Federal Circuit: Preliminary Injunctions More Available in Trade Secret Cases (Than in Patent Cases)

Core Labs v. Spectrum Tracer Services (Fed. Cir. 2013)

This case is about stopping former employees from becoming marketplace competitors. Two of Core Labs employees left the company and started a competing firm (Spectrum) servicing the hydraulic fracturing (fracking) industry. Core sued alleging trade secret misappropriation (under Texas Law), copyright infringement and patent infringement. During the lawsuit, Cole received the following email from a new Spectrum employee/whistleblower:

I recently have been contracting with Spectrum. . . . Not long ago I was handed some documents that have your company logos and such on them and had them ask me to recreate the same functionality in other documents and programs for them. From what I have been able to learn I believe you have been in a law suit with my company, and I am not very happy with trying to re-create someone else’s work. I have provided one of the worksheets I have been provided with and have others I can provide if they would be of any assistance. I am not sure if you gave my company permission or not to use these, but it is my intention to learn what the truth of the matter is.

The documents were in fact a copy of Core’s particular Microsoft Excel template file that it used to for its fracking services. In addition to making calculations, the file also includes some customer and price lists. And, the whistleblower had been asked to “incorporate field work functions” into the Spectrum software he was developing.

Despite this evidence, the district court rejected Core’s plea for a preliminary injunction based on the company’s failure to show irreparable harm due to ongoing infringement. On appeal, however, the Federal Circuit has reversed and ordered that the preliminary injunction be instituted.

Patent plaintiffs have been having some difficulty proving irreparable harm at the preliminary injunction stage. Here, however, the Core Labs requested the PI as a mechanism to support its Texas state law trade secret rights. Under Texas state law, a defendant’s possession of a plaintiffs’ trade secret rights is sufficient to create a presumption of irreparable harm. In general, irreparable harm tends to be easier to show in trade secret cases as compared with patent cases since information secrecy is so difficult regain once it is lost. The U.S. Supreme Court wrote on this point in a 1984 Monsanto case: “The economic value of [a trade secret] lies in the competitive advantage over others that [the trade secret holder] enjoys by virtue of its exclusive access to the data, and disclosure or use by others of the data would destroy that competitive edge.”

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In most cases, parties must wait until to appeal until a district court makes its final decision concluding the case. However, the appellate jurisdiction statute provides for interlocutory appeals based on a district court’s grant or denial of injunctive relief. 28 U.S.C. 1292. One interesting aspect of this case is the fact that the Federal Circuit has jurisdiction (rather than the 10th Circuit Court of Appeals since the District Court is located in Oklahoma). The Federal Circuit has jurisdiction over patent cases, but the original complaint (filed in Texas in March 2011) did not include a patent claim. The Texas District court granted defendants’ motion to transfer the case to Oklahoma (10/2011). The plaintiff (Core) later added the patent infringement claim alleging infringement of U.S. Patent No. 6,659,175. Spectrum then filed an inter partes reexamination request and the district court litigation stayed pending resolution of that USPTO procedure. What is unclear to me is how (under old §1295) is how this case “arises under” the patent laws.

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Section 101 issue? The claims of the ’175 patent are interesting because they look very similar to those invalidated by the Supreme Court in Mayo v. Prometheus. In the fracking process, liquid is injected into the well to create small fractures in the subsurface in order to allow better access to the valuable hydrocarbons. For environmental reasons, it is important to recover as much of the injected liquid as possible (it basically squirts back out under pressure). Thus, it is important for the process to measure amount of fluid recovered. The proposed method here is to add a “chemical tracer” to the injected liquid and then use the concentration of chemical tracer recovered as a basis for measuring the amount recovered.

1. A method for determining the extent of recovery of materials injected into a oil well comprising the steps of:

a) preparing a material to be injected into an oil well;

b) admixing therewith a chemical tracer compound at a predetermined concentration;

c) injecting the admixture into an oil well;

d) recovering from the oil well a production fluid;

e) analyzing the production fluid for the concentration of the chemical tracer present in the production fluid; and

f) calculating the amount of admixture recovered from the oil well using the concentration of the chemical tracer present in the production fluid as a basis for the calculation.

= = = = =

As per its usual, the Federal Circuit did not enter into a debate on the benefit/detriment of invention in question – here fracking.

46 thoughts on “Federal Circuit: Preliminary Injunctions More Available in Trade Secret Cases (Than in Patent Cases)

  1. Again, people know how to do basic math. Math works the same way in biology, mining, and horse racing. It’s one of the reasons you can’t patent a method of performing a generic calculation “based on a number”, even if you try hide what you’re doing by reciting some old conventional steps for obtaining that number.

    But the PTO seems to have great difficulty with this for some reason.

  2. Right. So we’ve got an old conventional method that results in a determination followed by an ineligible “calculation”. That’s an ineligible claim.

    Good catch by Dennis.

  3. …and there it is, the sanctimonious bit.

    Thanks Leopold. (only the ‘undeserving’ should just ‘shut up’ now, right?)

  4. Is your above language and comment an example of what you mean when you said you want to ” engage in an exchange of ideas with smart people …”

    Of course not. I wasn’t talking to any of those people at the time.

  5. Logic Game chance for you 6: remind Malcolm that patent eligibility and patentability are different concepts and that perfectly eligible claims can be comprised completely of all [oldsteps].

    It is one fact that his ‘pet theory’ has never been able to take into account.

  6. The irony is delicious as 6 accuse others of ‘reduced capacity,’ and quite misses with his statement of “But, as you and other lawl tar ds are so fond of saying, the method is enabled,

    Someone else (who’s your daddy?) inferred that you were in law school, but the truth is that the LSAT logic portion has prevented you from getting into law school.

    That logic problem is evident here. Good practice for you then, 6, to figure out why.

  7. Nothing like retreating to old canards of ‘WHATEVER’ law, eh Malcolm?

    Attempts to conflate 103 and 101 were shot down in the 9-0 dance-a-jig-baby Prometheus case.

    You left our weekend discussions in rather a huff (or a puff of smoke).

    Gee, I wonder why? Could it be that your worn and tired mantra is simply showing its decrepitness?

    LOL, you need to step up your game, son.

  8. MM: “a series of transforming steps (a-d) leading to a “determination” of some data value (e) and a final step of “calculating” something with the data in (f). Steps (e) and (f), of course, would be ineligible if patented separately..”

    101 Integration Expert: That is totally irrelevant for 101. Diehr said: “The fact that one or more of the steps in respondents’ process may not, in isolation, be novel or independently eligible for patent protection is irrelevant to the question of whether the claims as a whole recite subject matter eligible for patent protection under § 101.” (Diamond v. Diehr – 450 U.S. 175 (1981))

    MM: The proper question under 101, then, is to ask whether the data-gathering steps (a-d) are “old and conventional”. Anyone care to chime in in that regard?

    101 Integration Expert: Why would that be a proper question to ask under 101? Indeed it seems highly improper and in conflict with the Courts mandate to consider the claims as an “Integrated” inseparable whole.

  9. LB said in reply to 101 Integration Expert…

    “Hey, @sswipe, it was your sidekick who brought up the “Point of Novelty” test, not me. Leave me out of your sanctimonious BS.”

    Is your above language and comment an example of what you mean when you said you want to ” engage in an exchange of ideas with smart people having a variety of backgrounds, training, and perspectives, rather than to simply pound the table and repeatedly mouth self-serving, intellectually bankrupt “analysis.” on Feb 27, 2013 at 07:12 AM?

    Talk about being “intellectually bankrupt.

    Reply Feb 27, 2013 at 07:12 AM

  10. Although I’d like to point out to you MM, that they’re not simply “Extrapolating volumes and masses of compositions through the measurement of sub-components of the composition (whether trace or not) is old”.

    What they’re doing is extrapolating the amount (in volume/mass maybe) of a composition (the admixture) within another larger composition (the production fluid) through the measurement of subcomponents of the larger composition. Slightly different, though perhaps you guys do this all the time in bio. I doubt they necessarily did it all the time in the oil industry out on their wells.

  11. “Steps (e) and (f), of course, would be ineligible if patented separately (presumably that’s why even the greedy applicant in this case did not bother to try to patent that “invention”).”

    Mmmmmmm, idk.

    “the data-gathering steps (a-d)”

    Putting admixture into a well is a “data gathering step”? I’m going to be honest, I don’t think it is.

    “Anyone care to chime in in that regard?”

    The patent:

    link to google.fr

    Looks like a-d are old:

    link to google.fr

    At least if we take the actual recovery of the “production fluid” as implicit. Or maybe it is in the reference I can’t be bothered to read the whole thing atm.

    “Extrapolating volumes and masses of compositions through the measurement of sub-components of the composition (whether trace or not) is old.”

    Well then perhaps you should file one of those new fangled reexams, I hear they’re called post grant reviews.

    “There is nothing non-obvious about applying that generic principle (as recited in this piece of cr*p claim) to any composition in any field.”

    I guess that’s why it took 10 years to move from the reference I cited to the patent itself. People in that field probably aren’t quite as bright as you MM.

  12. Wow, I just got fanboied.

    I’ve heard about D’s hordes of fanbois at conferences and all, but this might be the first one I’ve seen on here.

  13. Les sorry I didn’t come right out and say it, yes, the claimed method is using the concentration of tracer in the production fluid so you’re going to need to determine that somehow and do so such that you get a reliable reading. Just how reliable you want your sample to be is up to you. If you want it to be super reliable then you’re probably going to need to take a good bit of the production fluid and maybe do some fancy integrations/monitorings or whatever. But, as you and other lawl tar ds are so fond of saying, the method is enabled, so I didn’t really care to point all that out.

  14. Dennis: The claims of the ’175 patent are interesting because they look very similar to those invalidated by the Supreme Court in Mayo v. Prometheus.

    Indeed they do: a series of transforming steps (a-d) leading to a “determination” of some data value (e) and a final step of “calculating” something with the data in (f). Steps (e) and (f), of course, would be ineligible if patented separately (presumably that’s why even the greedy applicant in this case did not bother to try to patent that “invention”).

    The proper question under 101, then, is to ask whether the data-gathering steps (a-d) are “old and conventional”. Anyone care to chime in in that regard? I haven’t looked at the spec but would not be surprised to see the “analyis” given away in the background of the specification (as was the case in Prometheus).

    It seems to me that even if we ignore the fact that step (f) is a pathetic joke and turns the entire claim into a pile of cr*p, we’re still looking an incredibly obvious piece of j*nk. Extrapolating volumes and masses of compositions through the measurement of sub-components of the composition (whether trace or not) is old. There is nothing non-obvious about applying that generic principle (as recited in this piece of cr*p claim) to any composition in any field. One would hope that a low level Examiner would be able to figure but … we know that’s not how the PTO really works.

  15. I’m sure he means, for example,

    Oh, I know what he ‘means,’ Les; rather, I know what substantial utility under 101 means.

    I am taking issue with his substantive legal error of his saying that the case law says something that it does not. Let’s see him back up his view with a proper cite from the case.

  16. I’m sure he means, for example, that at the end of the last element of the claim one hasn’t yet achieved the goal outlined in the preamble. One has only calculated the amount of admixture recovered, which is not in and of itself, in the view of some, not terribly useful. I would argue that the amount of admixture is useful for further estimation of the total fluid (as called for in the preamble), but some take the position that this intermediate result does not rise to the level of usefulness required by the statute.

  17. What is not in the claim appears to be as important as what is in the claim. It would be a neat trick indeed to be able to calculate per the claim without knowing for instance the volume that you injected the fracking solution into.

  18. No 6, you need to apply a little common sense. While it is not recited in the claim, it is not possible to make any determination at all without also measuring the total amount of production fluid.

    If you pour in 1,000,000 gallons down the hole with 10 gallons of tracer and then measure the concentration of tracer in a sample of the production fluid and find the concentration to be 10/1,000,000 does that mean you got back all of the original fluid?

    No, not if you only got back a 1 gallon sample of production fluid it doesn’t. It just means that what you got back wasn’t diluted with ground water or oil or whatever.

    The claim isn’t reciting a magic process, it outlines a finger print of the “invented” process by which infringing processes can be identified. The fact that you have to monitor concentration over time and the total volume of production fluid and do the associated integration just isn’t specified.

  19. Yes, and just like in Prometheus, this claim fails to satisfy 101 for lack of substantiality of utility.

  20. not me

    Sorry, Leopold, you are wrong and your response (that mirrors your idol Malcolm’s typical response in the gratuitous use of expletives) is quite out of place.

    My post at 4:25 was reflecting your improper use of point of novelty in a 101 mode at 3:49. So in fact, it was you that ‘brought it up.’

  21. Therefore the bringing out the Point of Novelty test every time there is a process claim being analyzed for 101 is highly improper. This can’t be emphasized enough it seems, especially with the likes of LB.

    Hey, @sswipe, it was your sidekick who brought up the “Point of Novelty” test, not me. Leave me out of your sanctimonious BS.

  22. Son, as always you’re as arrogant as you are ignorant. You’re not in Dennis’ league, never have been, never will be. Please stop making public comments that embarrass the family.

    By the way, are you still studying at that third-rate law school that mistakenly accepted you?

  23. Dennis Crouch said: Section 101 issue?

    Well, is the end tracer a naturally occurring compound or correlation as was the correlations between thiopurine metabolite levels and the toxicity and efficacy of thiopurine drugs in Prometheus? If not, there is no manifest law of nature in this claim. And without the manifest LoN there is no need for extra solution activity to be appended to the claims in order to show application, to presumably avoid tying up the basic tools of scientific and technological work, and inhibiting future innovation. Consequently there is no need to look for an “inventive” application as was proscribed in prometheus.

    BTW, the use of the language of “well-understood, routine, conventional activity,” in Prometheus is not a sanctioning of the Court for a point of novelty test in 101. The Court only looked at the extra steps appended to the claims to see if anything new/novel was in the steps that were added to a manifest law of nature. Again, this was strictly limited to “extra” solution activity in the wake of a manifest judicial exception such as a LoN. All process claims do not require an extra solution activity analysis precisely because all process claims are not manifest laws of nature, natural phenomenon or abstract ideas. Therefore the bringing out the Point of Novelty test every time there is a process claim being analyzed for 101 is highly improper. This can’t be emphasized enough it seems, especially with the likes of LB. Bottom line, the claim seems highly integrated so, considering the claim as an inseparable whole, there does not appear to be any 101 issues.

  24. Tell them what, Leopold? That a bunch of hacks on a web blog insist on misusing the canard of ‘point of novelty?’

    Sorry, but I doubt that they would be all that interested in your misdeeds.

    By the way, did you see (yet another) Malcolm Fail on the ‘Working Out the Kinks’ thread?

    Of course you have. You quietly wish to nurse his wounds. Off with you (and bring the red and white pompoms, I hear they are his favorite).

  25. Of an environmental note (per Prof. Crouch’s last comment) is that the ‘well’ that fracking fluids are introduced to are not always ‘captive.’ That is, there is almost always a ‘loss’ of these fluids that are not recovered and that enter the underground aquifers. Contamination (since fracking solutions tend to be toxic) is (and should be a heightened) concern.

  26. You need to read the claim again, it isn’t about putting 10 lbs of admix in and getting 8 pounds back then calculating 80% return. It is about putting 10 lbs of admix in, getting some unknown pounds back, but also getting some tracer back, and using the amount of tracer recovered to calculate (take a good guesstimate actually) as to if you got 8 or whatever pounds of admix back without actually having to ever know how much admix you actually got back.

  27. Umm, it’s pretty difficult to see how the claim could pass non-obviousness…since, if I inject 10 pounds of admixture into my well and get 8 pounds back (mixed into 30,000gallons of oil and water mixture which is, say, 80% oil) I infer an 80% return.

    Open up the leaflet that came with your favorite prescription drug, and see where the admixture involved is a “radioactive tracer” and they infer where the drug went in the body and for how long…

    Now, which substance to use for the tracer and in what form…that should have some non-obviousness to it.

  28. Interesting. It still seems to me that this claim has a more specific end result, i.e., calculating the amount of admixture recovered. From what you say, this is the novel step. (It does appear to be recited at an awfully high level, in that there is no hint as to how the calculation is done, other than that it is based on the concentration of tracer fluid.)

    The Prometheus claim ended with the recitation of a basic fact that could be inferred from a routine measurement, with no real step associated with that. If the Prometheus claim had ended with “calculating a dose of a particular drug in response to determining that the level of 6-thioguanine is less than about 230 pmol per 8×108 red blood cells, wherein the dose is based on said level,” it might have passed muster under 101. It also would have been considerably less valuable a claim, of course, as it would then not read on Mayo’s diagnostic test.

    Conversely, if the last step in the fracking claim was replaced with “wherein a concentration of the tracer greater than about .0001% indicates a need to do more fracking and a concentration less than about .0001% indicates that the well is dry,” you might have a 101 problem.

  29. So you feel like they are preempting the abstract idea/natural phenom/lawl of nature of: an end-tracer concentration relating to the amount of fluid recapture?

    Interesting take D. One that I may well have missed, but now that you have an inkling of what might be preempt, you’re going to need to go ahead and see if your alleged judicially excepted subject matter is in fact preempting all uses. If I had to guess, I would say it isn’t. Such a correlation may well be useful outside the application recited (mixing up some admixture and putting it in a well etc.). And when you inevitably try to expand your recitation of the abstract idea/natural phenom/lawl of nature at issue to account for this I think you will end up making it not an abstraction/natural phenom/lawl of nature any longer. And if you don’t try to expand it, then you’ll try to discard the rest of the claim as insignificant post or pre solution activity. I think you’ll run into trouble there as well. This is a good case to illustrate very clearly how doing the preemption analysis correctly can be difficult, and it also illustrates how claims in the useful arts will usually slide past the 101 gate np, even in a borderline case such as this where there is a suspicion aroused that there might be preemption, even though eventually it may be found that there is not in fact any preemption.

    But, at least you’re starting to catch on, as a beginner, to preemption. That is a victory in my book.

  30. Although in that case it looks like the initial complaint also had patent claims (and the amended complaint added additional non-patent claims), the import seems to be the same — the amended complaint controlled.

  31. The court discusses this in Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178 (Fed. Cir. 2004) and determined that Federal Circuit jurisdiction depends on whether the plaintiff’s complaint as amended raises patent law issues.”

  32. I have not fully researched this and so there may be a case on point. However, normally federal court “arising under” jurisdiction is determined at the point when the case is filed and cannot be created through an amended complaint. This is spelled out a bit in difference between the Scalia majority opinion and Stevens concurring opinion in the Vornado case.

  33. What is unclear to me is how (under old §1295) is how this case “arises under” the patent laws.

    Unless I’m missing something obvious, I’m not sure I see why it’s unclear. The CAFC has jurisdiction over cases, not issues, and the court looks at the complaint at the time of the appeal. Once the plaintiff added the infringement claim in an amended complaint, the CAFC gets jurisdiction. It’d be different under Holmes if the defendant had added an infringement counterclaim, of course.

  34. Here is why I see a parallel:

    The prior art already included using tracers in fracking and looking at the tracer output. What is novel here is that the patentees “ascribe a certain meaning to a particular level of measurement.” Here, the meaning is that end-tracer concentration relates to the amount of fluid recapture.

  35. The claims of the ’175 patent are interesting because they look very similar to those invalidated by the Supreme Court in Mayo v. Prometheus.

    I don’t think the resemblance of the quoted claim to the Prometheus v. Mayo claim is very strong. The problem with the Prometheus claim was that the essence of the claim was “ascribe a certain meaning to a particular level of a measurement.” I don’t see anything like that in the present claim. It appears to be a straightforward process for measuring a particular physical parameter in a very particular application. Whether the claim is obvious or not might be another story.

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