On this episode of Ropes & Gray's ITC-focused podcast series, Talkin' Trade, IP litigators Matt Rizzolo, Matt Shapiro, and Lara Ameri break down the ITC’s recent decision in Investigation No. 337-TA-1352, a case involving trade secret misappropriation in the pharmaceutical sector. The discussion covers the procedural twists of the 100-day program, the Commission’s findings on domestic industry and threatened injury, and the remedies imposed—including a seven-year limited exclusion order and cease-and-desist orders. The team also highlights key takeaways for companies navigating trade secret disputes at the ITC, including the standards for proving injury and the impact of competing products in the market.
Transcript:
Matt Rizzolo: Welcome back to Talkin’ Trade, a podcast where we explore the ins and outs of Section 337 investigations at the U.S. International Trade Commission. I’m Matt Rizzolo, and with me today, as usual, is my esteemed Ropes & Gray IP litigation colleague, Matt Shapiro. Matt & I are thrilled to welcome to the podcast our Boston-based associate Lara Ameri. How are you both doing today?
Matt Shapiro: Doing great. I’m glad to be here, Matt. Always a pleasure.
Lara Ameri: Thanks for having me. Happy to be here.
Matt Rizzolo: Excellent. Today, we’re going to take a deep dive into a significant recent Commission opinion in Investigation No. 337-TA-1352, which is titled Certain Selective Thyroid Hormone Receptor-Beta Agonists, Processes for Manufacturing or Relating to Same, and Products Containing Same. Not only is that case caption a mouthful, but the investigation is a prime example of the ITC’s role in adjudicating complex unfair trade practices that do NOT involve patent infringement. Today, we’ll be talking about trade secrets and, more importantly, trade secret misappropriation. Before we unpack the specifics, Matt, are there any brief updates from the Commission that our listeners should be aware of?
Matt Shapiro: Thanks, Matt. Yes, one brief update. As our listeners may recall, in our last episode, we did a deep dive into the Federal Circuit’s somewhat recent, important decision in Lashify v. ITC, where the Federal Circuit loosened up the standards for what types of investments may count for purposes of the domestic industry requirement. In the weeks after that decision, the ITC filed a petition for en banc review with the Federal Circuit, asking the full court to overturn the panel’s decision. Interestingly, however, while the ITC’s en banc petition was pending, the ITC itself applied the Lashify ruling in multiple investigations pending before the Commission. At the end of June, the Federal Circuit denied the ITC’s petition—so now, unless the ITC decides to file a cert petition, the new domestic industry standards under Lashify are probably here to stay awhile.
Matt Rizzolo: Thanks, Matt. Turning to the -1352 investigation and the Commission opinion that we are going to discuss in depth today, Lara, can you give us an overview of the case? How did this case get started?
Lara Ameri: Absolutely, Matt. This investigation involved Viking Therapeutics as the Complainant and Ascletis Pharma and its affiliated corporate entities and their CEO, Dr. Jinzi Jason Wu, as respondents. Viking alleged that Respondents misappropriated Viking’s trade secrets which, as you said, related broadly to selective thyroid hormone receptor-beta agonists. Those are compounds targeting thyroid hormone receptors for treating metabolic disorders and liver diseases, like non-alcoholic steatohepatitis (also called NASH). Viking’s key product here is called VK2809.
Matt Rizzolo: So, this is a pharma case involving complex drug development. We’ve talked on some past episodes about how life sciences companies have been turning to the ITC more often in recent years, and this seems to be an example of that. You mentioned that trade secrets were at issue—can you give us a little more detail on that front?
Lara Ameri: Sure. Viking asserted that Respondents misappropriated various categories of its trade secrets related to VK2809, and those included:
- Formulation trade secrets, which pertain to the drug’s capsule or tablet formulations with specific inactive ingredients.
- They also included preclinical trade secrets, which are information from research and development testing done in vitro or on animals.
- And, lastly, they included clinical trade secrets, which is data from human clinical trials.
These trade secrets had been shared with Respondents pursuant to a confidential relationship, but Viking claimed that the trade secrets were then used outside of that confidential relationship. Specifically, Viking claimed that Respondents used these trade secrets to develop their own competing products called ASC41 and ASC43F. And notably, ASC41 shares the same active pharmaceutical ingredient (also called API) as Viking’s VK2809 product.
Matt Rizzolo: So, how did this case unfold procedurally?
Lara Ameri: The investigation was instituted in February 2023, with Chief ALJ Cheney presiding. One interesting procedural anomaly here was that this was one of the rare Section 337 cases that was designated for an early initial determination (ID) under the 100-day program. For those who don’t know, the 100-day program is a pilot program launched by the ITC to essentially dispose of cases more expeditiously. Under that program, the Commission identifies, at institution, investigations that are likely to present a potentially dispositive issue. The Commission directs the assigned ALJ to rule on that issue early in the investigation through expedited factfinding and an abbreviated hearing limited to the identified issue. So, here, Judge Cheney was directed to hold an early evidentiary hearing on the issues of domestic industry and injury—in other words, the hearing would be used to determine whether Viking could show that the threat or effect of the alleged trade secret misappropriation would destroy or substantially injure an industry in the United States.
Matt Rizzolo: Having been involved in a 100-day proceeding at the Commission before that involved both of those issues, I can sympathize with those attorneys—it’s a very fast time crunch for a complex issue. What was the outcome of the 100-day early ID proceeding?
Lara Ameri: That’s where things started to get interesting. There were some concerns raised about whether the respondents had fully complied with their discovery obligations during the 100-day proceeding, but the Chief ALJ nonetheless held the early evidentiary hearing anyway—that was in April 2023, which was just about two months after the investigation was instituted. During that hearing and in the days thereafter, even more questions were raised about respondents’ compliance with their discovery obligations and the prejudice that Viking may have suffered. As such, the Chief ALJ found that any efficiencies to be gained by the 100-day early initial determination were frustrated, and that there was therefore good cause to extend the investigation beyond the 100-day period and to a full initial determination on all issues after a full evidentiary hearing. After that full hearing eventually took place, the Chief ALJ issued the final initial determination (FID) on October 3, 2024, and ultimately found a violation of Section 337 based on misappropriation of trade secrets. The Chief ALJ actually also ordered sanctions against the respondents and their former counsel for false representations and discovery violations.
Matt Rizzolo: But as we know, the ALJ’s ID is not the end of the road, so here, the full Commission eventually weighed in, right? What did it ultimately decide?
Lara Ameri: Yes, the Commission reviewed the final initial determination in its entirety and issued its final determination and its Commission opinion not long ago, on June 26, 2025. The Commission made several key findings in its opinion:
- First, the Commission affirmed, with modifications, the FID’s finding that the corporate respondents—so, the Ascletis corporate entities—had violated Section 337 through their misappropriation of Viking’s trade secrets.
- However, the Commission reversed the Chief ALJ’s finding of a Section 337 violation as to the individual respondent, Dr. Wu. The Commission said there was insufficient evidence that his actions were taken in his personal capacity, rather than as CEO of the corporate respondents. This highlights the importance of distinguishing corporate versus individual liability at the ITC.
Relatedly, the Commission also vacated the sanctions order against Dr. Wu in his personal capacity. However, the Commission otherwise adopted the Chief ALJ’s sanctions order, including non-monetary adverse inferences and monetary sanctions totaling over $567k against the corporate respondents and their former counsel for false representations and discovery violations.
- And lastly, the Commission affirmed, with modification, the FID’s findings on trade secret misappropriation. It specifically identified certain formulation, preclinical, and clinical trade secrets that were misappropriated. But the Commission clarified that not all asserted trade secrets were misappropriated, which seemed to correct an implication in the FID. In affirming the Chief ALJ’s findings on trade secret misappropriation, the Commission also rejected Ascletis’s independent development defense, particularly because Ascletis “benchmarked” its tablet formulation against Viking’s misappropriated capsule formulation—and that essentially means that Ascletis had in some way compared the formulation it was developing against Viking’s formulations to in some way assess the performance or qualities of their own formulation.
Matt Rizzolo: Thank you for that very comprehensive overview. It sounds like it was a significant victory for Viking. Now, let’s drill down into what is often a critical and complex part of these cases: the domestic industry requirement and injury thereto—the latter of which is an additional element in 337 cases that don’t involve statutory IP rights. Matt, can you walk us through how Viking handled these issues here?
Matt Shapiro: Sure. So, as we’ve discussed in past episodes, trade secret misappropriation claims under Section 337(a)(1)(A) require complainants to prove that respondents’ unfair acts have caused actual or threatened substantial injury to a domestic industry or have prevented its establishment. Now, this is distinct from patent cases, where injury is often presumed and then there’s a separate set of domestic industry requirements.
So, now let’s turn to the domestic industry at issue in the -1352 investigation. Here, the Commission looked at two aspects for Viking. First, the Commission considered Viking’s existing domestic industry, and second, it considered whether a domestic industry was in the process of being established.
- Turning to that first aspect—Viking’s existing domestic industry. The Chief ALJ’s final initial determination found that Viking demonstrated an existing domestic industry through its significant investments in “research, development, engineering, and testing to commercialize VK2809.”
- For example, the Commission credited expenses for Viking’s development of VK2809 formulation, as well as payments to contract research organizations (also known as CROs) and third-party consultants for development services.
- But now, this is where things get a little more interesting. The Commission reversed the final initial determination’s rejection of Viking’s $6.8 million in payments to BioDuro, which was a contract manufacturing organization that Viking had engaged to produce certain VK2809 tablets in the United States. The final initial determination incorrectly concluded, according to the Commission, that Viking’s tablets were manufactured entirely overseas, thereby declining to credit Viking’s associated domestic manufacturing expenditures toward its asserted domestic industry. Now, on review, the Commission reversed that finding, holding that Viking had substantiated sufficient domestic manufacturing activity in the United States through BioDuro. Thus, the Commission explained Viking’s payments totaling approximately $6.8 million to BioDuro correspond to work performed within the United States—not abroad—and thus, should have been properly credited.
- Once the Commission reversed that error, it found that Viking had engaged in $163.5 million in total of domestic investments.
- Now, turning to the second aspect—in addition to the existing domestic industry—the Commission affirmed the final initial determination’s finding that a domestic industry was in the process of being established. Now, let’s just take a step back for a second. In addition to the more typical domestic industry showing that we talk about a lot, which is based upon a current domestic industry, parties will sometimes assert that a domestic industry is in the process of being established—this is a separate way to satisfy the domestic industry requirement. Now here, turning back to the -1352 investigation, Viking demonstrated an industry in the process of being established based on its planned “investments in Phase III clinical trials, further investments [in] the FDA approval process, and the future commercialization of VK2809 tablets with a strategic partner.” The Commission affirmed this, applying the standard that Viking had taken “necessary tangible steps” and there was a “significant likelihood” that the domestic industry would be satisfied in the future. This includes Viking’s steps to manufacture VK2809 in the U.S. for clinical trials and for future commercial sales.
Lara Ameri: That distinction is crucial. It shows that even without a fully commercialized product, a company can demonstrate a robust domestic industry based on its development efforts, especially in the pharmaceutical space where the path to market is lengthy and capital-intensive. It’s important guidance for companies who may not yet have an approved or commercially ready product—it essentially tells us that you don’t need to let that prevent you from taking appropriate action at the ITC.
Matt Rizzolo: Yes, that’s exactly right. But as I mentioned before, because this is a so-called “non-statutory IP” case, once Viking satisfied the domestic industry portion of the statute, they were only halfway there. What about the injury requirement?
Matt Shapiro: So that’s right. Recall under Section 337, a complainant has a few different options to prove this injury. It can show actual harm—that is, in other words, the complained-of conduct has destroyed or substantially injured a domestic industry—or it can show that the unfair acts merely threaten to cause that harm. Another option is to show that the unfair acts are preventing the establishment of a domestic industry. Here, the Commission focused solely on threatened injury, affirming the final initial determination’s finding with some modified reasoning. And to do so, it utilized the non-exclusive Rubber Resins factors, along with some other relevant factors, to make this determination. Now, we won’t go into all the factors, but to highlight a few of the Rubber Resins factors:
- The Commission started with the second factor, which is the ability to undersell. The Commission highlighted how the misappropriation of proprietary information allowed Ascletis to spend far less on research and development for its competing ASC41 compound than Viking had spent for its VK2809 drug candidate. Now, this difference gave Ascletis a clear cost advantage, meaning it could potentially set lower prices once its product reached the U.S. market.
- Turning to the next factor, which is the third Rubber Resins factor—the explicit intention to enter the U.S. market. This is also a pretty interesting analysis, because even though Ascletis later tried to downplay its plans to enter the U.S. market in its filings, the Commission pointed to Dr. Wu’s own testimony and the sanctions that were imposed by the Chief ALJ for its discovery misconduct. Combined, these made it clear that Ascletis did intend to seek FDA approval for ASC41 and had plans to commercialize the drug in the United States.
- Under the fourth Rubber Resins factor, the Commission found that Ascletis would vastly lower foreign production costs. Now, the evidence showed Ascletis would leverage much lower production costs in China compared to Viking’s anticipated costs for the manufacturing of VK2809 domestically. As a result, Ascletis could undercut prices and attempt to secure an early foothold among potential U.S. patients. Taken together, these factors, including lower R&D expenses, a stated plan to enter the U.S. market, and advantages of foreign production, created a significant risk of harm to Viking’s future market share.
- Now, the Commission also looked at the fifth factor, which is that Ascletis’s misappropriation had a significant impact in a negative way on the domestic industry. The Commission concluded that Ascletis’s misappropriation gave it an unfair “jumpstart.” By using Viking’s confidential information, Ascletis could potentially get their product to market faster and take away future market share that would have otherwise gone to Viking.
To summarize, the ITC found that Ascletis’s actions not only gave them a head start, but also positioned them to undercut Viking on price and timing, with the clear intention of entering and competing in the U.S. market.
Lara Ameri: Beyond the traditional Rubber Resins factors, the Commission also emphasized two critical factors for pharmaceutical companies like Viking:
- The Commission found that Ascletis’s misappropriation directly interfered with Viking’s ability to secure a partnership with a large pharmaceutical company. Because VK2809 and ASC41 share the same API and mechanism of action, there was a critical “lack of differentiation” between the two products. This severely impairs a small company’s ability to secure collaboration deals in a competitive pharmaceutical market, which Viking’s expert credibly testified to.
- Additionally, Ascletis’s unfair acts caused a significant 40% reduction in VK2809’s net present value, which further undermined Viking’s partnering opportunities. The Commission found Viking’s expert’s assumptions for this calculation to be reasonable, including a 60-65% probability of technical and regulatory success for VK2809.
Matt Rizzolo: All of that adds up to a very clear picture of threatened injury. It’s no surprise that with those findings, the Commission came out the way that it did. What about the nexus between the unfair acts—here, the misappropriation of trade secrets and the threatened injury to the domestic industry?
Matt Shapiro: The Commission found a clear causal connection between the two. Ascletis used Viking’s trade secrets to develop and test their products, directly causing the lack of differentiation between VK2809 and the accused products. This threatens to split the market or significantly diminish VK2809’s future sales, reduce its net present value—as we mentioned before—and undermine its ability to secure a crucial strategic partnership. They noted that the threatened injury is “substantive and clearly foreseen.”
Lara Ameri: It’s also important to note that the Commission addressed the argument about the presence of other competing drugs, such as Madrigal’s FDA-approved Resmetirom (more commonly known by its brand name Rezdiffra). They found that Resmetirom’s approval actually improves VK2809’s probability of FDA approval because they share the same mechanism of action, and VK2809 is differentiated from Resmetirom in terms of efficacy and side effects. Thus, the existence of other treatments did not negate the threatened injury from Ascletis’s specific unfair acts.
Matt Rizzolo: So, in this case, the presence of other competing drugs in the market actually enhanced the complainant’s ability to show injury, which is something I find fascinating. After the Commission found a violation based on trade secret misappropriation and the clear threat of injury to Viking’s domestic industry, what remedy did it issue, Matt?
Matt Shapiro: No surprise, the Commission issued a seven-year limited exclusion order (LEO) against the corporate respondents’ products, prohibiting their unlicensed entry into the U.S. And just to clarify, when I’m using the term “corporate respondents,” I’m excluding the individual respondent Dr. Wu, who we mentioned is the CEO or president of the various corporate respondents. For trade secret cases, typically the duration of such an LEO is based upon the time it would have taken the respondent to independently develop the trade secrets using lawful means. Now, what’s interesting about the seven-year limited exclusion order here is that it accounted for three different time frames, all in serial: the first is Viking’s formulation of trade secrets, followed by its preclinical, and clinical trade secrets—and this recognized that all three had to be done in a consecutive nature, and that was the basis for the LEO.
Lara Ameri: Additionally, the Commission included a specific provision in the exclusion order requiring a ruling from the Commission, either via an advisory opinion or a modification proceeding, before any covered articles could be imported. This is particularly important for trade secret cases, as it’s often not easily discernible at the border whether an imported product actually utilizes misappropriated secrets.
Matt Rizzolo: Now, that’s an unusual addition to an exclusion order, and it could arguably prevent the Respondents from utilizing the Part 177 request process at U.S. Customs that is often used by parties who are seeking to import products that could be affected by an exclusion order. So, beyond the exclusion order, were there any other remedies issued by the Commission?
Matt Shapiro: Yes, the Commission also issued a cease-and-desist order against each of the corporate respondents. While Commissioner Johanson dissented on this point, the majority found that CDOs were necessary because Ascletis had representatives, including Dr. Wu, and a related entity, Gannex, LLC, present in the U.S. who were actively engaging with potential partners. This indicated significant domestic operations that could undercut the exclusion order. Furthermore, CDOs were deemed necessary to prevent potential stockpiling of accused products during the presidential review period for later clinical trials. The Commission also set a bond of 100% for the entered value of the covered articles imported during the 60-day presidential review period.
Lara Ameri: Finally, on the public interest factors, the Commission found that none of the statutory factors—public health and welfare, competitive conditions, U.S. production of like articles, or U.S. consumers—precluded the issuance of these remedies. They noted that alternative treatments, like Resmetirom and Viking’s own VK2809, exist or are in development.
Matt Rizzolo: Thanks, Lara and Matt. Appreciate you both joining me for a very detailed and insightful breakdown of a significant Section 337 investigation. This case truly highlights the ITC’s powerful enforcement capabilities in trade secret matters, and it underscores the complex interplay of domestic industry, the injury analysis, and the crafting of appropriate remedies in such a case.
Matt Shapiro: I couldn’t agree more, Matt. The specific findings on misappropriated trade secrets and the robust analysis of threatened injury make this a crucial opinion for anyone who’s seeking to practice in the trade secrets space at the ITC.
Matt Rizzolo: That’s all the time we have for this episode of Talkin’ Trade. You can find this podcast and other Ropes & Gray podcasts on Apple Podcasts, Spotify, or ropesgray.com/podcasts. I’m Matt Rizzolo, and on behalf of Matt Shapiro and Lara Ameri, thank you all for listening.
