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The Application of “Authentication by Comparison” at the PTAB

by | Aug 26, 2021 |

Directly addressing the application and operation of the Federal Rules of Evidence in proceedings before the Patent Trial & Appeal Board (Board), the US Court of Appeals for the Federal Circuit affirmed-in-part and reversed-in-part two inter partes review (IPR) decisions, criticizing the Board’s refusal to consider a particular reference relied upon by the patent challenger on the basis of failure to authenticate. Valve Corp. v. Ironburg Inventions Ltd., U.S. Federal Circuit Court of Appeals Nos. 20-1315, -1316, -1379 (Fed. Cir. Aug. 17, 2021) (Dyk, J.)

The Board found that an IPR petitioner, Valve Corporation, failed to show that several challenged patents were unpatentable based on a non-authenticated copy of a critical prior art reference (the Burns article). The Burns article was a printed copy of a 2010 online review of an Xbox 360 controller. Simon Burgess, a co-inventor of the patents at issue, had facilitated the publication of the Burns article by providing a test controller to Dave Burns (who worked for an online gaming magazine) for promotional purposes. Valve appealed the Board’s decision.

Valve argued that the Burns article copy submitted in connection with the IPR (the Exhibit) was merely a printout of the same online article cited and enclosed in the prosecution histories of the challenged patents, as well as another of Ironburg’s patents directed toward similar subject matter. The Board concluded that Valve failed to show that the Exhibit was the same version of the Burns article that appeared in the prosecution history and that it was not obligated to compare the documents in the absence of testimony from Valve that the two were identical. Valve appealed.

In reviewing the Board’s decision, the Federal Circuit first referred to the principles of authentication by comparison under Fed. R. Evid. 901(b)(3), which permits authentication of a document by a comparison with an authenticated specimen “by an expert witness or the trier of fact.” While the Court did note a discrepancy in the dates shown in the Exhibit and in the Burns article in one of the prosecution histories, the Court found that the difference in dates did not bear on the subject matter being disclosed, which was “virtually identical” between the two, as well as identical to the version of the same article in the other two relevant file histories. The Court held that the Board was obligated to perform this comparison and erred by failing to do so.

After determining that the Exhibit was “substantively the same” as the versions of the Burns article from the relevant prosecution file histories, the Court addressed the question of whether the Exhibit was a printed publication under 35 U.S.C. § 102(a)(1). The Board found “overwhelming evidence” that the Burns article was accessible prior to the critical date of the patents at issue, based in significant part on the fact that Mr. Burgess had provided a controller to Mr. Burns with the purpose of a “dialogue with the intended audience,” an indicia of public accessibility. The Board also noted its agreement with [...]

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Objective Indicia of Nonobviousness for Design Patents: Same Nexus Requirement as Utility Patents

by | Aug 26, 2021 |

The US Court of Appeals for the Federal Circuit reversed two decisions by the Patent Trial & Appeal Board (Board), finding that a soup company and soup dispenser manufacturing company failed to prove the unpatentability of two design patents covering can dispensers. The Court also concluded that the analysis for objective indicia of nonobviousness for utility patents also applies to design patents. Campbell Soup Co. v. Gamon Plus, Inc., Case Nos. 20-2344, 21-1019 (Fed. Cir. Aug. 19, 2021) (Moore, J.)

Gamon Plus owns two design patents directed to “the ornamental design for a gravity feed dispenser display,” or a can dispenser. Gamon’s commercialized embodiment is called the iQ Maximizer gravity feed dispenser. For nearly a decade, Gamon sold tens of millions of dollars’ worth of its iQ Maximizer to Campbell Soup. Campbell attributed increased soup sales in part to the iQ Maximizer in its 10-K Securities and Exchange Commission reports (an industry publication) and in an internal marketing study. Campbell later began purchasing similar gravity feed dispensers from Trinity Manufacturing.

Gamon sued Campbell and Trinity for design patent infringement. Campbell and Trinity then petitioned for inter partes review (IPR) of Gamon’s patents. In its final written decisions, the Board found that Campbell and Trinity failed to prove unpatentability because the prior art was not similar enough to the claimed designs to constitute a proper primary reference. Trinity (Campbell) appealed.

In that appeal, the Federal Circuit disagreed, vacated and remanded. On remand, the Board again held that Campbell and Trinity failed to prove unpatentability, finding that the claimed designs would not have been obvious over the prior art. The Board reasoned that although the prior art alone had the same overall visual appearance as the claimed designs, there existed objective indicia of nonobviousness, including Gamon’s commercial success in selling iQ Maximizers to Campbell, Campbell’s praise of—and commercial success in—using the iQ Maximizer and Trinity’s copying of the iQ Maximizer. The Board presumed a nexus between those objective indicia evidences and the claimed designs because it found the iQ Maximizer to be coextensive with the claims, meaning that the product was essentially the disclosed invention with unclaimed features being insignificant. The Board also found that Gamon established such a nexus regardless of the presumption. Campbell and Trinity again appealed.

Again the Federal Circuit reversed, concluding that the claimed designs would have been obvious over the prior art. In doing so, the Court confirmed the Board’s finding that the prior art and the claimed designs shared the same overall visual appearance (which Gamon did not challenge) but found that the Board’s presumption of nexus and finding of a nexus-in-fact between the claimed designs and the evidence of commercial success and praise were not supported by substantial evidence. As for the presumption, the Court considered whether the iQ Maximizer was coextensive with the claimed invention. Nexus is presumed if the objective indicia evidence is tied to a specific product that is “coextensive” with the claimed invention. The Board recognized that the claimed portions of [...]

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When Pictures Aren’t Pictures: Real Estate Agent-Generated Floor Plans Are Outside Copyright Infringement Exception for Pictorial Representations

by | Aug 26, 2021 |

Examining whether the Architectural Works Copyright Protection Act enacted in 1990 protects the creation of floor plans, the US Court of Appeals for the Eighth Circuit held that such technical drawings generated for practical, rather than artistic, purposes are not covered by a statutory exception that removes the right to control pictures, paintings, photographs or other pictorial representations of their work from architects. Designworks Homes, Inc. et al. v. Columbia House of Brokers Realty, Inc. et al., Case Nos. 19-3608, 20-1099, -3104, 20-3107 (8th Cir. Aug. 16, 2021) (Arnold, J.)

The facts of the case are relatively simple: In the course of selling designed homes, homebuilders hired real estate agents to generate floor plans for use in their listings. The designers of the homes registered copyrights in the homes themselves, then sued the homebuilders and their real estate agents for copyright infringement.

The issue for the Court was whether 17 U.S.C. § 120(a), a statute designed to limit the scope of copyright protection for architectural works, applied to the floor plans that the real estate agents developed. Section 120(a) excludes from the scope of a copyright in an architectural work “the right to prevent the making, distributing, or public display of pictures, paintings, photographs, or other pictorial representations of the work.” The district court held that the floor plans fell within Section 120(a)’s exclusion and, thus, were not covered by the copyright.

The Eighth Circuit disagreed. Employing numerous canons of statutory construction, the Court held that the functional floor plans were neither pictures nor “other pictorial representations” within the meaning of the statute. Drawing from 1990s dictionaries, the Court reasoned that although a floor plan could conceivably be a picture, context showed otherwise. For example, Congress used the phrase “technical drawings” elsewhere in the copyright statute; thus, had Congress intended to exclude them here, it knew how to do so. Moreover, the types of floor plans at issue here were—in the Court’s view—not similar to the other listed categories of items for which copyright protection had been curtailed as the plans did not have any artistic expression.

Practice Note: Not all hope is lost for the homebuilder or developer. Although the Eighth Circuit declined to expressly consider other defenses, it explained that there were others that very readily could apply, including the doctrine of fair use.



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Third Circuit Orders Second Look at Delays and Disgorgement of Profits

by | Aug 26, 2021 |

In a long-running trademark dispute between two charitable organizations, the US Court of Appeals for the Third Circuit found that the appellee did not preserve its challenge to the district court’s denial of summary judgment on its trademark cancelation claims, the appellant waived any challenge to the validity of the defendant’s mark and the district court did not abuse its discretion by declining to award enhanced monetary relief or prejudgment interest. Kars 4 Kids Inc. v America Can!, Case Nos. 20-2813; -2900 (3rd Cir., August 10, 2021) (Shwartz, J.) The Court also vacated-in-part and remanded for the district court to reexamine its laches and disgorgement conclusions under applicable law.

As charitable organizations that sell donated vehicles to fund children’s programs, both America Can (as CARS FOR KIDS) and Kars 4 Kids have used similar trademarks since their respective starts in the early- to mid-1990s. In 2003 and 2013, America Can sent cease and desist letters to Kars 4 Kids after seeing its advertisements in the state of Texas. In 2014, Kars 4 Kids sued America Can for federal and state trademark infringement, unfair competition and trademark dilution claims. Less than one year later, America Can filed its own suit—alleging the same claims—plus a petition to cancel a Kars 4 Kids trademark registration and seeking a nationwide injunction and financial compensation.

Both parties appeal from a denial of their respective summary judgment motions as well as (1) the jury finding that Kars 4 Kids willfully infringed America Can’s trademark rights in Texas, (2) the rejection of America Can’s petition for cancellation of a KARS FOR KIDS trademark registration finding that the registration was not knowingly procured by fraudulent means, (3) the conclusion that laches did not apply against America Can’s claims, (4) disgorgement of Kars 4 Kids profits in Texas totaling about $10.6 million, (5) rejection of enhanced monetary relief and (6) an injunction against Kars 4 Kids with respect to use of its trademark in Texas and from using the carsforkids.com domain name. On appeal, Kars 4 Kids also renewed its motion for judgment as a matter of law, including an argument that America Can’s trademark is invalid.

The Third Circuit rejected Kars 4 Kids’ effort to overturn the jury’s liability verdict, concluding that Kars 4 Kids failed to preserve its challenge to the validity of the CARS FOR KIDS trademark when it left that issue out of its Rule 50(a) motion. Instead, evidence of America Can’s continuous use of the CARS FOR KIDS mark well prior to 2003 predated Kars 4 Kids’ first use of its trademark in Texas in 2003 and established America Can’s ownership of the CARS FOR KIDS trademark in Texas.

However, after examining the laches claim, the Third Circuit explained that it considered (1) the plaintiff’s inexcusable delay in bringing suit and (2) prejudice to the defendant as a result of the delay. With no statute of limitations under the Lanham Act, the parties agreed that their claims are properly analogized to New Jersey’s six-year [...]

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When it Comes to Method of Use Claims, Preamble Language Regarding Intended Use is Limiting

by | Aug 26, 2021 |

The US Court of Appeals for the Federal Circuit issued three separate but related rulings (two precedential, one non-precedential) affirming decisions by the Patent Trial & Appeal Board (Board) regarding the validity of nine US patents and addressing the limitations of preamble language and motivation to combine. Eli Lilly Co. v. Teva Pharmaceuticals, Case Nos. 20-1876, -1877, -1878 (Fed. Cir. August 16, 2021) (Lourie, J.); Teva Pharmaceuticals v. Eli Lilly Co., Case Nos. 20-1747, -1748, -1750 (Fed. Cir. August 16, 2021) (Lourie, J.); Teva Pharmaceuticals v. Eli Lilly Co., Case Nos. 20-1749, -1751, -1752 (Fed. Cir. August 16, 2021) (Lourie, J.). These decisions come as the latest events in a dispute between Teva and Eli Lilly Company over competing products for the treatment of migraine headaches.

Teva owns nine patents directed to humanized antagonist antibodies that target calcitonin gene-related peptide. In 2018, the Food and Drug Administration (FDA) first approved Teva’s version of the biologic fremanezumab (Ajovy®) and then approved Lilly’s biologics license application for galcanezumab (Emgality®) eight days later. Both drugs are part of a new class of migraine therapeutic agents called calcitonin gene-related peptide antagonists.

Lilly challenged the validity of Teva’s nine patents covering Ajovy® in a series of inter partes review (IPR) petitions, arguing that the claims were obvious. The Board instituted IPR for all nine Teva patents. The similarity of subject matter and arguments led to three separate written opinions, each addressing three of the patents. In these decisions, the Board upheld the validity of three of the patents at issue (which covered methods of treating migraines with the antibodies) but found the claims of the six other patents directed to the antibodies themselves invalid.

Lilly appealed the first Board ruling covering methods of treating migraines to the Court. Lilly argued that the Board erred by (1) “reading a result into the constructions of the preambles and the term ‘effective amount,’” which led the Board to erroneously require Lilly to prove that a skilled artisan would have had “a reasonable expectation of achieving a result that was not claimed,” and (2) applying a too-high standard when weighing evidence to determine whether a skilled artisan would have a reasonable expectation of success. Lilly contended that a claim preamble containing only a statement of purpose cannot be a claim limitation and that no weight should have been given to the preambles. Teva argued that Lilly was basing its analysis on a false dichotomy between “limiting preambles” and preambles that are mere statements of purpose.

The Federal Circuit found the claim preambles to be limiting, reasoning that claims directed to methods of using compositions “are not directed to what the method ‘is’” but rather to “what the method ‘does,’” which usually is recited in the preamble. The preambles provided the only metric by which one practicing the claim could determine whether the amount administered is an “effective amount” and provided the antecedent basis for at least one later claim term in the independent claims.

After finding the preambles to [...]

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Federal Circuit Finds Interlocutory Appeal Untimely

by | Aug 19, 2021 |

Addressing the time limits for filing an interlocutory appeal in patent cases, the US Court of Appeals for the Federal Circuit dismissed such an appeal as untimely, finding that the appellant did not file within 30 days of all liability issues except for a determination of damages being resolved. Mondis Technology Ltd. v. LG Electronics Inc., Case No. 20-1812 (Fed. Cir. Aug. 3, 2021) (Hughes, J.)

Mondis Technology sued LG Electronics for infringement of a patent related to display technology. In a consolidated district court case joining other parties to dispute with LG, a jury found that (1) LG infringed certain claims of the patent owned by Mondis, (2) the patent claims were not invalid and (3) LG’s infringement was willful. The jury awarded $45 million in damages. LG filed multiple post-trial motions relating to infringement, invalidity, willfulness and damages. In September 2019, the district court denied LG’s motions regarding infringement, invalidity and willfulness. Then, in April 2020, the district court granted LG’s motion for a new trial on damages.

Within 30 days of the April 2020 order, LG filed a notice of interlocutory appeal with the Federal Circuit, seeking to challenge the denial of its three post-trial motions.

The Federal Circuit first discussed its jurisdiction to hear interlocutory appeals under 28 U.S.C. § 1292(c)(2), which provides the Court with exclusive jurisdiction over “an appeal from a judgment in a civil action for patent infringement which would otherwise be appealable to the . . . Federal Circuit and is final except for an accounting.” The Court explained that appeals under this section are subject to the time limits of § 2107(a), which in this case would give LG 30 days from the date the judgment became “final except for an accounting.” The Court cited to a previous case in which it held that a judgment is “final except for an accounting” under § 1292(c)(2) when all liability issues have been resolved and only a damages determination remains. The Court further supported its position by citing the Supreme Court of the United States’ 1988 decision in Budinich v. Becton Dickinson in which it found that the merits decision was final after the first post-trial order that resolved all issues except for attorneys’ fees. The Court thus found that all such liability issues were resolved as of the district court’s September 2019 order and that the 30-day clock started at that time.

LG also argued that Rule 4 of the Federal Rules of Appellate Procedure tolled the time to file its appeal. Rule 4(a)(4) provides that “the time to file an appeal runs for all parties from the entry of the order disposing of the last such remaining motion.” The Court disagreed with LG’s characterization, citing a Third Circuit opinion which found that a motion only tolls the time to file interlocutory appeals if the motion relates to the interlocutory judgment. The Court found that Rule 4(a)(4) did toll the time to file the interlocutory appeal but only until motions concerning liability [...]

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Without More, Mere Automation is Abstract—Not Construing Interchangeable Terms Doesn’t Give Them the Cold Shoulder

by | Aug 19, 2021 |

In the latest development relating to patent eligibility of content-based identifier patents, the US Court of Appeals for the Federal Circuit affirmed decisions finding patent claims ineligible under 35 U.S.C. § 101. PersonalWeb Techs. LLC v. Google LLC, YouTube, LLC, Case No. 20-1543 (Fed. Cir. Aug. 12, 2021) (Prost, J.) (consolidating PersonalWeb Techs. LLC v. Facebook, Inc., Case No. 20-1553, and PersonalWeb Techs. LLC, Level 3 Commc’ns. LLC v. EMC Corp., VMWare, Inc., Case No. 20-1554).

PersonalWeb sued technology companies in the Eastern District of Texas in 2011 over three of its patents. The patents were directed to data-processing systems that assign each data item a substantially unique content-based identifier, generated by hash algorithm, which changes when the content changes and is used to perform data-management functions. Several defendants successfully motioned for transfer to the Northern District of California, where their companies were headquartered and/or their employees responsible for the development of the accused products were based. After claim construction in Texas, the cases were transferred and stayed pending several inter partes reviews before the US Patent Trial & Appeal Board (Board). Previous decisions before the Federal Circuit affirmed the Board’s findings that using hash-based identifiers for data management was disclosed in the prior art, that content-based identifiers in performing file-management functions, such as backing up files, were also known and other independently unpatentable aspects were recited in the claims. After the stay was lifted, the California court granted the defendants’ motion for judgment on the pleadings that the remaining asserted claims were patent ineligible under 35 U.S.C. § 101. PersonalWeb appealed.

To assess patent eligibility, the Federal Circuit applied the two-step Mayo/Alice framework. Under step one (determining whether the claims at issue are directed to a patent-ineligible concept, such as an abstract idea), the Court considered the focus of the claimed advance over the prior art and found that the claims were directed to an abstract idea. PersonalWeb contended that its claims were directed to “a substantially unique, algorithm-derived, content-based identifier for all data items in a networked computer, which allows a computer within a network containing diverse computing and storage systems to locate and distribute data without knowing either the file system of any device within the network or the conventional name of any data item.” However, the Court adopted the district court’s view, which was that the patents were directed to “(1) using a content-based identifier generated from a ‘hash or message digest function,’ (2) comparing that content-based identifier against something else, [that is,] another content-based identifier or a request for data; and (3) providing access to, denying access to, or deleting data.” Given the focus in Mayo/Alice step one of “whether the claims of the asserted patents fall within the excluded category of abstract ideas,” and citing to parallel examples from precedent cases, the Court concluded that the claims were directed to the use of an algorithm-generated content-based identifier to perform the claimed data-management functions, which include controlling access to data items, retrieving and delivering copies [...]

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If Intrinsic Evidence Provides a Clear Meaning, Just Stop

by | Aug 19, 2021 |

The US Court of Appeals for the Federal Circuit vacated a final written decision of the Patent Trial & Appeal Board (Board) based on its finding that the Board erred in its ultimate claim construction by relying on extrinsic evidence that was inconsistent with the intrinsic evidence. Seabed Geosolutions (US) Inc. v. Magseis FF LLC, Case No. 20-1237 (Fed. Cir. Aug. 11, 2021) (Moore, C.J.)

In April 2018, Seabed Geosolutions petitioned for inter partes review of a patent owned by Magseis directed to “seismometers for use in seismic exploration.” Every claim recited a “geophone internally fixed within” either a “housing” or an “internal compartment” of a seismometer. The Board construed this limitation to require a non-gimbaled geophone based entirely on extrinsic evidence. The Board found that the term “fixed” had a special meaning of “non-gimbaled” at the time of the invention. Based on this finding, the Board determined that Seabed had failed to prove that the challenged claims were unpatentable because the cited prior art did not disclose a non-gimbaled geophone. Seabed appealed.

The Federal Circuit reversed the Board’s claim construction of the term “fixed” because it relied on extrinsic evidence that was inconsistent with the intrinsic evidence and unnecessary to consider given the clarity of the intrinsic evidence. The Court reminded the Board that it “resort[s] to extrinsic evidence to construe claims only if it is consistent with the intrinsic evidence,” and that “[i]f the meaning of a claim term is clear from the intrinsic evidence, there is no reason to resort to extrinsic evidence,” citing prior Federal Circuit decisions.

Contrary to the special meaning found by the Board, the Federal Circuit determined that the term “fixed” carried its ordinary meaning (i.e., attached or fastened). The Court found that the term “specifies the geophone’s relationship with the housing, not the type of geophone.” As an initial matter, the specification was silent as to whether the geophone was gimbaled or not. “That silence does not support reading the claims to exclude gimbaled geophones,” in part because the specification used the term gimbaled when describing other aspects of the invention. Had the applicant intended to limit the claimed geophone, it would have done so.

Furthermore, the specification described the internal mounting of the geophone as a key feature to overcome issues with the then-conventional method of separating the geophone from the seismometer’s other components. The specification reiterated that by internally mounting the geophone, the invention was “self-contained.” The prosecution history also revealed that both the applicant and examiner understood the term to carry its plain and ordinary meaning, equating “internally fixed within” with “disposed, and electrically connected, within.” That equivalence indicates that the term was intended to describe the relationship of the geophone with the seismometer, rather than to limit the type of geophone as contemplated by the Board. Accordingly, the Court found that the intrinsic record was clear, and that the Board’s reliance on extrinsic evidence—much less extrinsic evidence that was inconsistent with the specification itself—was improper and remanded for [...]

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Publisher’s Co-Authorship Claim Arises Under Copyright Act, Invoking Exclusive Federal Jurisdiction

by | Aug 19, 2021 |

The US Court of Appeals for the Fifth Circuit reversed a district court’s dismissal of a copyright authorship dispute, finding that the district court had exclusive jurisdiction over the case because a book publisher’s claim of co-authorship arose under the federal Copyright Act, not state contract law. Di Angelo Publ’ns, Inc. v. Kelley, Case No. 20-20523 (5th Cir. Aug. 12, 2021) (Higginbotham, J.)

Makeup artist Jentry Kelley and Di Angelo Publications entered into a publishing contract for Kelley’s cosmetics book. Kelley provided Di Angelo with an initial three-page manuscript, which Di Angelo claimed it then transformed into a book while communicating and collaborating with Kelley. The book listed Kelley only as the holder of the book’s copyright. After an initial 1,000-copy print run, Kelley asked Di Angelo to prepare an updated or revised version of the book for sale. Di Angelo claimed it had prepared the updated work when it discovered that Kelley was attempting to work directly with Di Angelo’s printer to reduce the costs she would incur selling the revised edition, which violated the parties’ contract.

After unsuccessful overtures to the printer, Kelley filed a complaint in Harris County, Texas, asking for rescission of the parties’ contract because Di Angelo intentionally misled her regarding publishing costs and overcharged her for publishing services. Kelley alleged that she was the sole copyright owner and that Di Angelo did not develop or have any intellectual property rights in connection with the book. Di Angelo counterclaimed for breach of contract, among other claims, and sought a declaratory judgment that Kelley failed to substantially perform under the contract. Di Angelo alleged that Kelley had prevented it from selling the updated edition of the book.

Following partial summary judgment in favor of Kelley, including on the declaratory judgment claim, Di Angelo filed suit in the Southern District of Texas. Di Angelo disputed Kelley’s claim to exclusive copyright ownership and asserted a single claim for relief: A declaration that Di Angelo owned the copyright in the two editions of the book, as well as any derivative works, and had rights in their printing and distribution. Additionally,Di Angelo alleged that it acquired copyrights in the books by “writing, editing, planning and taking all photographs and making all illustrations, and planning, designing, and arranging the layout” of the book. Kelley moved to dismiss Di Angelo’s declaratory relief claim, characterizing the suit as an end-run around the Harris County rulings against Di Angelo and arguing that there was no federal jurisdiction because Di Angelo’s claim was premised solely on Kelley’s alleged breach of the contract, which was governed by Texas law. Di Angelo responded that resolution of the authorship dispute required the district court to interpret federal copyright law, including definitional and ownership provisions, which the state court lacked jurisdiction to address. The district court agreed with Kelley on the jurisdictional question and granted the motion to dismiss. Noting that the parties’ contract referred to Kelley as the “author,” the district court found that that Di Angelo’s claim [...]

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

by | Aug 19, 2021 |

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 [...]

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