finality Archives | IP UPDATE

Forum contacts must be linked to alleged trade secret misappropriation to establish personal jurisdiction

The US Court of Appeals for the Tenth Circuit affirmed the dismissal of federal and state trade secret misappropriation claims against three out-of-state defendants for lack of personal jurisdiction, finding that although the defendants purposefully directed activities toward Colorado, the plaintiffs failed to establish that their alleged injuries arose out of or related to those contacts. Flux Drive Inc. v. Rong, Case Nos. 25-1308; 26-1013; -1292 (10th Cir. Oct. 30, 2026) (Matheson, McHugh, Federico, JJ.)

Flux Drive alleged that a former senior design engineer, Michael Sparks, conspired with John Qiang Rong, Rong’s wife Leigh Wang, and Zyrcon Global Strategies to misappropriate proprietary technology related to industrial drive equipment and transfer it to PRD Technologies, a Chinese manufacturer. According to Flux, Rong facilitated the alleged scheme by serving as a technical liaison between Sparks and PRD, transmitting a master services agreement under which Sparks performed engineering work for PRD, and helping provide financing to Sparks.

Rong and Wang, both Illinois residents, maintained that Rong merely assisted with communications between Sparks and PRD, and that the $23,000 transferred to Sparks’ Colorado bank account was a short-term bridge loan that was repaid within a month.

Flux sued in the District of Colorado, asserting claims under the Defend Trade Secrets Act (DTSA), the Colorado Uniform Trade Secrets Act, and several common law theories. Rong, Wang, and Zyrcon moved to dismiss for lack of personal jurisdiction. The district court granted the motion and subsequently awarded the defendants attorneys’ fees under Colorado Revised Statutes § 13-17-201, which mandates reasonable attorneys’ fees when certain tort actions are dismissed on a pretrial motion under Rule 12(b). Flux appealed both the dismissal and the fee awards.

The Tenth Circuit first addressed whether the defendants had sufficient contacts with Colorado to support specific personal jurisdiction. The Court explained that the DTSA does not independently authorize nationwide service of process and that Flux therefore had to establish personal jurisdiction under Colorado law and constitutional due process principles.

The Tenth Circuit concluded that Flux had made a prima facie showing that the defendants purposefully directed activities toward Colorado. Rong repeatedly communicated with Sparks, knowing that Sparks resided in Colorado; Sparks testified that Rong was someone to whom he was expected to report; and the defendants transferred $23,000 to Sparks’ Colorado bank account. Those contacts were sufficient to satisfy the purposeful-direction requirement at the preliminary stage.

Flux nevertheless failed to establish that its claims arose out of or were related to those contacts. Although Rong allegedly transmitted the master services agreement, Flux did not explain how that agreement facilitated the theft of its trade secrets. Similarly, Flux offered no evidence that the $23,000 loan was used to purchase equipment employed in the alleged misappropriation, or that the defendants knew or controlled how the funds would be used. The Tenth Circuit emphasized that allegations of a supervisory relationship or participation in a broader scheme, without a factual connection between the forum contacts and the claimed injuries, were insufficient to establish specific jurisdiction. It therefore [...]

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When Is It Really Over? If Additional Proceedings Are Needed, Judgment Is Not Final

The US Court of Appeals for the Federal Circuit, factually distinguishing the concept of finality in this case from its earlier decision in Fresenius USA v. Baxter Int’l, vacated and remanded a district court’s amended final judgment with instructions to dismiss the case as moot in view of parallel proceedings that had found all patent claims invalid. Packet Intelligence LLC v. NetScout Systems, Inc., Case No. 22-2064 (Fed. Cir. May 2, 2024) (Lourie, Hughes, Stark, JJ.)

This dispute was originally before the Federal Circuit in 2020 when NetScout appealed a district court’s judgment that it willfully infringed multiple patents and that none of the patent claims were shown to be unpatentable or invalid. NetScout also appealed the district court’s damages award, which included enhancements. In the first appeal, the Federal Circuit reversed the damages award, vacated the enhanced damages and affirmed the remainder of the decision (Packet I). While the case was on remand to the district court, the Patent Trial & Appeal Board issued final written decisions in a series of inter partes reviews (IPRs) that had been initiated by third parties, finding all claims to be unpatentable as obvious. Packet appealed the Board’s decisions to the Federal Circuit. The district court issued an amended decision on May 4, 2022, after the Federal Circuit’s first decision remanding the case and after the Board’s final written decisions in the IPRs.

NetScout appealed again, arguing that if the Federal Circuit affirmed the Board’s findings invalidating the patents at issue, then the claims at issue in the litigation would all be unpatentable, which would trigger an immediate issue preclusion that would leave Packet unable to collect on any outstanding monetary damages awarded by the district court. Therefore, the question before the Federal Circuit was whether the decision in Packet I rendered the case sufficiently final such that it would be immune to the Board’s subsequent determination of unpatentability.

The Federal Circuit determined that Packet’s infringement judgment was not final before the Federal Circuit affirmed the Board’s unpatentability judgments. The Court discussed its prior decisions on finality, focusing on its 2013 decision in Fresenius in which the Court considered a different concept of finality. In Fresenius, the Court explained that the finality at issue was not the potential res judicata effect on another litigation. Rather, Fresenius was concerned with “whether the judgment in this infringement case is sufficiently final so that it is immune to the effect of the final judgment in the PTO proceedings, as affirmed by this court.” The Federal Circuit stated that in accordance with this concept of finality (also the one at issue in NetScout’s appeal), a litigation is sufficiently final when it is “entirely concluded” so that the cause of action is merged into a final judgment and the final judgment leaves nothing for the court to do but execute the judgment.

Applying this standard to the facts of the case at issue, the Federal Circuit found that Packet’s cause of action remained pending and [...]

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