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Use of an algorithm disclosed in a textbook in a different field may warrant trade secret protection according to a recent Federal Circuit decision in Masimo Corp. v. True Wearables, Inc., No. 2021-2146, 2022 WL 205485 (Fed. Cir. Jan. 24, 2022). In this case, the Federal Circuit upheld a preliminary injunction to prevent an optimization algorithm from being released even though the defendants presented that the equivalent of the algorithm had been published in a conference paper cited more than 1,200 times and in statistic textbooks since 1960s.

Masimo and Cercacor filed a suit against True Wearables and Dr. Lamego and requested for a preliminary injunction to prevent the plaintiff’s trade secret from being released to the public. The purported trade secret is an optimization algorithm used by the plaintiff on medical devices for measuring blood characteristics. Dr. Lamego is a former employee of Cercacor, who developed the purported trade secret for Cercacor and left Cercacor to found True Wearables (TW). Masimo’s preliminary injunction requested to bar TW’s patent application, which bears Masimo’s trade secret of the optimization algorithm as alleged by Masimo, from issuing. …
Continue Reading Trade Secrets Not So Secret: Conventional Technique, New Application

In addition to conventional warfare, it was recently confirmed by an arm of the Ukraine Ministry of Defense that it hacked trade secrets from a Russian state nuclear utility, and then leaked the trade secrets to a public website to harm the utility’s commercial prospects. Such “hack and leak” operations have been done before by nation-affiliated hackers to attempt to influence political activities of other nations, but this may be the first operation of this type concerning technical trade secrets during warfare. Although the economic impact from this particular operation may be difficult to gauge at this time, this hack and leak of nation state-affiliated company trade secrets may be a sign of things to come in future armed conflicts.
Continue Reading A New Battlefront: Ukraine Resistance Includes Leaks of Russian Trade Secrets

It’s the time of year again when we are taking a look at 2021’s top ten most read posts. This year, we witnessed an increased risk of trade secret theft due to the Great Resignation, proposed trade secret misappropriation penalties as a result of Chinese government trade secret espionage, and the expansion of ITC involvement in trade secret misappropriation. Take a look at our top ten posts that highlight these key developments.
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Continue Reading The Year’s Most Popular Posts

Gavel

A recent case from the Sixth Circuit, addressing a source code agreement, highlights the importance of carefully specifying what happens to source code (and the trade secrets therein) after breach of the agreement.  In Epazz, Inc. v. National Quality Assurance USA, Inc.,[1] the Sixth Circuit affirmed the district court’s decision that a software licensee did not misappropriate a trade secret of the licensor when the licensee acquired the source code from an escrow agent, because the plain terms of the license agreement between the two authorized the release if the licensor breached. Further, the licensee did not commit misappropriation by hiring another provider to maintain and further develop the source code, where the license provided “the right . . . to use the . . . Material” upon breach of the agreement.
Continue Reading Untangling a Messy Dispute: No Misappropriation for Trade Secret Use Authorized by Agreement

The Supreme Court recently denied a petition for certiorari by Monib Zirvi and others, in which petitioners sought Supreme Court intervention regarding the notice required to trigger the statute of limitations clock for trade secret misappropriation claims. The case is Zirvi et al. v. Flatley et al. (Case No. 20-1612). You can review the petition here. The case arises out of a 2018 lawsuit, in which four self-described inventors of DNA Arrays brought suit against Illumina, a “multibillion-dollar, global player in genetic analysis,” alleging that Illumina and its associates conspired to steal Petitioner’s trade secrets and covertly conceal the information in patent applications. According to Petitioners, the DNA Arrays at issue are now used in the detection of cancer, inherited genetic defects, and viral infections such as COVID-19.
Continue Reading Supreme Court Declines to Weigh in on Notice Required to Trigger Statute of Limitations for Trade Secret Misappropriation Claims

In a recent order, a judge in the Western District of North Carolina held that even though Plaintiff filed for a preliminary injunction in the United States, it may also arbitrate the dispute in Switzerland.  This highlights that even with an arbitration agreement in place, trade secret litigation can occur on multiple fronts.
Continue Reading Multi-Front Trade Secret Protection: Moving for Injunction in U.S. Court Does Not Stop Plaintiff from Arbitrating in Switzerland

The Seventh Circuit Court of Appeals recently upheld a preliminary injunction prohibiting a former distributor and its parent company from selling a spine implant device that incorporated trade secret information. Plaintiff Life Spine, Inc. had created a device to correct spinal spacing issues during surgery. Life Spine contracted with Defendant Aegis Spine to distribute the device only to medical facilities nationwide and to keep Life Spine’s confidential information secret and use the confidential information only in furtherance of the business relationship. However, Life Spine alleged that Aegis Spine passed confidential details, such as component dimensions to fractions of a millimeter of the device, to Aegis Spine’s parent company, who quickly developed a similar device that competed against Life Spine’s device. Life Spine sued Aegis Spine and its parent, alleging that Aegis Spine misappropriated its trade secrets, as well as other contractual and tort claims, and sought a preliminary injunction. Based on findings of trade secret misappropriation and breach of contract, the Northern District of Illinois entered a preliminary injunction against Aegis Spine and its business partners from making, marketing, distributing, selling, or obtaining intellectual property rights in the competing device to Life Spine’s device.
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Continue Reading Seventh Circuit Affirms Trade Secret Protection of Patented Spinal Implant Device

While California law is clear regarding the elements required to establish a misappropriation of trade secrets claim, the law has remained unsettled on the elements required to maintain an action for threatened misappropriation of trade secrets. However, in the case of Beauty Barrage LLC, et al. v. Dermaceutical Laboratories LLC, et al., San Francisco Superior Court Judge Anne-Christine Massullo shed some light on the question.
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Continue Reading Addressing Wrinkles in California’s Threatened Misappropriation of Trade Secrets Law

Located in the heart of Europe, Belgium is a true hub of logistics and innovation. It is for example home to one of Europe’s largest sea ports (with all the warehousing infrastructure that one would expect). Belgium also hosts several, globally leading biotech and life sciences clusters. It is no coincidence for example that pharma giant Pfizer has one of its largest production and packaging sites in Puurs, a small Belgian town, where it produces its Covid-19 vaccine. A few miles north, Jansen Pharmaceuticals has its HQ.

Such hubs are not just rich in talented human resources, but also in cutting edge and highly valuable know-how. A high concentration of know-how, combined with the increased mobility of employees, means a high(er) risk of misappropriation of this valuable information by unauthorized (third) parties. When a (foreign) company suspects its know-how has been misappropriated in Belgium, it will need evidence to substantiate this allegation in court. If the know-how is (also) covered by an intellectual property (IP) right, the holder of the know-how has access to a very efficient means of collecting evidence: the descriptive counterfeit seizure whereby discovery-like evidentiary measures will be granted ex parte. When the misappropriated know-how is only protected as a trade secret, no similar measures are provided for under EU law. The Belgian judges have therefore in the past not been very eager to grant trade secret holders access to ex parte evidence-gathering. With a recent judgment, however, the Brussels Court of Appeal has left the door behind which discovery-like measures are stored for holders of trade secrets open.…

Continue Reading Gathering evidence of trade secret infringement in Belgium: towards discovery-like measures?

Changing Patent Protections

U.S. and foreign patent systems have suffered legislative and judicial reverses as
to subject matter eligibility for patenting, a rising bar of obviousness due to increasing skill of the art, insights aided by artificial intelligence (AI) tools, procedural artifacts for no-risk post grant invalidation by granting agencies, and awakening of once dormant…