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The Intersection of Trade Secrets and Patents

The Intersection of Trade Secrets and Patents

A federal court in New Orleans has allowed a trade secret claim to proceed to trial, even though the alleged trade secrets were disclosed in a patent application. Cajun Servs. Unlimited, LLC v. Benton Energy Serv. Co., No. 17-0491 (R. Doc. 241).

The lawsuit concerns Cajun’s patented elevator roller insert system (ERIS), which is a technology used in drilling for oil. Before filing its patent application, Cajun agreed to rent ERIS to Benton Energy. While renting ERIS, Benton Energy hired a third party to reverse engineer ERIS, using drawings and prototypes supplied with the rented system. Cajun eventually filed its patent application for ERIS while still renting the system to Denton Energy.

Cajun initially brought claims for trade secret theft and unfair trade practices. Once a patent was granted for ERIS, Cajun added a patent infringement claim against Benton Energy.

In response, Benton Energy filed a summary judgment motion on Cajun’s trade secret claims. Benton Energy attempted to argue that trade secret claims failed as a matter of law because Cajun publicly disclosed the ERIS technology in its patent application. That is, the information could not be a trade secret because it was no longer a “secret” since it was disclosed in the patent application.

The court disagreed. It noted that “publication of the ‘862 Patent application does not deprive Plaintiffs of a cause of action for misappropriation of trade secrets before the patent application was published.” In other words, the subsequent patent application did not absolve Benton Energy from liability for any misappropriation that occurred before the patent publication.

A non-provisional patent application in the U.S. is normally published eighteen months after its earliest priority date. A non-publication request may be made to prevent publication of the non-provisional application. This holding confirms that before publication, the information disclosed in a patent application may still be afforded trade secret protection.

Protecting Individual Replacement Parts

Protecting Individual Replacement Parts

In Automotive Body Parts Ass’n v. Ford Global Techs. (Fed. Cir. 2019), Ford accused the Automotive Body Parts Association (ABPA) of infringing Ford’s design patents that cover individual parts of Ford’s F-150 truck. The ABPA argued that the patented designs are functional. ABPA further argued the application of doctrines of exhaustion and repair to these patented designs.

The design patent D489,299, titled “Exterior of Vehicle Hood,” claims “[t]he ornamental design for exterior of vehicle hood,” as shown in Figure 1 below.

The design patent D501,685, titled “Vehicle Head Lamp,” claims “[t]he ornamental design for a vehicle headlamp, as shown below in Figures 1 and 2.

A design patent must be directed to an “ornamental design for an article of manufacture” and not one “dictated by function.” High Point Design LLC v. Buyers Direct, Inc., 730 F.3d 1301, 1315 (Fed. Cir. 2013) (interpreting 35 U.S.C. § 171(a)). Although the article of manufacture itself is typically functional, the protected design elements themselves may not be “primarily functional.”

As to functionality, ABPA states that consumers seeking replacement parts prefer hoods and headlamps that restore the original appearance of their vehicles. As such, ABPA concludes that there is a functional benefit to designs that are aesthetically compatible with those vehicles. Specifically, ABPA argues that Ford’s protected hood and headlamp designs are functional because they aesthetically match the F-150 truck.

The Court disagreed with the ABPA’s functionality arguments. Specifically, the Court held that even in the context of a consumer’s preference for a particular design to match other parts of a whole, the aesthetic appeal of a design to consumers is inadequate to render that design functional.

As to exhaustion, ABPA asserts that the sale of an F-150 truck exhausts any design patents embodied in the truck and permits use of Ford’s designs on replacement parts so long as those parts are intended for use with Ford’s trucks.

The Court declined to apply exhaustion to the protected hood and headlamp designs sold by a third party as replacement parts, the Court noting that exhaustion attaches only to items embodying the protected designs sold by, or with the authorization of, the patentee.

As to the right or repair, ABPA argues that purchasers of Ford’s F-150 trucks are licensed to repair those trucks using replacement parts that embody Ford’s hood and headlamp design patents.

The Court also rejected ABPA repair argument noting that the right of repair does not permit a complete reconstruction of a patented device or component. As such, a purchaser may replace “individual unpatented component” of the patented article but does not permit the purchaser to infringe other patents by manufacturing separate patented components of the purchased article. Accordingly, the new hoods and headlamps in question are subject to Ford’s design patents, and manufacturing new copies of those designs constitutes infringement.

This decision reinforces the use of design patents to protect the manufacturer of individual replacement parts to be used in a purchased article.

Predictability and Criticality as Factors in the Evaluation of a Patent Specification

Predictability and Criticality as Factors in the Evaluation of a Patent Specification

The Court of Appeals vacated the decision of the Patent Trial and Appeal Board in In Re Global IP Holdings (Fed. Cir. 2019), instructing the Board to include predictability and criticality as factors to consider in determining whether Global IP’s written description satisfies the proper legal standard.

Global IP filed a reissue application in U.S. Patent No. 8,690,233 to replace the term “thermoplastic” with “plastic” in three independent claims. In the reissue application, the inventor filed a declaration that, at the time of the invention, he was aware of the use of plastics other than thermoplastics for the formation of a sandwich-type composite panel with a cellular core.

The Examiner rejected Global’s reissue claims finding that “the specification only supports thermoplastics“ and that Global “cannot claim the full range of plastics, which would include thermosetting as well as thermoplastics” thereby introducing new matter. The Board affirmed the Examiner’s rejection explaining that “regardless of the predictability of results of substituting alternatives, or the actual criticality of thermoplastics in the overall invention, [Globla’s] Specification, as a whole, indicates to one skilled in the art that the inventors have possession only of the skins and core comprising specifically thermoplastics.”

The Court held that the Board was mistaken in its legal analysis of whether Global’s specification complies with the written description requirement. The Court stated that “the level of detail required to satisfy the written description requirement varies depending on the nature and scope of the claims and on the complexity and predictability of the relevant technology.” The Court further stated that, in addition to predictability, the criticality or importance of an unclaimed limitation to the invention can be relevant to the written description inquiry.

Accordingly, a variation that is predictable to a person of ordinary skill in the art is more likely to be covered by a specification. Moreover, variations of a non-critical component of the invention are more likely to be covered by the specification.

Amazon Program for Patent Infringement Complaints

Amazon Program for Patent Infringement Complaints

Amazon is testing a new program to handle infringement complaints brought by patent owners against third-party retailers.

The program is called the “Utility Patent Neutral Evaluation.” The patent owner must provide a $4,000 deposit with a patent infringement complaint. The third-party retailer must provide another $4,000 deposit if they wish to respond to the complaint. Once the third-party retailer has responded, the patent owner can respond one last time.

A third-party attorney holds both deposits and performs a neutral review of the infringement complaint based on the submitted complaint and responses. Each submission cannot exceed fifteen (15) pages.

The third-party response cannot include invalidity arguments unless the USPTO or a court has already addressed this argument.

A decision is issued within a few months. If the patent owner wins, the infringing listing is removed, and the patent owner gets their deposit back. If the third-party retailer wins, the listing is maintained, and the third-party retailer gets their deposit back. If the third-party retailer decides not to participate, the listing is removed.

One limitation is that the program cannot be used for products made and offered by Amazon. Rather, the program is limited to allegations against third-party retailers selling their products through Amazon.

In re Morinville: Computer Generated Business Organization Not Patentable

In re Morinville: Computer Generated Business Organization Not Patentable

In the case of In re Morinville, the Court of Appeals for the Federal Circuit (“Court”) affirmed on appeal the decision of the Patent Trial and Appeal Board (“PTAB”) to reject all the claims of U.S. Patent Application No. 11/003,557 (“Application”).

As shown below, independent claim 1 of the Application recites a method of reorganizing a business hierarchy into a more centralized functional hierarchy.

  1. A method implemented in a computer for dynamically generating a hierarchal functional structure from a hierarchal operational structure, comprising the steps:
    providing a hierarchal operational structure of unique positions within an organization;
    associating one of a plurality of roles with each of the positions, wherein each of the roles has a corresponding major function, and wherein at least a subset of the roles is non-unique;
    identifying a first one of the positions;
    identifying positions in the hierarchal operational structure that are subordinate to the first one of the positions and that have roles which have at least one functional level in common with the role of the first one of the positions; and
    generating a hierarchal functional structure of the identified positions; and
    controlling user access to business processes based on the hierarchal functional structure;
    wherein each of the steps is automatically implemented in the computer.

Under the first step of the Alice framework, the Court affirmed that claim 1 is directed to an abstract idea. Specifically, the abstract idea of creating a functional organizational structure from a hierarchal operational structure and controlling access to business processes based on the created functional structure.

Concerning the use of a computer to implement the rules that define the implementation of the abstract idea, the Court noted that computer-based efficiency does not save an otherwise abstract idea.

Moreover, concerning the defined rules themselves, the Court noted that rules implemented on a computer that were previously available to be implemented without the assistance of a computer also could not save an otherwise abstract idea.

Under the second step of the Alice framework, the Court affirmed that the recitation of the generic computer does not provide the requisite inventive concept and, as such, is insufficient to transform the method recited in claim 1 into a patent-eligible invention.

Concerning the inventive concept, the Court noted that such features must be more than “well-understood, routine, conventional activity.”

Comments: While software can be patent eligible in the U.S., the recited steps of the claimed software method must be defined with specificity and not as a black box.

In drafting these specific software steps, the recited functionality should not describe functions that can be reasonably performed by a human without the assistance of a computer.

Moreover, the claimed software steps should not describe only functionality that is regularly provided by an operating system implemented on the computer.

John C. Laurence
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