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

by Paul Devinsky | Feb 4, 2021 | Trade Secrets

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 Amol Parikh | Feb 13, 2020 | Technology

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.)

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PTO Introduces Intellectual Property Identifier Tool

by Amol Parikh | Jan 26, 2023 | Uncategorized

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 Tim Dunker | Oct 14, 2021 | EU Update, Trademarks

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 [...]

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USPTO Conducting Patent Eligibility Jurisprudence Study

by Amol Parikh | Jul 15, 2021 | Patents

At the request of Senators Thom Tillis (R-NC), Marie Hirono (D-HI), Tom Cotton (R-AR) and Chris Coons (D-DE), the US Patent & Trademark Office (USPTO) is undertaking a study on the current state of patent eligibility jurisprudence in the United States and how the current jurisprudence has impacted investment and innovation, particularly in critical technologies like quantum computing, artificial intelligence, precision medicine, diagnostic methods and pharmaceutical treatments. On July 9, 2021, the USPTO issued a Federal Register Notice seeking public input on these matters to assist in preparing the study. The deadline for submitting written comments is September 7, 2021.

The Federal Register Notice included 13 concerns on which comments were requested:

Explain how the current state of patent eligibility jurisprudence affects the conduct of business in your technology areas, and identify your technology areas.
Explain what impacts you have experienced as a result of the current state of patent eligibility jurisprudence in the United States. Include impacts on as many of the following areas as you can, identifying concrete examples and supporting facts when possible:
1. patent prosecution strategy and portfolio management;
2. patent enforcement and litigation;
3. patent counseling and opinions;
4. research and development;
5. employment;
6. procurement;
7. marketing;
8. ability to obtain financing from investors or financial institutions;
9. investment strategy;
10. licensing of patents and patent applications;
11. product development;
12. sales, including downstream and upstream sales;
13. innovation and
14. competition.
Explain how the current state of patent eligibility jurisprudence in the United States impacts particular technological fields, including investment and innovation in any of the following technological areas:
1. quantum computing;
2. artificial intelligence;
3. precision medicine;
4. diagnostic methods;
5. pharmaceutical treatments and
6. other computer-related inventions (e.g., software, business methods, computer security, databases and data structures, computer networking, and graphical user interfaces).
Explain how your experiences with the application of subject matter eligibility requirements in other jurisdictions, including China, Japan, Korea, and Europe, differ from your experiences in the United States.
Identify instances where you have been denied patent protection for an invention in the United States solely on the basis of patent subject matter ineligibility, but obtained protection for the same invention in a foreign jurisdiction, or vice versa. Provide specific examples, such as the technologies and jurisdictions involved, and the reason the invention was held ineligible in the United States or other jurisdiction.
Explain whether the state of patent eligibility jurisprudence in the United States has caused you to modify or shift investment, research and development activities, or jobs from the United States to other jurisdictions, or to the United States from other jurisdictions. Identify the relevant modifications and their associated impacts.
Explain whether the state of patent eligibility jurisprudence in the United States has caused you to change business strategies for protecting your intellectual property (e.g., shifting from patents to trade secrets, or vice versa). Identify the changes and their associated impacts.
Explain whether you have changed your behavior with regard to filing, purchasing, licensing, selling, or maintaining patent applications and patents in the United States as a result of [...]

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Making Waves: Post-Employment Contract Assignment Provision Invalid Under California Law

by Sarah Bro | Dec 3, 2020 | Patents

The US Court of Appeals for the Federal Circuit invoked “precedents that are relevant but not directly on point” to examine when employment contract provisions may require assignment of inventions conceived post-employment and without use of the former employer’s confidential information, finding that an intellectual property assignment provision in the employer’s predecessor’s employment agreement was void under California law. Whitewater West Industries, Ltd. v. Richard Alleshouse, et al., Case No. 19-1852 (Fed. Cir. Nov. 19, 2020) (Taranto, J.)

Richard Alleshouse began working for Wave Loch in 2007 as an engineer in the field of large-scale sheet-wave water attractions, which are surf and wave simulators sometimes seen on cruise ships and in water parks. Alleshouse’s many duties for the company included the inspection, assessment and improvement of the company’s wave rides; the development of new rides; and product management of the company’s branded FlowRider sheet wave attraction.

After almost five years with the company, Alleshouse consulted with a lawyer, Yong Yeh, regarding the scope of his employment agreement with Wave Loch, which included intellectual property assignment terms that survived termination of the employment agreement. Following that consultation, Alleshouse and Yeh discussed the idea of starting their own company to design sheet-wave attractions. In August 2012, Alleshouse resigned from Wave Loch, and in October 2012, Alleshouse and Yeh filed provisional patent applications that resulted in three different US patents describing and claiming certain “water attractions involving a flowing body of water on a surface” and “nozzle shapes and configurations which create a flowing body of water over a surface.”

In 2017, Whitewater West Industries, the successor to Wave Loch, sued Alleshouse, Yeh and their new company, Pacific Surf Design, in federal district court in California, asserting claims for breach of contract and correction of inventorship. In particular, Whitewater sought an assignment of the three patents under the terms of Alleshouse’s employment contract with Wave Loch, and claimed that Yeh was improperly listed as an inventor on each of the three patents. The district court ruled for Whitewater and found that the intellectual property assignment provision in Alleshouse’s employment agreement was valid and thus breached due to the failure to assign the patent rights at issue. Alleshouse appealed.

Alleshouse challenged the employment agreement’s intellectual property assignment provision as invalid under California Labor Code § 16600, which prohibits any contract provision that restrains a person from a lawful profession, trade or business, and under § 2870(a), which prohibits requiring an employee to assign over any invention that an employee developed entirely on her own time without using the employer’s equipment, supplies, facilities or trade secret information (with certain enumerated exceptions for employee inventions related to the employer’s business or the employee’s work for the business). The parties agreed on two factual points that were important to the Federal Circuit’s analysis on appeal: that the inventions at issue were not conceived until after Alleshouse left his job at Wave Loch, and that Alleshouse did not use any trade secret or confidential information belonging to Wave [...]

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Administrative Patent Judges – You’re Fired (At Will and Without Cause)

by McDermott Will & Emery | Apr 2, 2020 | Patents

The en banc US Court of Appeals for the Federal Circuit declined to review its October 2019 panel decision holding the appointment of administrative patent judges (APJs) at the US Patent and Trademark Office (PTO) unconstitutional because APJs are appointed as if they are “inferior officers” but vested with authority that is reserved for Senate-confirmed “principal officers” under the Constitution’s Appointments Clause. Arthrex, Inc. v. Smith & Nephew, Inc., Case No. 18-2140 (Fed. Cir. Mar. 23, 2020) (per curiam) (Moore, J., joined by O’Malley, Reyna and Chen, JJ., concurring) (Dyk, J., joined by Newman, Wallach and Hughes, JJ., dissenting).

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