Robert S. Shwarts

Shwarts is chair of Orrick Herrington & Sutcliffe's global trade secrets practice group. Clients include Oracle Corp., Acer Inc. and 10X Genomics Inc.

For mainland China client Advanced Technology & Materials, a maker of amorphous metals for the electronics industry, and other co-defendants in trade secrets misappropriation claims filed by a heavyweight Japanese rival, Shwarts took depositions in Hong Kong and Hawaii, traveled to South Carolina where the claimant had a subsidiary and tried the matter before the International Trade Commission in Washington, D.C.

"I got a lot of air miles out of that one," he said. Certain Amorphous Metal and Products Containing Same, 337-TA-1078 (ITC, filed Sept. 19, 2017). The complainant was Metglas Inc., of Conway, South Carolina, a subsidiary of Hitachi Metals Ltd. of Tokyo.

Shwarts knew that representing AT&M and three other Chinese co-defendants would be a heavy lift. A recent study of trade secret litigation in the U.S. found that plaintiffs prevailed in their claims in 70 percent of cases.

"We were representing China state-owned enterprises, but the case predated the current trade war acrimony, before there was a tariffs issue," Shwarts said. "The Chinese companies were anxious to defend themselves, and we felt we had a strong defense and it was important to be aggressive."

He developed a strategy predicated on delivering value while resolving the claims as quickly as possible. Shwarts and his team focused on highlighting Hitachi's failure to prove that AT&M misappropriated trade secrets and deemphasized its independent development of the technology. He said that defendants in similar trade secrets cases often pursue both defenses, which can be very costly.

Proving independent development would be expensive, complex and highly disruptive to his client's business because it would involve producing documents and information going back more than a decade, including highly sensitive information about AT&M's processes.

By contrast, demonstrating that Hitachi's misappropriation allegations were baseless would be less costly and not burdensome on AT&M.

"We made it plain to Hitachi they had their own issues in establishing that there had been any trade secrets truly at issue. There was no there there," Shwarts said. The depositions were key in showing that Hitachi had never taken any steps in Japan to defend its trade secrets. "They claimed only that they saw a marked improvement in our product and on that basis, they accused us of copying them. Our people told how we made our own advances."

In June 2018 Hitachi moved to withdraw its complaint and to terminate the investigation. It was a first-of-its-kind win for Chinese respondents in the kind of trade secrets case at issue. "We were left with a very happy client," Shwarts said.

-- John Roemer