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Jessica Chesher

Managing Editor


Innovation eReview
Technology Law Digest

Below are summaries to a selection of technology and intellectual property related decisions issued by the Federal and State courts during the month of January 2005. To read the full text of any decision simply click on the case name and a new window will appear.

Trade Secret Misappropriation 

The issue raised by this appeal is whether Natural Biologics, Inc. misappropriated a trade secret from Wyeth in violation of the Minnesota Uniform Trade Secrets Act. The United States Court of Appeals for the Eighth Circuit held: (1) Wyeth properly preserved the secrecy of the information in question such that it was indeed a trade secret; (2) the claim brought by Wyeth was not barred by the three-year statute of limitations period; and (3) the district court did not abuse its discretion by permanently enjoining Natural Biologics from using the misappropriated trade secret. This ruling is important because it demonstrates that communications with former employees can be used to prove the existence of misappropriation. For the full decision see Wyeth v. Natural Biologics, Inc. (8th Cir., January 24, 2005).

Joint Venture Gone Awry

The legal issues in this case are too numerous to summarize, but the ultimate factual issue that presented itself was whether Saudi Basic Industries Corporation (“SABIC”) secretly overcharged its joint venture partners over a period of more than two decades. The Delaware Supreme Court affirmed the decision of the Delaware Superior Court finding both breach of contract and tortious conduct on the part of SABIC, and further affirmed the awarding of damages in excess of $416 million. This ruling is important not because it pronounces any new legal rules, but rather because this case in its entirety demonstrates the importance of closely monitoring joint venture agreements, as well as the dangers associated with blindly assuming partners are indeed faithfully adhering to the terms of the agreement.  For the full decision see Saudi Basic Indus. Corp. v. Mobil Yanbu Petrochemical Co. (Delaware Supreme Court, January 14, 2005).

Inequitable Conduct Ruling

The issues raised by this appeal are whether: (1) the district court properly found there to be inequitable conduct on the part of Bruno Independent Living Aids; and (2) a finding of inequitable conduct on these facts renders the case an exceptional one, thereby supporting the awarding of attorneys fees to the defendant. The United States Court of Appeals for the Federal Circuit held that there was both inequitable conduct and that this inequitable conduct, which occurred because the Director of Engineering withheld pertinent information from the Patent Office, should result in the case being deemed "exceptional." This ruling is important because it demonstrates that statements made to government agencies, in this case the FDA, can be used as an admission during patent prosecution and litigation. For the full decision see Bruno Indep. Living Aids v. Acorn Mobility Services, LTD. (Fed. Cir., January 11, 2005).

Co-ownership of Patents in Divorce

The issue raised by this appeal is whether 35 USC 262 (pertaining to joint ownership of patents) creates a private cause of action to deliver the relief to an inventor when a State court of competent jurisdiction orders a property distribution in a divorce proceeding that affects the ownership of one or more United States Patents. The United States Court of Appeals for the Federal Circuit did not address the issue presented and instead held that it lacked jurisdiction to hear the case given that the plaintiff already had his day in court. Therefore, both Nancy and Oleh Weres remain co-owners of four issued patents despite the fact that Nancy was not an inventor and despite the fact that Oleh was a co-inventor. This ruling is important because it demonstrates the consequences that can befall joint inventors who have not assigned their rights and who remain co-owners. For the full decision see Weres v. Weres (Fed. Cir., January 11, 2005).

Assigner Not A Necessary Party To Litigation

The issue in this case is whether an assignor of a patent who retains a reversionary right (i.e., the right to reobtain an interest in the future) in the patent is a necessary party to any litigation such that the litigation cannot proceed in the assignor's absence. The United States Federal District Court for the Northern District of Illinois held that the assignor is not a necessary party to the litigation where the events that would trigger reversion (i.e., failure to pay and/or insovency) are not present. This ruling is important because it demonstrates that an assignor may avail themselves of the benefit of reversionary protections when licensing without requiring participation in any litigation related to the licensed patent. For the full decision see Pliant Corp. v. MSC Marketing & Technology, Inc. (N.D. Ill., January 10, 2005).

E-mail Supports Oral Agreement

The issue in this case is whether a patent license existed where the evidence suggested that a verbal agreement was reached in face to face negotiations and a subsequent e-mail seemed to confirm the verbal agreement, but where no written contract was ever entered into. The United States Court of Appeals for the Federal Circuit concluded that a genuine issue of material fact exists as to whether the parties agreed to a contract at the meeting and that the district court should not have disposed of the case prior to a trial. This ruling is important because while the Federal Circuit did not find the e-mail to be a contract in and of itself, the court did believe that the e-mail could provide adequate objective evidence to support the existence of an oral agreement. For the full decision see Lamle v. Mattel, Inc. (Fed. Cir., January 7, 2005).

Assignor Estoppel

The issue in this case is whether an inventor who assigns his rights is prevented from later arguing that the patent ultimately obtained is invalid.  The United States Federal District Court for the District of New Jersey ruled that where the inventor represented that his invention had value, executed an inventor’s oath in which he expressed his belief that he was the first inventor of a new and novel invention, reiterated belief in the Assignment and acknowledged receipt of valuable consideration for his rights to the invention, the inventor is prevented from subsequently attempting to invalid the issued patent.  The district court, however, explained that the estopped party may nevertheless argue for a narrow claim construction and/or argue that the accused devices are within the prior art and therefore cannot infringe.  This ruling is important because it demonstrates that the doctrine of assignor estoppel still provides a viable theory in at least some circumstances.  For the full decision see Saint-Gobain Performance Plastics Corp. v. Truseal USA, Inc. (D.N.J., January 6, 2005).

Preemptive Patent Litigation

The issue in this appeal was whether certain threats made by a patent owner created a real and imminent threat of litigation such that the party receiving the threats could file preemptive litigation against the patent owner seeking a declaration that the patent in question was invalid and not infringement. The district court determined that the declaratory judgment action could not proceed because the threats were only hypothetical. The United States Court of Appeals for the Federal Circuit found otherwise, and ordered that the declaratory judgment action proceed. This ruling is important because it demonstrates the dangers associated with making threats of litigation. For the full decision see Electronics For Imagining, Inc. v. Coyle (Fed. Cir., January 5, 2005).

Responding to Patent Office Information Requests

The issue in this appeal was whether a patent applicant can refuse to provide requested information to the Patent Office simply because the requested information is not material to patentability. The United States Court of Appeals for the Federal Circuit ruled that the Patent Office was within its right to request the information and that because the information was not provided the application went abandoned. Under 37 C.F.R. § 1.105 the Patent Office can require information that does not directly support a rejection, provided that the information required is reasonably necessary to treat a matter in an application. This decision is important because it demonstrates the latitude the Patent Office enjoys with respect to information it requests from applicants, as well as the consequences for failure to comply with such requests. For the full decision see Star Fruits S.N.C. v. United States (Fed. Cir., January 3, 2005).

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