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

Sorry—No Finality, No Injunction, No Appellate Jurisdiction

by | Nov 9, 2023 |

The US Court of Appeals for the Third Circuit dismissed an appeal from the denial of a motion under the Defend Trade Secrets Act (DTSA) for an ex parte seizure order, explaining that such orders are not final, not effectively injunctive and that the DTSA does not independently provide appellate jurisdiction to review such orders. Janssen Prod., L.P. v. eVenus Pharms. Lab’ys Inc., Case No. 22-2426 (3d Cir. Oct. 17, 2023) (Porter, Freeman, Fisher, JJ.)

In 2015, the US Food & Drug Administration (FDA) approved Janssen’s drug Yondelis—a stable, injectable version of the cancer drug trabectedin—for use in certain cancer patients. Janssen asserts that its data, specifications and methods for manufacturing Yondelis are trade secrets. After Janssen received FDA approval for Yondelis, eVenus sought FDA approval for a generic version of Yondelis. Janssen filed a lawsuit against eVenus (under the Hatch-Waxman Act) for patent infringement. During discovery, Janssen obtained documents that allegedly demonstrated that eVenus misappropriated Janssen’s trade secrets. Janssen then filed the current lawsuit against eVenus seeking relief for eVenus’s alleged trade secret misappropriation under the DTSA.

During discovery, Janssen found that eVenus spoliated evidence. In response, Janssen filed a motion for an ex parte seizure under the DTSA, requesting that the district court order the seizure of eVenus’ network servers and stored data, and the laptops and cell phones of certain eVenus employees and ex-employees. The district court denied Janssen’s ex parte seizure motion. Janssen appealed.

The Third Circuit dismissed the appeal, concluding that it lacked jurisdiction over Janssen’s appeal for two reasons.

First, the Third Circuit found that it lacked appellate jurisdiction because the district court’s denial of Janssen’s ex parte seizure motion was not a final judgment and did not meet any of the limited exceptions to the final judgment rule.

One limited exception to appellate jurisdiction under the final judgment rule is review of a lower court’s refusal to order injunctive relief. However, as the Third Circuit explained, an ex parte seizure order under the DTSA is not effectively injunctive and therefore does not fall under the injunction exception. The Court explained that refusal to grant an ex parte seizure order does not satisfy the first two prongs of the Court’s three-part functional injunction test, which require that an order be “directed to a party” and may be enforced by contempt. Regarding the first prong, the Court noted that DTSA seizure orders are not “directed to a party” because the DTSA requires law enforcement officials—and not a party—to execute any ex parte seizure order. Regarding the second prong, no party can be held in contempt for failing to comply with an order that does not direct it to do anything. Therefore, the district court’s order did not effectively deny an injunction.

Second, the Third Circuit analogized DTSA seizure orders with seizure orders under the Lanham Act in terms of statutory construction. As the Court explained, in the Lanham Act, ex parte seizure provisions are part of its “injunctive relief” section. In contradistinction, Congress did not [...]

Continue Reading



read more

Head East: Contract Disputes Act Claims Must Be Filed in DC

by | Sep 28, 2023 |

The US Court of Appeals for the Ninth Circuit concluded that the Contract Disputes Act (CDA) “impliedly forbids” federal contractors from bringing most trade secret misappropriation claims against federal agencies in district court. Instead, the CDA requires contractors to bring such claims before the US Court of Federal Claims or the agency board of contract appeals, both of which are located in Washington, DC. United Aeronautical Corp. v. United States Air Force, Case No. 21-56377 (9th Cir. Sept. 7, 2023) (Smith, Lee, JJ.) (Collins, JJ., dissenting).

United Aeronautical Corporation (Aero) develops firefighting products, including the Mobile Airborne Fire Fighting System for use in aerial firefighting. The US Forest Service contracted with Aero to develop an updated aerial system to assist the agency in fighting fires. The ensuing prototype necessarily incorporated significant amounts of Aero’s intellectual property. To protect that information, Aero and the Forest Service executed a Data Rights Agreement (DRA) providing that “the technical data produced . . . or used or related” to developing the prototype “shall remain the property of [Aero],” but specifying that the Forest Service “shall have unlimited rights to view and use the data required for the continued use and operation of the” prototype. The Forest Service proceeded to share Aero’s data with the Air Force, which developed an upgraded aerial firefighting system it marketed internationally.

Aero sued the Air Force for misappropriating its trade secret information. Procedurally, Aero brought its claims under the Administrative Procedure Act (APA), seeking a declaration that the Air Force’s actions violated the Trade Secrets Act and federal procurement law, and an injunction prohibiting any further use of that data to develop competing products. Although the Air Force believed it was permitted to use Aero’s trade secrets pursuant to the DRA, it also argued that Aero’s complaint must be dismissed for lack of subject matter jurisdiction. The district court agreed, concluding that the CDA vests exclusive jurisdiction over federal-contractor disputes with the Court of Federal Claims where, as here, the dispute is related to a procurement contract. Aero appealed.

The Ninth Circuit affirmed the dismissal. Aero argued that the APA permits any “person suffering legal wrong[s] because of agency action” to seek redress in a federal district court and that the Air Force’s misappropriation of Aero’s trade secret information—in violation of the Trade Secrets Act—was exactly that. The Ninth Circuit disagreed, concluding that the nature of Aero’s claims (misappropriation, not breach of contract) and the relief it sought (an injunction, not damages or specific performance) mattered little. What mattered was the existence of a contract between the contractor and an agency that “related to” the intellectual property at issue.

Under the APA, a private party cannot bring suit when its claims are “impliedly forbidden” by a different statute that vests exclusive jurisdiction with another tribunal. The Ninth Circuit concluded that the CDA “impliedly forb[ade]” Aero’s claims since it was enacted to create a dispute resolution system for claims concerning federal procurement contracts, vesting exclusive jurisdiction of these disputes with [...]

Continue Reading



read more

Noncompulsory Counterclaims Don’t Confer Appellate Jurisdiction

by | Aug 17, 2023 | , ,

The US Court of Appeals for the Federal Circuit determined that it does not have appellate jurisdiction to review noncompulsory patent counterclaims in a case otherwise unrelated to the originally asserted patents. Teradata Corp. v. SAP SE, Case No. 22-1286 (Fed. Cir. Aug. 1, 2023) (nonprecedential) (Lourie, Taranto, Hughes, JJ.)

Teradata makes and sells data warehouse systems and services. SAP develops and sells software. The two companies began collaborating while SAP was simultaneously developing its own database (HANA) and component software. SAP eventually informed Teradata that it would stop selling certain Teradata products. Teradata sued SAP, alleging misappropriation of trade secrets on the theory that SAP used Teradata’s proprietary information to create HANA. Teradata also alleged various antitrust violations, arguing that SAP “illegally tied” HANA and HANA’s supporting software. In response, SAP filed counterclaims against Teradata for allegedly infringing SAP patents related to database organization and optimization. On Teradata’s motion, the district court agreed to sever one of the four patent infringement claims but allowed the others to proceed. The district court reasoned that Teradata’s claims and SAP’s counterclaims all arose from “the same transaction or occurrence,” namely SAP’s development of HANA.

The district court granted summary judgment to SAP on Teradata’s antitrust and technical trade secret claims and stayed proceedings on Teradata’s business trade secret claim and to Teradata on SAP’s patent counterclaims. Teradata appealed to the Federal Circuit.

SAP moved to transfer the appeal to the Ninth Circuit. The Federal Circuit denied the motion but instructed the parties to address the jurisdictional issue in the merits brief. 28 U.S.C. § 1295(a)(1) grants the Federal Circuit exclusive appellate jurisdiction over final decisions in which a party claims or asserts a compulsory counterclaim related to patents. As it relates to this case, the issue was whether SAP’s patent infringement counterclaims were “compulsory,” meaning SAP would be unable to later sue on these patent infringement allegations “if it did not press them in this action.”

The Federal Circuit began by looking at Federal Rules of Civil Procedure 13(a), which states that a counterclaim is “compulsory” if it arises from the same transaction or occurrence as a plaintiff’s claim. The Court explained that it uses three tests to determine whether the transaction or occurrence is sufficiently related between the claim and counterclaim:

  1. Whether the legal and factual issues are substantially the same
  2. Whether the evidence will be substantially the same
  3. Whether there is “a logical relationship between the claim and the counterclaim.”

Taken together, these tests essentially ask if there is substantial overlap between what the plaintiff and the defendant must establish to succeed on the claim and counterclaim, respectively.

The Federal Circuit found that the first two tests clearly weighed against SAP’s counterclaim being compulsory. While an understanding of the accused products and alleged trade secrets would be necessary for both the claim and the counterclaim, “same-field overlap” is not enough to make the issues or necessary evidence “substantially the same.”

As to the third test, the Federal Circuit found [...]

Continue Reading



read more

Mootness Requires Covenant Not to Sue to Be Unconditional and Irrevocable

by | Jun 29, 2023 |

Addressing a district court decision finding no trade secret misappropriation, the US Court of Appeals for the Fourth Circuit agreed that the alleged trade secret holder had failed to moot the case because its covenant not to sue was both conditional and revocable. Synopsys, Inc. v. Risk Based Security, Inc., Case No. 22-1812 (4th Cir. June 15, 2023) (Agee, Rushing, Dawson, JJ.)

In early 2021, Risk Based Security (RBS) sent a cease-and-desist letter to Synopsys, its competitor in the software security industry, alleging intellectual property misappropriation, including use of RBS’s private database of source code vulnerabilities. Synopsys responded by filing a declaratory judgment action asserting that it had not engaged in trade secret misappropriation. RBS later issued a covenant not to sue in express reliance on certain pretrial representations made by Synopsys, including that Synopsys was not planning to use RBS’s database. RBS moved to dismiss the case as moot based on its covenant, but the district court denied the motion. The district court then ruled on summary judgment that RBS had failed to establish that its alleged trade secrets satisfied the requirements that they have an independent economic value derived from their secrecy and were subject to reasonable efforts to maintain their secrecy. RBS appealed.

The Fourth Circuit first affirmed the rejection of RBS’s covenant not to sue. The Court noted that the covenant was not unconditional and irrevocable because it was expressly premised on Synopsys’s planned future performance, which RBS could later claim was not being met. The Court also relied on the fact that the covenant was limited to the use of RBS’s private database and was thus narrower than the original cease-and-desist letter, which was explicitly not limited to that use. Finally, the Court concluded that there was a continuing live controversy, demonstrated by the fact that, after issuing the covenant, RBS added Synopsys to a pending trade secret case it had filed against Synopsys’s subsidiary. Accordingly, the Fourth Circuit affirmed the district court’s denial of RBS’s motion to dismiss.

On the merits, the Fourth Circuit agreed with the district court that RBS had failed to show that its alleged trade secrets met the independent value or reasonable secrecy elements required by statute. In particular, the Court agreed that RBS’s evidence regarding its value as a company and the revenue it derived from licensing its database could not show independent value for the specific alleged trade secrets contained in the database.



read more

Preliminary Injunction, Meet Irreparable Harm

by | Apr 13, 2023 |

The US Court of Appeals for the Fifth Circuit, in a case where an ex-employer sought preliminary injunctive relief based on an alleged breach of non-disclosure and non-compete agreements and alleged misappropriation of confidential business information, ruled that the Texas presumption of irreparable harm for breach of non-compete clauses does not always apply and that a finding of irreparable harm requires particularized findings regarding the alleged harm. Direct Biologics L.L.C. v. McQueen, Case No. 22-50442 (5th Cir. April 3, 2023) (Davis, Dennis, JJ., Higginson, C.J.).

Adam McQueen previously was executive vice president of Direct Biologics (DB). As a member of DB’s management, McQueen had access to DB’s confidential trade secret information regarding the production and production specifications of DB’s novel medical technologies. To protect that information, McQueen signed both non-compete and non-disclosure agreements with DB, preventing him from providing “services . . . similar to that which [he] provided to [DB],” and from disclosing or using DB’s confidential information.

McQueen resigned from his position and joined Vivex, DB’s direct competitor. Almost immediately DB sued McQueen and Vivex, alleging breach of the non-compete, breach of the non-disclosure agreement and trade secret misappropriation. Shortly thereafter, DB moved for a preliminary injunction to compel McQueen to comply with the non-compete covenant and prevent him from using DB’s confidential and trade secret information. Vivex countered by arguing that McQueen’s new role as vice president of product strategy was a “non-competitive role,” and that McQueen was sequestered from all products that would compete with DB. The district court denied the preliminary injunction motion, agreeing with Vivex that DB failed to provide any evidence that DB had been harmed. DB appealed.

DB argued that the district court erred in two ways—first, by failing to apply Texas’s presumption of irreparable harm based on McQueen’s breach of a non-compete agreement, and second, by failing to correctly apply the irreparable harm analysis by looking only at past actions.

The Fifth Circuit began by reviewing Texas’s presumption of irreparable harm. Under Texas law, the breach of a non-compete agreement can result in a presumption of irreparable harm. But, as the Court explained, the presumption does not always apply. Texas courts can decline to apply the presumption when there is no independent proof of harm. Here, not only did DB fail to produce any evidence that McQueen disclosed or used DB’s confidential information, but there also was evidence showing that he had not. Based on this record, the Court held that it was not an abuse of discretion to decline to apply the presumption.

The Fifth Circuit then analyzed the district court’s irreparable harm analysis. The Court explained that the irreparable harm analysis requires that the trial court make particularized findings regarding whether the harm was likely to occur over the pendency of the litigation, and if so, whether the harm would be difficult to quantify monetarily. While the district court here made findings directed to whether McQueen had caused harm, it did not make any findings regarding what might happen during the litigation. The [...]

Continue Reading



read more

Message Received: US Courts Are Appropriate, More Convenient Venue to Adjudicate US IP Disputes

by | Feb 23, 2023 | , ,

Addressing personal jurisdiction and forum non conveniens in a software licensing dispute, the US Court of Appeals for the Fourth Circuit upheld a district court’s exercise of personal jurisdiction over a Dutch entity and the court’s decision to not dismiss the case for forum non conveniens. dmarcian, Inc. v. dmarcian Europe BV, Case Nos. 21-1721; -2005 (4th Cir. Feb. 14, 2023) (Wilkinson, Heytens, Hudson, JJ.)

dmarcian is a North Carolina-based software company that developed software to help email users authenticate incoming emails. A Dutch businessman who owned Mailmerk contacted dmarcian to offer to market the software in Europe. While dmarcian was initially unreceptive to the offer, the two parties eventually reached an oral agreement for Mailmerk to rebrand as dmarcian Europe BV (dmarcian BV) and sell the dmarcian software in Europe and Africa.

A dispute arose when dmarcian BV claimed ownership of portions of the dmarcian source code. dmarcian BV filed suit in the Netherlands, eventually filing for and winning injunctive relief in the Netherlands when dmarcian terminated dmarcian BV’s license. dmarcian then filed suit in the Western District of North Carolina asking for a preliminary injunction against dmarcian BV, which dmarcian BV opposed with a motion to dismiss for forum non conveniens. The district court denied the motion to dismiss and entered a preliminary injunction that precluded dmarcian BV from operating outside of Europe and Africa and required dmarcian BV to stop using the registered “dmarcian” trademark without a disclaimer. The district court later found dmarcian BV in contempt for violating the preliminary injunction and ordered dmarcian BV to pay $335,000 in sanctions. dmarcian BV appealed the injunction and the sanctions.

dmarcian BV argued that the district court did not have personal jurisdiction. The Fourth Circuit rejected that argument, finding that the North Carolina long-arm statute authorized jurisdiction over dmarcian BV. The Court found that the application of the long-arm statute to dmarcian BV complied with due process because dmarcian BV worked closely with the dmarcian team in North Carolina (e.g., receiving sales leads, attending virtual meetings, coordinating software development), dmarcian BV sought out dmarcian to initiate business, and there was a strong interest in protecting intellectual property rights in North Carolina.

The Fourth Circuit also upheld the denial of the dismissal for forum non conveniens because the Dutch court was not an adequate alternative forum since Dutch courts cannot effectively adjudicate US trademark claims. The Fourth Circuit found that any judgment by the Dutch court would have little effect in the United States and would deny relief to dmarcian for the infringement of its rights.

The Fourth Circuit upheld the preliminary injunction grant, finding that the district court properly applied US and North Carolina law extraterritorially and that dmarcian was likely to succeed on all claims. The Court found that US laws properly applied and that dmarcian was likely to succeed on the following claims:

  • Copyright infringement, because there was a registered copyright, dmarcian BV reproduced elements of the source code outside of the licensing agreement, and [...]

    Continue Reading


read more

Words Matter: Court Sides with Translation Company in Insurance Coverage Dispute

by | Dec 8, 2022 |

The US Court of Appeals for the First Circuit concluded that a company’s general liability insurer was obligated to provide coverage for legal fees incurred in fending off a trade secret and defamation lawsuit brought by a competitor. Lionbridge Tech., LLC v. Valley Forge Ins. Co., Case No. 21-1698 (1st Cir. Nov. 21, 2022) (Kayatta, Selya, Thompson, JJ.)

Lionbridge and TransPerfect are competitors in the language-translation industry. TransPerfect sued Lionbridge for misappropriation of trade secrets and defamation. TransPerfect alleged that Lionbridge concocted a scheme through its corporate owner to feign interest in acquiring TransPerfect and, through this scheme, improperly gained access to TransPerfect’s trade secrets, which could be used to poach TransPerfect’s customers and otherwise undermine TransPerfect’s business.

Shortly after the lawsuit was filed, Lionbridge informed its liability insurance carrier, Valley Forge, about the litigation. Valley Forge initially indicated that it would provide Lionbridge with coverage for legal costs associated with the litigation. Valley Forge subsequently disputed the requested coverage based on both the reasonableness of the fees incurred and the nature of the suit. Lionbridge filed suit against Valley Forge seeking full coverage from Valley Forge for its defense costs. The dispute centered on whether the fees incurred could be considered injury arising out of “[o]ral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organizations goods, products, or services,” as provided by Lionbridge’s insurance policy. The district court granted summary judgment in favor of Valley Forge, finding that Valley Forge did not owe Lionbridge a duty to defend under the relevant policy provisions and exclusions. Lionbridge appealed.

The First Circuit reversed, explaining that an insurer’s duty to defend depends on whether the allegations in the underlying litigation are reasonably susceptible to an interpretation that the policy provisions apply. The focus of the inquiry is the source of the injury, not any specific theories of liability set forth in the underlying complaint. The Court explained that this inquiry required a comparison of the allegation made in the underlying litigation against the insurance policy provisions.

After analyzing the underlying complaint against the insurance policy, the First Circuit determined that the policy provisions applied because the allegations “roughly sketch[ed]” an injury arising from a defamation claim. TransPerfect’s claims were rooted in alleged reputational harm to its business, which fit within the relevant provision. The Court noted that complete overlap between the policy provisions and the claims was not required.

The First Circuit next considered whether any policy coverage exclusions applied to preclude coverage. The relevant exclusions fell into two buckets:

  • Injuries caused by an insured with direct knowledge that its actions would inflict injury, or injuries arising out of an oral or written publication that the insured knows is false
  • Trade secret misappropriation.

Valley Forge carried the burden of proving that either or both categories of exclusions applied. The Court concluded that the first category did not apply because Valley Forge failed to show that all allegations [...]

Continue Reading



read more

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

by | Oct 6, 2022 |

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



read more

Play It Again and Again (Sam): Meanwhile No Injunction, No Fees

by | Sep 15, 2022 |

In its third opportunity to review the district court’s decision in this trade secret case involving flooring, the US Court of Appeals for the Eleventh Circuit again reversed, this time vacating a permanent injunction and an award of attorneys’ fees. The Eleventh Circuit noted that the district court failed to make the findings required to support an injunction and abused its discretion in awarding full fees notwithstanding prior reversal of relief awarded. AcryliCon USA, LLC v. Silikal GmbH, Case No. 21-12853 (11th Cir. Aug. 29, 2022) (Newsom, Marcus, JJ.; Middlebrooks, Distr. J.)

In an earlier appeal in this case, the Eleventh Circuit reversed a ruling on trade secret misappropriation rendered by the district court in favor of AcryliCon USA (AC-USA) and vacated the damages award. An aspect of the Court’s ruling was that the “permanent” injunction entered by the district court was only preliminary in nature (not permanent) and was, as a matter of law, dissolved because the district court did not include it in the original final judgment. On remand, the district court was ordered to determine the appropriate amount of attorneys’ fees the prevailing party should receive. However, the district court just entered the same amount of attorneys’ fees it had originally awarded and again entered a “permanent” injunction barring the use of the trade secret at issue, concluding that it was obliged to do so by the Eleventh Circuit’s ruling in the first appeal.

In the second appeal, the Eleventh Circuit held that AC-USA failed, as a matter of law, to prove its misappropriation claim and reversed the judgment entered in favor of AC-USA on that count. The Court also reversed the district court’s judgment that its $1.5 million damages award could be sustained on the basis of the contract claim once the misappropriation claim was reversed. The Court ruled that, as a matter of law, since AC-USA had failed to prove actual damages on its consequential damages theory, it could only recover nominal damages based on its breach of contract claim. Finally, the Court concluded that AC-USA was entitled to attorneys’ fees only on its breach of contract claim because, under Georgia law, even a nominal damages award would still materially alter the legal relationship between the parties.

In the second remand, the district court awarded essentially the same amount of attorneys’ fees ($1.3 million) to AC-USA but acknowledged that, since Silikal prevailed in vacating the award of compensatory and punitive damages, Silikal “was the prevailing party on the appeal under the terms of the [agreement]” and was entitled to almost $500,000 in attorneys’ fees for its successful appeal. The district court also awarded $100 in nominal damages to AC-USA for its successful appeal on the breach of contract claim. The district court then entered a permanent injunction enjoining Silikal “from disclosing or using in any way, directly or indirectly, the [ . . . resin . . . ] to anyone other than Plaintiff.”

Both parties appealed. AC-USA appealed the award of [...]

Continue Reading



read more

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

by | Feb 4, 2021 |

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.”



read more

BLOG EDITORS

Paul Devinsky

Amol Parikh

STAY CONNECTED

Subscribe

TOPICS

ARCHIVES