On July 26, 2016, the orders issued by the U.S. International Trade Commission (“ITC”) against India’s Viraj Profiles in a Section 337 case entered into full effect. Viraj must now stop importing, marketing, and selling its stainless steel products in the United States for a period of 16.7 years. The orders apply to all Viraj stainless steel, regardless of product form, including but not limited semi-finished steel, wire rod, bars, angles, wire, flanges and fasteners.
The case stems from allegations made by Valbruna Stainless of Fort Wayne, Indiana, that Viraj paid an ex-employee hundreds of thousands of dollars to steal Valbruna’s manufacturing trade secrets and customer lists from its Vicenza, Italy, location. The ex-employee and a Viraj executive were criminally charged and convicted in an Italian court.
On May 25, 2016, the ITC found Viraj in default as a sanction for abusive litigation conduct, including destroying evidence and providing false testimony under oath. The sanctions are based in part on a forensic computer inspection of Viraj’s computers. The inspection uncovered evidence that Viraj had possession of Valbruna’s trade secrets and was using them, contrary to Viraj’s representations throughout the case. The ITC therefore found Viraj in violation of the law, and issued an order to exclude all stainless steel products manufactured by Viraj from the United States for a period of 16.7 years. The ITC also ordered Viraj to cease and desist from all activities relating to the sale of its stainless steel products in the United States, including marketing, advertising, or soliciting distributors.
Section 337 gives the President 60 days to review the ITC’s orders, after which the orders become effective immediately. During the Presidential review period, Viraj was permitted to continue importing, selling and marketing its stainless steel products provided that it posted a bond in the amount of 13.4% of the product value. That bonding privilege has now ended, and the importation, sales and marketing are now prohibited.
The orders also apply to Viraj-made steel sold by other parties. Addressing the issue of the German stainless steel company, Bebitz, which Viraj’s financial statements identify as a related company, the Commission stated that the “order does not cover Bebitz's downstream products. However, to the extent that Bebitz chooses to import Viraj Profiles' covered stainless steel products into the United States, it is subject to the limited exclusion order, as is any non-respondent.” In addition, the cease and desist order forbids Viraj or any affiliates or agents from “aid[ing] or abet[ting] other entities in the importation, sale for importation, sale after importation, transfer, or distribution of the covered products.”
“We are pleased that the ITC’s orders are now fully effective, and that stainless steel produced at Viraj will now be excluded from the United States for 16.7 years,” said Massimo Amenduni Gresele, Valbruna’s managing director. “The business practices employed by Viraj – inducing our employee to steal trade secrets and then lying to us, the Italian courts, and the ITC – are deplorable, and the US Government was absolutely right to issue this broad sanction against all of Viraj’s stainless steel. We will now turn our focus to enforcement of the exclusion order, being alert to any efforts to circumvent the exclusion.”
Valbruna Stainless employs more than 220 people throughout the United States in manufacturing and selling stainless steel products. Its subsidiary, Valbruna Slater Stainless, is in the process of completing a $30 million expansion of its Fort Wayne manufacturing facility that is expected to generate nearly fifty new jobs by 2017.
Viraj may appeal the ITC’s orders to the United States Court of Appeal for the Federal Circuit, but the ITC’s orders will remain in effect throughout any appeal proceedings.
- Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
- Now Save Rs.3150 on your Demat Account ...Click here
- Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
- Get the most detailed result analysis on the web - Real Fast!
- Actionable & Award-Winning Research on 500 Listed Indian Companies.