interlocutory appeal Archives

interlocutory appeal

What’s Shaking? Not an Interlocutory Appellate Decision on Damages

by Tessa Kroll | Jan 30, 2025 | Trade Secrets

The US Court of Appeals for the Fifth Circuit dismissed and remanded a district court certified interlocutory appeal concerning the standard for calculating a reasonable royalty under the Defend Trade Secrets Act (DTSA). The Court explained that the rate instruction issued by the district court was erroneous because the parties had not yet gone to trial and the plaintiff had not yet proven liability. Therefore, the issue of damages might never arise. Silverthorne Seismic, L.L.C. v. Sterling Seismic Servs., Ltd., Case No. 24-20006 (5th Cir. Jan. 3, 2025) (Smith, Clement, Higginson, JJ.) (Higginson, J., dissenting).

Silverthorne licensed seismic data to Casillas Petroleum Resource Partners II, LLC, an oil and gas exploration company. Under this arrangement, Silverthorne provided data to Sterling, a seismic data processer, which processed the data and sent it to Casillas. Because Sterling’s data processing required more data than what Casillas had paid for, Sterling was only permitted to forward the data that Casillas had licensed. However, Sterling sent Casillas unlicensed data, which Casillas allegedly showed to potential investors.

Silverthorne sued Sterling for trade secret misappropriation under the DTSA and sought reasonable royalties for Sterling’s improper disclosure. Shortly before trial, the district court issued an order adopting the Fifth Circuit’s definition of “reasonable royalty” in University Computing (1974), which, in this case, would have required Silverthorne to prove what the parties “would have agreed to for . . . use [of] the alleged trade secret.” University Computing predates the DTSA, which provides for reasonable royalties for “disclosure or use of a trade secret.” Silverthorne appealed the order, noting that it would not be able to prove what Sterling would have agreed to pay to use the data, since Sterling was a data processor and not an end user. The district court certified the following question for appeal:

[W]hether a plaintiff is entitled to prove reasonable royalty damages under the DTSA using willing buyer(s) detached from the parties to the litigation when willing buyers (here, oil and gas exploration companies) exist for plaintiff’s alleged trade secret (here, seismic data), but the defendant and comparable entities (here, seismic processors) do not buy or license that trade secret.

An administrative panel of the Fifth Circuit granted leave to appeal.

Majority Opinion

The Fifth Circuit dismissed the appeal as not involving a controlling question of law. The Court explained that interlocutory appeals are only permitted where an order involves a controlling question of law, the resolution of which would materially and immediately affect the outcome of litigation in the district court. The Fifth Circuit emphasized that a question is not controlling just because the answer would complicate a litigant’s ability to make its case or because the answer could save the parties from a post-judgment appeal. Applying these principles, the Court reasoned that damages issues generally do not control a case until the plaintiff establishes liability, unless the damages issue would be dispositive. Because Silverthorne had not yet established liability and was not barred from proving damages under the district court’s definition [...]

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More Delays: Appeal Dismissed under Collateral Order Doctrine

by Kathleen Lynch | Jan 12, 2023 | Patents

The US Court of Appeals for the Federal Circuit dismissed a patent holder’s interlocutory appeal for lack of jurisdiction under the collateral order doctrine. Modern Font Applications LLC v. Alaska Airlines, Inc., Case No. 21-1838 (Fed. Cir. Dec. 29, 2022) (Reyna, Cunningham, JJ.) (Newman, J., dissenting).

Modern Font Applications (MFA) is a nonpracticing entity that holds the exclusive license to a patent disclosing a method for operating systems to read and display nonstandard fonts. In 2019, MFA sued Alaska Airlines in district court for patent infringement. During the proceeding, Alaska Airlines designated portions of its source code files as confidential information for attorneys’ eyes only under the district court’s standing protective order. MFA moved to allow its in-house counsel to access the source code, and Alaska Airlines moved to keep it protected. The district court denied MFA’s motion and granted Alaska Airlines’ motion, finding that the source code amounted to a trade secret and MFA’s in-house attorney was properly excluded as a “competitive decisionmaker.” MFA sought interlocutory appeal of the order.

The Federal Circuit found that it lacked jurisdiction to review the discovery order. The Court explained that US Congress holds appellate courts to the final judgment rule, which states that decisions are only appealable if they end disputes on the merits, leaving nothing but execution of the judgment. A “practical construction” of this rule is the collateral order doctrine, which allows appellate review of a “small class” of attendant rulings. To qualify for review under this doctrine, a decision must be “conclusive”; address an important question, separate from the case’s merits; and be such that an appeal of the final judgment would not encompass a review of the decision at issue. The Federal Circuit stressed that the Supreme Court of the United States “has repeatedly emphasized the limited scope” of this doctrine.

The Federal Circuit found that MFA’s appeal failed the third prong of the collateral order doctrine. The Court noted that across appellate jurisdictions, pretrial discovery orders almost always fail this prong because review of final judgments can usually adequately address discovery issues. MFA argued that dismissing its appeal would prejudice MFA both financially and by eliminating its key litigation strategists and that the district court’s error would not be sufficient to overturn a final adverse judgment. The Court was not persuaded, noting that any financial harm was speculative, and that MFA could hire outside counsel or experts instead of relying on its in-house attorney. The Court also reiterated that to merit review under the collateral order doctrine, the issue must be “effectively unreviewable” on appeal, and the likelihood of an appellant’s success is irrelevant. The Court also found that MFA’s appeal failed the second prong because the exclusion of MFA’s attorney was too entangled with the ultimate outcome of the case to be considered an issue “separate” from the case. Because MFA failed two of three collateral order doctrine prongs, the Court did not address the first prong and dismissed the appeal for lack of jurisdiction.

In [...]

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There Should Be No Secret about Scope of Trade Secret Injunction

by Jodi Benassi | May 26, 2022 | Trade Secrets

In the context of an interlocutory appeal, the US Court of Appeals for the Federal Circuit vacated a portion of a preliminary injunction in a case involving alleged misappropriation of trade secrets for failing to provide sufficient specificity as to what it prohibits. Carl Zeiss Meditec, Inc. v. Topcon Medical Systems, Inc. et al., Case No. 2021-1839 (Fed. Cir. May 16, 2022) (Hughes, Linn and Stoll, JJ.)

Topcon Medical filed an interlocutory appeal, seeking vacatur of a preliminary injunction granted by a district court in the Northern District of California. Topcon asserted that the injunction failed to satisfy Federal Rule of Civil Procedure 65(d) because it did not provide an adequate description of what specific acts are prohibited. Topcon argued that the injunction is ambiguous as to whether it applies to all of its platform or only to a certain module. Topcon further argued that the ambiguities are exacerbated by the district court’s misunderstanding of evidence presented from a declaration and deposition in the case and the court’s use of that evidence to draw conclusions about the misappropriation of trade secrets.

The Federal Circuit agreed with Topcon that the preliminary injunction failed to provide any notice required under Rule 65(d) as to whether—and to what extent—Topcon’s continued use of the platform and modules is outlawed. As to the basis for the injunction, the Court noted that “the district court did not address whether all [the] information [asserted in the complaint] was confidential, or whether it was acquired, used, or disclosed improperly. Second, as Topcon convincingly argues, the scope of the asserted trade secrets captured under CZMI’s argument is staggering, including unspecified software architecture, unnamed user interfaces, generically noted research, and other information simply identified as trade secrets.” The Court explained that Rule 65(d) expressly requires that the injunction order must “describe in reasonable detail—and not by referring to the complaint or other document—the act or acts restrained or required.” The Court further agreed with Topcon that the district court’s reference to declaration evidence related to data that was not the data on which the misappropriation claim was based, which “exacerbate[d] the ambiguity of the injunction and in no way support[ed] extending the injunction to cover [other parts of the accused] platform or …decoder.”

Because the grant of injunction did not identify the specific acts prohibited, the Federal Circuit vacated and remanded the injunction to the district court to clarify the scope of the injunction.

Federal Circuit Finds Interlocutory Appeal Untimely

by Paul Devinsky | Aug 19, 2021 | Patents

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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