IP UPDATE
Exploring the Latest in Intellectual Property Law
IP UPDATE
Exploring the Latest in Intellectual Property Law
Results for "Trade secret protection"
Subscribe to Results for "Trade secret protection"'s Posts

Patents and Trade Secrets Aren’t Mutually Exclusive: The Nuanced Nature of Trade Secret Protection

By on Aug 19, 2021
Posted In

Addressing the nuanced nature of trade secret protection of patented products, the US Court of Appeals for the Seventh Circuit affirmed a district court’s trade secret protection determination, finding that the asserted trade secrets were not publicly disclosed and had been adequately protected. Life Spine, Inc. v. Aegis Spine, Inc., Case No. 21-1649 (7th Cir. Aug. 9, 2021) (St. Eve, J.)

The underlying conflict in this case has its roots in a short-lived business relationship between two companies specializing in selling spinal implant devices. Life Spine makes and sells a device called the ProLift Expandable Spacer System. Aegis Spine contracted with Life to distribute Life’s ProLift system to hospitals and surgeons for scheduled surgeries. Under the distribution agreement, Aegis was obligated to protect Life’s confidential information, act as a fiduciary for Life’s property and refrain from reverse engineering the ProLift system. Aegis did not abide by its contractual promises. It gave information about Life’s ProLift system to L&K Biomed, Aegis’s parent company and Life’s direct competitor. L&K used Life’s confidential information to develop a competing spinal implant device. Shortly after L&K’s device appeared on the market, Life sued Aegis for trade secret misappropriation and breach of the distribution agreement. The district court ruled in favor of Life, granting its motion for preliminary injunction against Aegis and its business partners, all of whom could no longer market the competing product. Aegis appealed.

Aegis argued that the injunction rested on the flawed legal conclusion that a company can have trade secret protection on a device that it publicly discloses through patents, displays and sales. The Seventh Circuit disagreed.

While the Court reaffirmed that there can be no trade secret protection in information available in the public domain, it found that such was not the nature of the information sought to be protected in this matter. Rather, the Seventh Circuit agreed with the district court that Life did not publicly disclose the specific information it sought to protect via patenting, displaying and selling its ProLift system.

The ProLift expandable spinal implant consists of the implant (or cage) component and an installer. The cage comprises an upper and lower endplate, a nose and base ramp and an expansion screw. The installer is used to insert the cage into a patient’s spine and expand the affected spinal disc height. Life considers “the precise dimension and measurements of the ProLift components and subcomponents and their interconnectivity” to be confidential trade secrets. The district court found that third parties are unable to access that precise dimensional information without first signing confidentiality agreements, and the information is not available in any of Life’s marketing materials (which include only dimensional approximations) or patents. Life’s ProLift system cannot be purchased by the general public or even handled at industry convention displays without Life’s close supervision. Instead, Life’s distributors sell ProLift directly to hospitals and surgeons for scheduled surgeries only.

The Seventh Circuit noted that “a limited disclosure” does not destroy all trade secret protection on a product, allowing a company [...]

Continue Reading



A Healthy Dose of Seeds: Unique Combination Trade Secrets Entitled to Protection

By on Nov 29, 2022
Posted In

The US Court of Appeals for the Sixth Circuit upheld a jury verdict finding a dietary supplement company liable for misappropriating another company’s research and development (R&D) related to broccoli-seed extract. Caudill Seed & Warehouse Co., Inc. v. Jarrow Formulas, Inc., Case No. 21-5354 (6th Cir. Nov. 10, 2022) (per curiam) (Moore, J., concurring in part and dissenting in part). The decision addressed several issues relating to so-called “combination” trade secrets.

Caudill manufactures and sells various nutritional supplements, including a supplement made using broccoli-seed extract. Caudill sued Jarrow Formulas for trade secret misappropriation after its Director of Research Ken Ashurst left Caudill and joined Jarrow. Ashurst had led Caudill’s R&D efforts for nine years, including extensively researching the development of broccoli-seed derivatives and assembling a large body of research related to broccoli seeds. After he joined Jarrow, Ashurst delivered a curated collection of broccoli product research to Jarrow and helped it bring its own competing broccoli-seed extract supplement to the market in just four months.

The case proceeded to trial. The jury found that Caudill had a protectable trade secret; Jarrow misappropriated said trade secret; and Caudill was entitled to more than $2 million in actual losses, more than $400,000 in unjust enrichment damages, and exemplary damages. Jarrow moved for judgment as a matter of law and for a new trial. After the district court denied the motions, Jarrow appealed.

Jarrow argued that Caudill improperly asserted a “kitchen-sink theory” of trade secrets by broadly defining all its research activities as a single trade secret. Jarrow also argued that Caudill failed to show that it had acquired the alleged trade secret. Finally, Jarrow challenged the damages awards on legal grounds. The Sixth Circuit rejected each of Jarrow’s arguments on appeal.

The Sixth Circuit first found that Caudill properly defined its alleged trade secret as its “research and development on supplements, broccoli, and chemical compounds.” The Court treated Caudill’s alleged trade secret as a “combination” trade secret (i.e., a collection of elements that individually are generally known but are unique in combination.) The Court concluded that Caudill demonstrated it had assembled a unique collection of processes and information relating to its R&D process, and therefore, Caudill properly defined its entire R&D process as a trade secret. The Court rejected Jarrow’s argument that Caudill’s alleged trade secret mostly consisted of public domain materials on the basis that the materials were unique in combination.

The Sixth Circuit also rejected Jarrow’s argument that Caudill failed to show that Jarrow acquired and used the entire combination trade secret. The Court noted differing authority on whether a plaintiff alleging a combination trade secret must show acquisition and use of the entire combination but concluded that trade secret law does not require proving acquisition of “each atom” of the combination trade secret. The Court reasoned that when a trade secret consists of a “mass of public information” that has been collected, the defendant will always be able to identify some minute detail of the combination that it did [...]

Continue Reading



Defend Trade Secrets Act Supports Sealing Information on Appeal

By on Jan 7, 2021
Posted In ,

Addressing whether purported trade secret information ought to remain under seal on appeal, the US Court of Appeals for the Sixth Circuit ruled in a one-judge order that the Defend Trade Secrets Act (DTSA) provided a statutory basis that overcame the presumption of public access. Magnesium Machine, LLC v. Terves, LLC, Case No. 20-3779 (6th Cir. Dec. 10, 2020) (McKeague, J.)

This case presented the issue of what part of a record may be sealed on appeal—normally a routine question—in litigation that was anything but routine. According to the verified complaint, Magnesium Machine discovered a particular salt-based treatment for use on oil and gas tools. According to Magnesium, in the course of litigating a patent infringement suit against one of Magnesium’s suppliers, Terves and its counsel, McDonald Hopkins, obtained information reflective of Magnesium’s alleged trade secret from a third party pursuant to subpoena. Specifically, Magnesium claimed that particular language in a settlement agreement disclosed Magnesium’s trade secrets. The settlement agreement had been produced by the third party without any confidentiality designation. The complaint alleged violations of the federal DTSA and Oklahoma and Ohio state trade secrets acts.

Invoking the seizure provisions of the DTSA, Magnesium sought and obtained an ex parte order directing the US Marshals to seize Terves’s electronic equipment, including devices at Terves’ president’s home. That order did not last long. Following an evidentiary hearing (in which Terves participated) the day after the order was issued, the district court vacated the seizure order because Magnesium had not demonstrated misappropriation of a trade secret.

To appeal, Magnesium requested express findings of fact and conclusions of law. The district court explained that Terves and its lawyers subpoenaed materials in good faith, that the settlement agreement was produced without restriction (such as a confidentiality marking), that Terves’s lawyers did not impermissibly share the settlement agreement with Terves employees and that upon objection by Magnesium, Terves deleted its copies of the settlement agreement. Thereafter, on motions to dismiss, the district court concluded that Magnesium failed to allege misappropriation and that the litigation privilege protected Terves’ counsel.

Terves sought and obtained attorneys’ fees against Magnesium and its counsel for proceeding in bad faith. The district court found that Magnesium had every reason to know that its claims were baseless, because it was “well aware at the time the suit was filed that Defendants had received the allegedly secret information through legitimate discovery means and that it was provided to them without description.” Moreover, claiming that a three-word phrase in the settlement agreement purportedly disclosed trade secret information was “an intentional exaggeration/misrepresentation.” Indeed, other public statements had provided far more detail than the purportedly secret phrase, according to the district court.

On appeal, although Terves contended that the purported trade secret did not qualify as a secret, in the exercise of caution and on Magnesium’s request, Terves nonetheless sought to file a brief under seal. Judge David McKeague, acting on behalf of the Sixth Circuit, agreed that it was appropriate to seal the information, [...]

Continue Reading



Use of Infringing Product, Misappropriated Trade Secrets May Continue—for a Licensing Fee

By on Sep 3, 2020
Posted In

The US Court of Appeals for the Sixth Circuit affirmed a district court’s stay of a permanent injunction against copyright infringement and trade secret misappropriation, permitting the infringer to continue use of an infringing product and misappropriated trade secrets but requiring the infringer to pay a licensing fee. ECIMOS, LLC v. Carrier Corp., Case Nos. 19-5436, -5519 (6th Cir. Aug. 21, 2020) (Boggs, J.).

Carrier sold HVAC systems. ECIMOS designed and sold a quality-control-testing system that assessed each HVAC unit at the end of Carrier’s assembly line. ECIMOS’s system consisted of a software program, associated hardware and a database that stored results of runtests performed by the system. Carrier paid ECIMOS to maintain and periodically upgrade its software system. ECIMOS licensed Carrier to use the system but prohibited unauthorized copying, distributing or creating derivative works based in whole or in part on the software.

Years into the relationship, ECIMOS upgraded its software to run on a new operating system. ECIMOS expected Carrier to agree to the proposed upgrade just as it had done previously. Unbeknownst to ECIMOS and without its consent, Carrier had already installed ECIMOS’s software directly onto the new operating system. Carrier started a venture with a third party, Amtec, to develop a new quality-control software and storage database to replace the ECIMOS system.

ECIMOS sued Carrier for violating the copyright on the ECIMOS system’s database, breaching the parties’ software-licensing agreement and misappropriating ECIMOS’s trade secrets. At trial, ECIMOS alleged that Carrier improperly shared ECIMOS’s copyrights and trade secrets with Amtec, allowing Amtec to develop a competing system. The jury agreed, finding that the competing system incorporated ECIMOS’s trade secrets. The jury determined that Carrier infringed the copyright on ECIMOS’s runtest database script source code, that ECIMOS held a trade secret in its software source code and its assembled hardware drawings and wiring diagrams, and that Carrier misappropriated those trade secrets by sharing them with Amtec. The jury awarded ECIMOS copyright and contract damages.

The district court also imposed a permanent injunction against Carrier’s use of the infringing Amtec database, but stayed the injunction until Carrier developed a noninfringing database. The court also enjoined Carrier from further disclosure of ECIMOS’s trade secrets, but did not enjoin Carrier from using those trade secrets. To the contrary, the district court appointed a special master to supervise the redesign and permitted Carrier to continue using the infringing database that incorporated ECIMOS’s trade secrets until the redesigned system was complete. The district court further required Carrier to pay ECIMOS the licensing fees that ECIMOS would have charged in the course of an ongoing, mutually agreeable licensing relationship. ECIMOS objected to the stay and appealed.

ECIMOS argued that the stay was an abuse of discretion, that the injunction should have prohibited Carrier from using (not just disclosing) ECIMOS’s trade secrets, and that the injunction should have prohibited Carrier’s disclosure and use of ECIMOS’s assembled hardware, not just the hardware drawings and wiring diagrams. The Sixth Circuit disagreed, affirming in full the district court’s [...]

Continue Reading



Calling All US IP Owners: Submit Your Comments on IP-Lax States

By on Jan 5, 2023
Posted In

The Office of the US Trade Representative (USTR) seeks public commentary regarding countries that deny adequate and effective protection of intellectual property rights, or deny fair and equitable market access to US persons that rely on intellectual property protections. Comments are due by January 30, 2023.

Each year the USTR requests that intellectual property owners, stakeholders and other interested parties submit commentary regarding countries that weaken protections and benefits associated with intellectual property ownership and registration in the United States. The USTR interprets the feedback and compiles an annual report.

The USTR’s authority for such action arises out of Sections 301-305 of the Trade Act (19 U.S.C. §§ 2411-2415). These “Special 301 Provisions” require the USTR to determine which, if any, of the countries submitted by commenters should be identified as Priority Foreign Countries. In furtherance of this goal, the USTR maintains a Priority Watch List and a Watch List. The Special 301 listings and actions announced in the annual report are the result of intensive deliberations among all relevant agencies within the US government, which in turn are informed by extensive consultations with participating stakeholders, foreign governments, the US Congress and other interested parties.

The 2022 report identified a wide range of concerns, including the following:

  • Challenges with border and criminal enforcement against counterfeits, including in the online environment
  • High levels of online and broadcast piracy, including through illicit streaming devices
  • Inadequacies in trade secret protection and enforcement in China, Russia and other countries
  • Troubling “indigenous innovation” and forced technology transfer policies that may unfairly disadvantage US right holders in markets abroad
  • Other ongoing, systemic issues regarding intellectual property protection and enforcement, as well as market access, with many trading partners around the world.

The 2022 report listed the following countries on the Priority Watch List: Argentina, Chile, China, India, Indonesia, Russia and Venezuela. The report listed the following countries on the Watch List: Algeria, Barbados, Bolivia, Brazil, Canada, Colombia, Dominican Republic, Ecuador, Egypt, Guatemala, Mexico, Pakistan, Paraguay, Peru, Thailand, Trinidad and Tobago, Turkey, Turkmenistan, Uzbekistan and Vietnam.

The USTR is soliciting comments for this year’s report via the online Federal eRulemaking Portal in lieu of an in-person hearing.  Commenters are encouraged to include detailed information, including the following:

  • Specific references to laws, regulations and policy statements, including innovation policies; executive, presidential or other orders; and administrative, court or other determinations that should factor into the review
  • Particular regions, provinces, states or other subdivisions of a country in which an act, policy or practice is believed to warrant special attention
  • Data, loss estimates and other information regarding the economic impact on the United States, US industry and US workforce caused by the denial of adequate and effective intellectual property protection.

Commentators should act now, as the window to submit public commentary ends on January 30, 2023. Keep an eye out for the 2023 report, which is scheduled for release on or around April 18, 2023.



And the Band Played On: Reviewing Rule 54(b) Partial Summary Judgment Based on Who Did What to Whom and When

By on Oct 6, 2022
Posted In

In a case where the cast of characters on both sides of the v. evolved during the lead-up to the litigation as the litigants negotiated third-party deals and formed new entities, the US Court of Appeals for the First Circuit (characterizing the matter as the “entrepreneurial equivalent of musical chairs”) affirmed a dismissal of a trade secret claim against a foreign defendant but not against the related US entity, and found that the case qualified under Rule 54(b) for the “narrow exception” to the finality rule. Amyndas Pharmaceutical, SA v. Zealand Pharma A/S, Case No. 21-1781 (1st Cir. Sept. 2, 2022) (Barron, Selya, Kayatta, JJ.)

Amyndas is a Greek company with a US affiliate. It is a biotechnology firm that researches and develops therapeutics targeting a part of the immune system known as the complement system. One area of Amyndas’s research deals with “complement inhibitors.”

Amyndas’s research yielded compstatin, a peptide that selectively inhibits the C3 protein (which plays a role in activating the complement system). Amyndas also developed a related peptide (AMY-101) that targets that protein. Amyndas owns trade secrets and confidential information related to this work.

Zealand Pharma, a Danish biotechnology firm, contacted Amyndas about a potential partnership for the development of complement-related therapeutics. The firms entered into a confidential disclosure agreement (CDA) regarding information-sharing “for the purposes of evaluating a possible business/services relationship between the parties and their respective Affiliates.” Amyndas started giving Zealand Pharma access to confidential information (including confidential information about AMY-101). The firms also entered into a second CDA—with added protections—for “the evaluation or formation of a possible business and/or services and/or collaborative relationship.”

Both CDAs included an identical “Governing Law” provision stipulating that the CDAs would “be interpreted and governed by the laws of the country (applicable state) in which the defendant resides” and a forum-selection clause stipulating that “any dispute arising out of th[e CDA] shall be settled in the first instance by the venue of the defendant.”

Zealand Pharma also began its own research program focused on complement therapeutics. It did not inform Amyndas of this initiative. Although negotiations continued, the firms ultimately decided not to collaborate. Amyndas later terminated its information-sharing relationship with Zealand Pharma.

Zealand Pharma later formed Zealand US, a Delaware corporation. Without Amyndas’s knowledge or consent, Zealand Pharma also filed two European patent applications for compstatin analogues and later an international patent application designating the United States and claiming priority to the earlier  EU applications.

After the international applications were published, Amyndas learned that they described “compstatin analogues that are capable of binding to C3 protein and inhibiting complement activation,” which had been the focus of Amyndas’s research and a subject of Amyndas’s confidential information-sharing with Zealand Pharma.

The other defendant, Alexion, is an established player in the complement therapeutics field and a proprietor of Soliris, a complement inhibitor that targets a protein in the complement system. Soliris is approved by the US Food and Drug Administration (FDA) and previously was the only FDA-approved and clinically available [...]

Continue Reading



US-China Agreement Supports International Injunction Against Alleged Chinese Counterfeiter Under State Law

By on Feb 4, 2021
Posted In

Addressing for the first time whether state law has extraterritorial scope, the US Court of Appeals for the Sixth Circuit upheld a worldwide preliminary injunction against an alleged Chinese counterfeiter’s use of alleged trade secrets, citing a new US-China trade agreement. AtriCure, Inc. v. Meng, Case No. 20-3264 (6th Cir. Jan. 21, 2021) (McKeague, J.)

AtriCure is an Ohio company that sells surgical tools for the treatment of atrial fibrillation. AtriCure needed a Chinese agent to register and sell its product in China. Dr. Meng became AtriCure’s distributor in China from 2005 to 2017. After Meng signed multiple distribution agreements with AtriCure, including non-compete clauses and confidentiality agreements, he was given access to confidential technical documents describing AtriCure’s products. Unbeknownst to AtriCure, Meng was the president of AtriCure’s Chinese competitor, Med-Zenith. When Med-Zenith released a line of products that were strikingly similar to AtriCure’s in both form and operation, AtriCure sued for trade secret misappropriation under the Ohio Uniform Trade Secrets Act and sought a worldwide preliminary injunction to prevent Meng from continuing to manufacture and sell counterfeit versions of AtriCure’s medical devices. After the district court granted the preliminary injunction, Meng appealed.

Addressing Meng’s arguments on likelihood of success, the Sixth Circuit found that:

  • The district court defined the alleged trade secrets with sufficient specificity because AtriCure had given Meng detailed drawings and manufacturing specifications.
  • The district court had not clearly erred in relying on evidence that AtriCure provided the trade secret information to Meng or that Meng used the information where Med-Zenith had copied its entire product line from AtriCure.
  • The district court had not clearly erred in holding that the production of an adapter that did not copy but still took advantage of AtriCure’s proprietary algorithm (i.e., by allowing Med-Zenith accessories to be used with AtriCure’s system) was likely a misappropriation of trade secrets.

Addressing the extraterritorial aspect of a worldwide injunction, the Sixth Circuit held that the district court did not abuse its discretion in issuing a worldwide injunction because the international reach of the injunction comports with the equities of the case and does not offend international comity. As to the equities, the Court noted that worldwide injunctions are common in trade secret misappropriation cases. As to comity, the Court found that Meng had failed to articulate any conflict and cited a recently signed agreement between the United States and China that “emphasizes trade secret protection” (Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China, Jan. 15, 2020).

Finally, the Court addressed whether the Ohio Uniform Trade Secrets Act itself was entitled to extraterritorial scope. Because Ohio courts had not yet addressed the question, the Court conducted its own statutory interpretation and found that the intent of the statute (“the lodestar of statutory interpretation in Ohio”) favored extraterritorial application “at least in this case.”



Key Takeaways from MWE International Seminar Intellectual Property Session – January 2020

By on Feb 13, 2020
Posted In

On January 21 and 22, 2020, the 8th annual McDermott International Seminars took place in Osaka and Tokyo. These seminars focused on cross-border M&A, GDPR, intellectual property, global enforcement and other key topics. Lawyers from McDermott’s US and European offices, including Washington, DC; Chicago; New York; Paris; London; Brussels; and Munich, discussed these topics with Japanese companies operating globally. During the International Seminars, the Intellectual Property team discussed insights around emerging technologies and intellectual property.

What follows are key takeaways from the IP session of the seminar. (See highlights from the full Seminar.)

(more…)



PTO Introduces Intellectual Property Identifier Tool

By on Jan 26, 2023
Posted In

On January 18, 2023, the US Patent & Trademark Office announced the launch of its new Intellectual Property (IP) Identifier tool. This tool is designed for those who are less familiar with IP and assists users in determining whether they have IP and identifies what IP protections are available to support their business, invention or brand. The tool also briefly explains patents, trademarks, copyrights and trade secrets.

The IP Identifier tool comprises two modules: The Basic IP Identifier and the Advanced IP Identifier. The Basic IP Identifier module consists of six questions that allow users to quickly identify the type of IP they should protect. The Advanced IP Identifier module explains the specific types of IP and includes links to additional resources, including how to file an application for protection. A third module, Managing Your IP Assets, is currently under development.



Party May Not Veil EU Individual’s Information under GDPR at the TTAB

By on Oct 14, 2021
Posted In ,

In a rare precedential opinion, the Trademark Trial & Appeal Board (TTAB, Board) ruled that the EU General Data Protection Regulation (GDPR) does not apply in Board proceedings. Chicago Mercantile Exchange, Inc. v. Intercontinental Exchange Holdings, Inc., Opposition Nos. 91235909; 91254514 (T.T.A.B. Sept. 27, 2021) (Faint, Interlocutory Attorney).

This was a consolidated proceeding between Chicago Mercantile Exchange and New York Mercantile Exchange (collectively, CME) and Intercontinental Exchange Holdings (ICE) and brought before the TTAB. CME sought to amend the Board’s standard protective order (SPO) to allow in-house access to information and materials designated by ICE as “Confidential – Attorney’s Eyes Only” and asked the TTAB to find that the EU GDPR does not apply in the proceedings.

The Board’s SPO is automatically imposed in all inter partes proceedings. In order for the Board to disturb their SPO, CME needed to show that protection of ICE’s trade secrets will impair CME’s prosecution of its claims. ICE asserted that CME failed to show good cause for modification of the SPO and the Board agreed. As an initial matter, CME failed to provide information sufficient for the Board to determine in-house counsel’s responsibilities, including whether those responsibilities included competitive decision-making such that disclosure to in-house counsel would competitively harm ICE. Secondly, CME failed to clearly demonstrate that there was a need for access to the highly sensitive competitive information to adequately prepare its case. Accordingly, the Board denied CME’s motion to amend the protective order.

CME next raised the issue of whether ICE may redact names, email addresses and other information from documents and electronically stored information (ESI) originating in the European Union prior to its production on the basis that the GDPR requires such redaction. CME argued that because ICE waited more than 18 months to assert this objection, the objection is waived, that CME will be severely prejudiced if ICE’s objection stands and that the GDPR does not apply in inter partes Board proceedings.

For background, the GDPR is an EU regulation made effective May 25, 2018, in order to protect the privacy and security of EU citizens’ personal data by limiting the transfer of such information among member states of the European Union, as well as between the European Union and other countries, including the United States. The broad definition given to “personal data” in the GDPR encompasses “any information relating to an identified or identifiable person.” However, this class of information (an individual’s name, position, job title and email address) is generally required to be produced in discovery pursuant to the Fed. R. Civ. Pro. 26(b)(1).

In this precedential decision, the Board, citing the 1987 Supreme Court case Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court, established that a foreign country’s law precluding disclosure of evidence in US courts and tribunals will generally not deprive those courts and tribunals of “the power to order a party subject to its jurisdiction to produce evidence even though the act of production may violate that statute.”. Additionally, the GDPR does not per [...]

Continue Reading



BLOG EDITORS

Paul Devinsky

Amol Parikh

STAY CONNECTED

Subscribe

TOPICS

ARCHIVES