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Another Motion to Dismiss Federal Defend Trade Secret Act Claim is Denied

Another Motion to Dismiss Federal Defend Trade Secret Act Claim is Denied

Following a national trend, another Defend Trade Secrets Act (DTSA) claim has survived a motion to dismiss filed in a California district court. The DTSA enables trade secret owners to pursue trade secret misappropriation claims in federal court if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce. In the recent Volans-i, Inc. v. SpektreWorks, Inc. case, the parties both developed and built long-range high-payload aircrafts known as drones. Pursuant to a consulting agreement, the defendant allegedly assisted Volans-i with design, engineering, testing and other work related to Volans-i’s C-10 and C-20 drones and had access to Volans-i’s trade secrets related to the same. The consulting agreement allegedly prohibited SpektreWorks from using Volans-i’s confidential information or its consultant work product other than to provide consulting services to Volans-i. Volans-i alleged that in violation of the DTSA and in breach of the parties’ agreement, the defendant sold a knockoff of its C-10 containing an avionics board which copied the design of Volans-i’s avionics board and utilized many identical components—thereby “copying plaintiff’s design and component choice[.]” 2019 U.S. Dist. LEXIS 90923, at *5. In its motion to dismiss, SpektreWorks argued...

Is Employer to Whom Trade Secrets are Allegedly Disclosed a Necessary Party in DTSA Claim Against Former Employee?

Is Employer to Whom Trade Secrets are Allegedly Disclosed a Necessary Party in DTSA Claim Against Former Employee?

Given increased employee mobility, claims under the Federal Defend Trade Secrets Act (DTSA) are on the rise. The DTSA provides a federal cause of action for misappropriation of a trade secret related to a product or service used in, or intended for use in, interstate or foreign commerce. See 18 U.S.C. § 1836(b). When considering a complaint against a former employee for violations under the DTSA, is the new employer to whom information is allegedly disclosed a necessary and indispensable party? A Massachusetts district court recently said no. In Phio Pharms. Corp. v. Khvorova, the plaintiff Phio Pharmaceuticals Corporation (PPC) sued the defendant—the company’s former Chief Scientific Officer—for misappropriation under the DTSA. PPC alleged that the defendant assigned to U Mass Medical School (defendant’s new employer and competitor of PPC) a patent application describing a class of molecules that PPC and the defendant allegedly investigated while the defendant was working for PPC. PPC sought the return of all trade secret information allegedly in the defendant’s possession and an injunction against further use or disclosure of its confidential information. The defendant moved to dismiss claiming that U Mass was an indispensable party under Federal Rule of Civil Procedure 19. The court...

CAFC Decision Issues Interpreting the Original Patent Requirement

CAFC Decision Issues Interpreting the Original Patent Requirement

As reported in a prior post, the Court of Appeals for the Federal Circuit (CAFC) recently had the opportunity to revisit the legal standard for invalidating reissue patent claims under the original patent requirement. In Forum US, Inc. v. Flow Valve, LLC, the CAFC affirmed a district court grant of partial summary judgment that certain reissue claims were invalid under the original patent requirement of 35 U.S.C. § 251. In the process, the Federal Circuit reaffirmed the legal standard set forth in a 2014 CAFC decision, Antares Pharma, Inc. v. Medac Pharma Inc., 771 F.3d 1354 (Fed. Cir. 2014). In Antares Pharma, the Federal Circuit held that to comply with the original patent requirement, an invention claimed in a reissue patent must either be for: (i) the same invention disclosed in the original patent or (ii) a newly claimed invention “clearly and unequivocally” disclosed as a separate invention in the original patent. See id. at 1362-1363. In Forum US, the plaintiff sought a declaratory judgment that claims 14-20 of U.S. Reissue Patent 45,878 were invalid. The original patent related to the machining of pipe joints used in the oil and gas industry. Each of the thirteen original patent claims required...

Recent Decision Highlights Importance of Pleading Compliance with the Federal Patent Marking Statute

Recent Decision Highlights Importance of Pleading Compliance with the Federal Patent Marking Statute

A Delaware district court recently held that a patentee failed to state a claim for past patent infringement damages where the patentee failed to plead compliance with the patent marking statute in its complaint. See Express Mobile, Inc. v. Liquid Web, LLC, C.A. Nos. 18-01177-RGA, 18-01181-RGA, 2019 U.S. Dist. LEXIS 64362, at *5 (D. Del. Apr. 15, 2019). The decision highlights the importance of pleading compliance with the marking statute even where a product covered by the patent is not being offered for sale or sold in the United States. The federal patent marking statute (“Marking Statute”) provides a limitation on recoverable damages in patent litigation. See 35 U.S.C. § 287(a). It provides that “Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word ‘patent’ or the abbreviation ‘pat.,’ together with the number of the patent.” The Marking Statute further provides that “[i]n the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except...

Another District Court Addresses Viability of “Continuing Misappropriation” Under the Federal Defend Trade Secrets Act

Another District Court Addresses Viability of “Continuing Misappropriation” Under the Federal Defend Trade Secrets Act

The Federal Defend Trade Secrets Act (DTSA) provides a federal cause of action for misappropriation of a trade secret related to a product or service used in, or intended for use in, interstate or foreign commerce. See 18 U.S.C. § 1836(b). The DTSA applies to any trade secret misappropriation for which any act occurred “on or after the date of the enactment” of the DTSA. See P.L. 114-153 § 2(e). A Missouri district court recently held that the DTSA applies to trade secret misappropriation that continues after the DTSA enactment date (May 11, 2016)—even if the misappropriation began before the enactment date, see Roeslein & Assocs. v. Elgin, Civ. No. 17-1351(JMB), 2019 U.S. Dist. LEXIS 6981, at *36 (E.D. Mo. Jan. 15, 2019), adding to mounting precedent concluding the same. In Roeslein, developers of energy production facilities sued one individual (a former employee) and three corporate defendants for violation of the DTSA, among other claims. The corporate defendants moved to dismiss claims asserted against them under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that the plaintiffs’ DTSA claims were not cognizable because the plaintiffs failed to allege misappropriation on or after the DTSA’s enactment date. The court granted-in-part...

New CAFC Decision Interpreting the Original Patent Requirement of 35 U.S.C. § 251 May Be Imminent

New CAFC Decision Interpreting the Original Patent Requirement of 35 U.S.C. § 251 May Be Imminent

As intellectual property litigators who litigate reissue patents know, the Federal Circuit has not decided a case based on the original patent requirement of 35 U.S.C. § 251 since the 2014 Antares Pharma, Inc. v. Medac Pharma Inc. decision. 771 F.3d 1354 (Fed. Cir. 2014). In Antares Pharma, the court held that to comply with the original patent requirement, an invention claimed in a reissue patent must either be for: (i) the same invention disclosed in the original patent or (ii) a newly claimed invention “clearly and unequivocally” disclosed as a separate invention in the original patent. See id. at 1362. An appeal of a decision in Forum US, Inc. v. Flow Valve, LLC, Civ. No. 17-495-F (W.D. Ok.), Docket Entry 45, (CAFC Appeal No. 18-1765) invalidating certain claims pursuant to the original patent requirement is scheduled to be argued at the Federal Circuit on January 11, 2019 and may result in a new precedential decision applying the original patent requirement. In Forum US, the plaintiff sought a declaratory judgment that claims 14-20 of U.S. Reissue Patent 45,878 were invalid. The original patent related to the machining of pipe joints used in the oil and gas industry. Each of the 13...

Need for Close Attention to Proposed Reasonable Royalty Evidence

Need for Close Attention to Proposed Reasonable Royalty Evidence

A recent court decision precluding a patent owner from relying on any of its proffered evidence to support a proposed reasonable royalty rate should be studied carefully by patent owners. See Acceleration Bay LLC. v. Activision Blizzard Inc., C.A. No. 16-00453-RGA, 2018 U.S. Dist. LEXIS 178362 (D. Del. Oct. 17, 2018). The case underscores how closely courts are evaluating evidence put forward to support a proposed reasonable royalty and the need to carefully vet such evidence (and decide who will present it) early in the case. In Activision, the defendant moved to preclude the plaintiff’s damages theories and supporting evidence. The court granted-in-part defendant’s motion. The plaintiff patentee had sought to support its proposed reasonable royalty rate of 15.5 percent with four pieces of evidence: (1) testimony of its Vice President of Licensing; (2) testimony of its CEO; (3) an industry report; and (4) an agreement between the defendant and a third party. The court precluded all four categories of evidence. First, the court precluded the testimony of the plaintiff’s licensing executive, stating that a reasonable royalty opinion is necessarily based on specialized knowledge, which the executive lacked. The court also found that the executive lacked personal knowledge of the...

Using IPR To Trigger Prosecution Disclaimer

Using IPR To Trigger Prosecution Disclaimer

A recent district court decision found prosecution disclaimer stemming from statements by a patentee distinguishing its inventions from the prior art when opposing inter partes review. See Game & Tech. Co. v. Blizzard Entm’t, Inc., 2018 U.S. Dist. LEXIS 58424 (C.D. Cal. Apr. 4, 2018). As alleged infringers are increasingly filing petitions for inter partes review of patents asserted against them, the case illustrates how to use statements made by a patentee to oppose inter partes review against them in a related district court patent litigation. In Blizzard Entm’t, Game and Technology Co. Ltd. (GTCO) sued the defendant game developer, alleging that the defendant’s manufacture, sale, and distribution of online games infringed three patents: U.S. Patent No. 8,035,649, 8,253,743, and 7,682,243. After the Court transferred the case from the Eastern District of Texas to the Central District of California, the defendant petitioned for IPR of all patents-in-suit and moved to stay the action pending inter partes review. The Court stayed the case pending inter partes review. In March 2018, the Patent Trial and Appeal Board (PTAB) issued a decision concerning the ‘743 patent, finding all claims unpatentable under 35 U.S.C. § 103. As to the ‘649 and ‘243 patents however,...

Not So Fast: Another Court Limits Use of Reissue

Not So Fast: Another Court Limits Use of Reissue

Barco, N.V. & Barco, Inc. v. Eizo Corp. & Eizo Inc., aff’d, Barco, N.V. & Barco, Inc. v. Eizo Corp. & Eizo Inc., Appeal No. 2017-2086 (Fed. Cir. Apr. 3, 2018) is the latest federal district court decision analyzing the rule against recapture under 35 U.S.C. § 251. The Court of Appeals for the Federal Circuit summarily affirmed the lower court’s decision under Rule 36. As patent applicants are increasingly using the reissue process to try to remove limitations relied upon to distinguish prior art during an original prosecution – in many instances to broaden claim scope to cover a competitor’s product – Barco follows a judicial trend of courts stamping down on this abuse of the reissue statute. Violation of the rule against recapture has been treated as a question of law reserved for the court as opposed to the jury. Courts analyzing the issue use a three step test: 1) whether, and in what respect, the reissue claims are broader in scope than the original patent claims; 2) whether the broader aspects of the reissue claims relate to subject matter surrendered in the original prosecution; and 3) whether the reissued claims were materially narrowed in other respects to...

Rule 37’s “Meet and Confer” Requirement Gaining Steam in Discovery Disputes

Rule 37’s “Meet and Confer” Requirement Gaining Steam in Discovery Disputes

Merz N. Am., Inc. v. Cytophyl, Inc. is the latest federal district court decision analyzing the meet and confer requirement of Federal Rule of Civil Procedure 37. As discovery issues continue to dominate the first 12 to 18 months of civil litigation (depending on the jurisdiction), litigators should review recent decisions, at least one of which denied a discovery motion for failure to adequately meet and confer. Under Rule 37(a)(1), a party moving to compel discovery must certify that it “has in good faith conferred or attempted to confer with the person or party failing to make . . . discovery in an effort to obtain it without court action.” Because neither the Rule nor the advisory notes accompanying it specify which methods of conferring are appropriate, individual courts have interpreted Rule 37’s meet and confer requirement through local rules and judicial decisions. For example, the Local Rules for the Eastern District of Texas require, “at a minimum, a personal conference, by telephone or in person, between an attorney for the movant and an attorney for the non-movant.” Further, while some courts have addressed the merits of a motion to compel despite a failure to adequately meet and confer, see,...