens

ACE’s principal defense was procedural geography. It moved to dismiss on forum non conveniens grounds, arguing that the dispute (Chinese defendant, Chinese employees, conduct largely in China) belonged in a Chinese court. Forum non conveniens permits a U.S. court to decline jurisdiction in favor of a foreign forum, but only when the alternative forum is both available and adequate. The burden is the moving defendant’s, and the Seventh Circuit calls it “heavy”: the defendant must “submit evidence of an adequate and alternate forum,” such as expert affidavits. Judge Dow held that ACE had not carried it. The framing matters. The court did not declare that China is never an available or adequate forum; it wrote that it “cannot say based on the submissions before it” that China was one here.

On availability, the experts on both sides largely agreed that the parties were amenable to process in China. What defeated ACE was a narrower point: Inventus made “a persuasive showing that China is ‘presently unavailable’” because of the travel restrictions China had imposed to control COVID-19, which would keep U.S.-based witnesses out, and ACE did not rebut it. The court also took note that ACE had reportedly filed its own unfair-competition suit against Inventus in a “local court of Shenzhen City” and that Inventus had received no confirmation the Chinese courts had accepted that case. That, the court said, “gives the Court pause, as it suggests the courts in Defendant’s domicile may not be as available as Defendant claims, or at least for lawsuits concerning a U.S.-based plaintiff injured in the United States.”

On adequacy, the court’s reasoning cut to the heart of why cross-border trade-secret plaintiffs prize U.S. courts. Both experts agreed that Chinese law authorizes “conduct preservation measures” functionally equivalent or similar to U.S. injunctive relief, so the question was not whether the tool exists on paper. Inventus’s expert declared that no public act preservation order had ever been issued by the courts in Guangdong Province, where ACE and ICC are located; ACE’s expert disputed that with a single Guangdong case, an advertising-slogan dispute that ACE neither attached nor analyzed. On that record the court said it was “not particularly convinced as to the availability of injunctive relief to Plaintiffs in China.” More pointedly, ACE’s expert did not convince the court that a Chinese court “would be able to monitor extraterritorial activity or require compliance with its orders outside of China.” That doubt stood in sharp contrast to what the U.S. court had already accomplished: it had entered a TRO that enjoined ACE throughout the world, and ACE had confirmed its compliance with that worldwide order. A forum that cannot grant the global relief the case requires is, for that case, inadequate.

Why the worldwide TRO matters

The worldwide TRO is the fulcrum of the court’s adequacy analysis, and it captures the strategic logic of bringing a foreign-facing trade-secret case under the DTSA in a U.S. court. Trade secrets, once taken, can be used anywhere; relief confined to a single country is leaky relief. A U.S. court exercising personal jurisdiction over a foreign defendant can issue an injunction that, in personam, binds that defendant’s conduct everywhere, and can enforce it through the court’s contempt power against a party that has appeared. ACE’s own compliance with the worldwide TRO was, in the court’s view, affirmative evidence that the U.S. forum could deliver effective global relief while the proposed Chinese alternative could not.

It bears emphasis that the May 18, 2021 opinion is a forum decision, not a merits adjudication of misappropriation, and the court did not rest its analysis on an express ruling about the presumption against extraterritoriality. Its significance lies in the interaction of three elements: Section 1837’s domestic “act in furtherance” hook, which makes the DTSA available against a foreign defendant; the forum non conveniens analysis, which keeps the case in the United States; and the worldwide TRO, which makes the U.S. forum genuinely effective against conduct abroad. Together they show how a plaintiff facing offshore misappropriation can litigate at home and obtain relief that travels.

Open questions

The opinion resolves the forum question for this case but rests partly on circumstances that may not generalize. The “presently unavailable” conclusion leaned on pandemic-era travel restrictions, leaving open how the analysis comes out once witnesses can again travel and the only barrier is the ordinary inconvenience of foreign litigation. The adequacy conclusion turned on the thin record ACE assembled about Chinese provincial courts’ injunctive practice; a defendant who submits a fuller expert showing, or developments in Chinese trade-secret enforcement, could shift that calculus. The decision also does not test the outer limits of Section 1837: how slender a domestic “act in furtherance” may be and still anchor the statute, or how courts should treat a scheme in which the only U.S. nexus is incidental. And because the court enforced a worldwide TRO against a defendant that appeared and complied, it did not have to confront the harder enforcement problem of a foreign defendant that simply ignores a U.S. injunction and keeps assets beyond reach.

Implications

One domestic act can open the door. Under Section 1837, a single qualifying “act in furtherance” committed in the United States, such as employees downloading proprietary files before leaving, can bring an otherwise foreign misappropriation scheme within the DTSA.
Forum non conveniens is the foreign defendant’s first move, and the burden is the defendant’s. Expect a Chinese or other foreign defendant to argue the case belongs at home; that motion carries a heavy burden, and ACE lost largely because it supported it with bare citations to Chinese procedural law instead of expert evidence.
Document the inadequacy of the foreign forum. Inventus answered with an expert declaration that no public act preservation order had ever issued from the courts in Guangdong Province, and ACE’s late, single-case rebuttal did not persuade the court; building that record early matters.
Worldwide injunctive relief is the prize. A U.S. court with personal jurisdiction can enjoin a foreign defendant’s conduct globally and enforce it through contempt: relief a foreign court may be unable to match.
Move fast for emergency relief. Securing an early worldwide TRO not only protects the secrets but also becomes evidence that the U.S. forum is the effective one, strengthening the case against dismissal.

Frequently asked questions

How does the DTSA apply to a Chinese defendant at all? Through 18 U.S.C. § 1837, which extends the Act to conduct outside the United States when the offender is a U.S. person or organization, or when an act in furtherance of the offense occurred in the United States. In Inventus, the alleged mass downloading of documents that originated at Inventus’s Illinois facility, by employees who then left for ACE, is the kind of domestic act that supplies the hook. The court did not squarely rule on Section 1837; it cited the section for the DTSA’s worldwide injunctive relief.

Did the court rule that the defendant misappropriated trade secrets? No. The May 18, 2021 decision denied dismissal on forum non conveniens grounds. It kept the case in Illinois. It is a forum ruling, not a final merits determination on misappropriation.

Why was China found to be an inadequate forum? More precisely, ACE failed to show that it was adequate, which is where the burden sat. On the submissions before it the court found China “presently unavailable” because pandemic travel restrictions would keep U.S. witnesses away, and it was “not particularly convinced” that comparable injunctive relief was available to Inventus in China or that a Chinese court could require compliance with its orders outside China. That stood in contrast to the U.S. court’s worldwide TRO, with which the defendant had confirmed compliance.