A growing trend pushes IP disputes arising from any agreement into arbitration or a particular court (and thus out of the PTAB).
Question: Should Congress pass a law prohibiting agreements not-to-challenge patents via inter partes review? (making such agreements unenforceable)
— Dennis Crouch (@patentlyo) February 9, 2022
Peter Sgromo v. Leonard Scott (Fed. Cir. 2022)
Sgromo owned two patents that he transferred to Scott’s company Eureka Inventions. The two had what the courts call a “personal” relationship, and the transfer of rights was apparently done to “repay Scott for money he had given or loaned to [Sgromo] over the course of their relationship.” Bestway (USA), Inc. v. Sgromo, 2018 WL 3219403 (N.D. Cal. July 2, 2018). Sgromo then negotiated a license deal from a third-party, but that income was designated as coming to Eureka.
3D Pool Vision Pat. US7046440B1
When the two broke-off their relationship Sgromo wanted the patents back and sued. An arbitrator sided with Scott, concluding that Sgromo did not own the patents. A district court then confirmed the award, and Sgromo appealed.
On appeal now, the Federal Circuit has refused to hear the case — finding that a patent ownership dispute does not “arise under” the patent laws. As such, the Federal Circuit does not have appellate jurisdiction. See, Gunn v. Minton, 568 U.S. 251 (2013) (patent attorney malpractice does not arise under the patent laws).
The court transferred the appeal to the Ninth Circuit.
by Dennis Crouch
For several years we have been tossing around the question of whether no-IPR contracts are enforceable. In Nippon Shinyaku v. Sarepta Therapeutics (Fed. Cir. 2022), the court says “YES THEY ARE” (at least when an alternate forum is provided). Although the court did not enter into any serious policy analysis or consideration of Supreme Court precedent promoting patent challenges such as Lear, Inc. v. Adkins, 395 U.S. 653 (1969); & MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 124 (2007). (more…)
by Dennis Crouch
On Feb 4, the Federal Circuit issued an important decision in California Institute of Technology v. Broadcom Ltd. and Apple Inc. (Fed. Cir. 2022). Four of the big issues are listed below:
= = = =
In this post, I am just going to focus on the estoppel issues: Argument estoppel is a big deal with inter partes review. By design, patent challengers get one-bite at the Apple; one shot at invalidating the patent claims based upon obviousness or anticipation. Of course, the devil is in the details with this sort of rule.
Rather than relying upon traditional judge-made principles of res judicata, Congress specified within the statute how estoppel works for IPR proceedings. The basic rule is that, once a patent claim is subject to a final-written-decision in an IPR, the IPR petitioner is estopped from asserting “that claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” 35 U.S.C. 315(e)(2) (applies also to real-party-in-interest and privies). Timing here is important, but favors estoppel. Namely, once the IPR reaches Final Written Decision, the challenger is prohibited from continuing to assert invalidity, even if the litigation was already filed and had been pending prior to IPR institution.
The scope of estoppel provided by 315(e) has been subject to substantial litigation. One key decision is Shaw Industries Group, Inc. v. Automated Creel
Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016). In Shaw, the Federal Circuit substantially limited the scope of estoppel. Shaw was a partial institution case — the PTAB had instituted IPR on only some grounds. The court particularly held that 315(e) did not estopp the petitioner from later raising the non-instituted challenges in district court litigation. The court reasoned that those could not have reasonably been raised in the IPR since the petitioner’s attempt had been denied by the PTAB. But Shaw raised further questions about where to draw the line, and district courts across the country came-up with a variety of conclusions about the scope of estoppel. The most pro-challenger readings focused on grounds that could have been raised after institution, and thus concluded that estoppel was fairly strictly limited only to the grounds actually instituted. See, e.g., Koninklijke Philips N.V. v. Wangs All. Corp., 2018 WL 283893, at *4 (D. Mass. Jan. 2, 2018).
Shaw was based upon a procedural posture that the Supreme Court eventually ruled improper. Notably, Shaw presumed that partial IPR institution was proper. In SAS, the Supreme Court rejected that approach and instead held that IPR institution is an all-or-nothing decision by the USPTO. SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018) (PTAB does not have partial institution authority; and that the IPR petition defines the scope of the IPR).
Ordinarily, each Federal Circuit panel is bound to follow precedent set-out by prior a Federal Circuit panel. My colleague Tommy Bennett refers to this as the “Rule of Circuit Precedent.” However, since Shaw‘s foundation had been undermined, the panel here in CalTech concluded that it was no longer binding precedent.
The panel here has the authority to overrule Shaw in light of SAS, without en banc action.
Although SAS did not expressly overrule Shaw, the court concluded that the Supreme Court had “undercut” Shaw‘s “theory [and] reasoning . . . in such a way that the cases are clearly irreconcilable.” Quoting Henry J. Dickman, Conflicts of Precedent, 106 Va. L. Rev. 1345 (2020).
With this newfound freedom, the court rewrote the rule of estoppel — this time in a much broader sense:
Accordingly, we take this opportunity to overrule Shaw and clarify that estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all claims and grounds not in the IPR but which reasonably could have been included in the petition.
Slip Op. In the litigation, Apple and Broadcom had hoped to rely upon several prior art references during litigation. However, evidence showed that they were “aware” of those references by the time that they filed the IPR petition. Even though they were not included within the IPR petition, they “reasonably could have” been used as the basis for an IPR challenge. Thus, the appellate panel affirmed the district court’s ruling barring the subsequent challenge in litigation.
The “aware of” requirement is quite broad, and the Federal Circuit did not delve further into defining the “reasonably could have” threshold. For its part, the district court in this case had gone a step further and expanded estoppel to also include any grounds relying upon prior art “a skilled searcher conducting a diligent search reasonably could have been expected to discover.” California Inst. of Tech. v. Broadcom Ltd., 2018 WL 7456042 (C.D. Cal. Dec. 28, 2018) (subsequent modifications omitted). This test is a based upon a statement made by Senator Kyl as the America Invents Act was being debated. 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011). In his testimony, Sen. Kyl expressed that the estoppel provision had been “softened” by adding “reasonably.” Without that term, the estoppel would have been
amenable to the interpretation that litigants are estopped from raising any issue that it would have been physically possible to raise in the inter partes reexamination, even if only a scorched-earth search around the world would have uncovered the prior art in question. Adding the modifier ‘‘reasonably’’ ensures that could-have-raised estoppel extends only to that prior art which a skilled searcher conducting a diligent search reasonably could have been expected to discover.
Statement of Sen. Kyl.
Although it is unclear how far reasonableness extends, it is clear that IPR estoppel is now based upon a use-it-or-lose-it principle. Holding arguments back at the IPR petition stage is effectively a waiver of those arguments.
by Dennis Crouch
WIPO administers the WIPO-administered Hague System for the International Registration of Industrial Designs. In 2015, the US linked its design patent system with Hague — this gives U.S. designers easier access to global design rights; and non-U.S. applicants easier access to the U.S. market. This week, China announced that it is also joining the system. Even without being part of Hague, IP offices around the globe have received huge increases in Chinese -origin industrial design applications. For instance, 55% of global design applications filed in 2020 were by Chinese residents.
The first chart below shows the impact in the U.S. design patent system. For the first time in 2021, most new U.S. design patents originated from outside of the U.S.; with Chinese-origin design patents taking the clear quantitative lead over all other nations. The second chart shows the rise in design patents (and design patent applications) over the past several years.
by Dennis Crouch
Patent attorneys expect an initial office rejection, but clients often want to know: how long must this go on before we get our patent? The chart below provides some data on how many office-action rejections you might expect before a patent issues.
To collect the data, I wrote a short bit of code to parse through the file histories of all the issued patents from the past several years and count the number of non-final and final rejections. The histogram above is based upon the total number of rejections in each patent history. You can see that most issued patents issue with either 0 or 1 rejection, but there are a sizeable number that require 3+ (this also typically involves an RCE and/or appeal brief). Note that the applications that fly-through without any rejections may have also received some sort of notice, objection, or requirement that slows down the process. Note also that the chart here does not consider patent families. In the past, I have seen that continuation applications following an issued patent tend to issue fairly quickly. In those cases, the applicant and examiner have already agreed on an aspect of the invention that is novel, and the new claims often simply re-form those key components.
The process of going from No to Yes can vary. By definition, the technology at issue should be new, and so the first office action response is often about educating the examiner and how it is different from the prior state-of-the-art. But, in most cases, the applicant also ends up amending claims either for clarity or in order to add limitations to avoid prior art identified by the patent examiner. This is all part of the process, and perhaps exactly how it should work.
How many rejections does it take to get a patent?
About 15% of cases go straight through without any rejection, but some cases require more work. pic.twitter.com/s51wntcoKb
— Dennis Crouch (@patentlyo) February 5, 2022
"about 0.1%" vs "0.1%"?
Is there a difference?
— Dennis Crouch (@patentlyo) February 4, 2022
In a prior post, I wrote about third party prior art submissions, but that post was only looking at issued patents. I have gone back and pulled-in data from all publicly-available applications, including those that have been abandoned or are still pending. The results: third parties have submitted prior art in about 7,000 applications over the past decade. This is about 0.2% of all the applications in my dataset.
I have uploaded the listing of all the applications with third-party submissions (and current status of each application) at the link below. Dennis Crouch, Third Party Submissions, Harvard Dataverse (Feb. 4, 2022), https://doi.org/10.7910/DVN/M5JK3Y.
I pulled up a recent case. U.S. App. No. 16/824,815 focusing on a vehicle heads-up display owned by Visteon. A third party (James D. Busch) submitted his own published patent application (US Pub. No. 20180217429) as prior art and included a 30-page “concise description of relevance.” At that point, the examiner issued an anticipation rejection and the patentee abandoned. Note here that Busch is both a prolific inventor and a patent attorney. He has an interesting article suggesting that patentees may want to use 3rd party submissions in order to seed forward citations of your patent.
by Dennis Crouch
The chart below shows the USPTO utility patent allowance rate broken up on a quarterly basis (using calendar year quarters). The rate is based upon two numbers: The number of patents issued each quarter, and the number of applications abandoned each quarter. Allowance Rate = Patents / (Patents + Abandonments). Because I only have detailed abandonment data on published applications, I limited all the data to only published applications. I generally expect that the grant rate for unpublished applications to be a bit lower.
Note the drop in allowance rate during the Bush years while Jon Dudas was USPTO Director. David Kappos quickly reset expectations. And, since then we have seen a steady rise in allowance rate. Kappos also brought the steady handed Drew Hirshfeld into a leadership role where he has remained through three presidencies.
The second chart breaks this down by entity type. You’ll notice the spike in 2nd Qtr 2020 at the beginning of COVID. We had a dip in abandonment during that time. The CARES Act and action by Dir. Iancu allowed some applicants to delay abandonment. Some of the waivers were directly applicable only to small/micro entity applicants, and that may be the explanation for the impact.
UPDATED TO FIX MY MATH ERROR:
I posted some statistics on references cited in recently issued patents. That raised some discussion in the comments regarding third-party prior art submissions. The chart below puts some numbers on the result that everyone likely expected–third party submissions are quite rare. Out of every 10,000 issued patents, only about 14 include prior art submissions from third parties.
One aspect to consider about this data is that it may be skewed because it only includes issued patents — We can expect that there are a percentage of cases where the third-party submission led the applicant to eventually abandon the patent application.
Although third-party submissions were permitted prior to the AIA, the AIA expanded the process substantially – although only with regard to applications filed after Sept 2012. Today, third parties can submit prior art to the PTO so long as it is both (1) within six months of publication and (2) before an office action rejecting a claim or a NOA. The submissions also require a fee of $180 for every 10 documents submitted ($90 for small entity).
The following are some recently issued patents that include third party submissions if you want to look through the file histories: 11,228,023; 11,225,200; 11,224,546; 11,224,456; 11,228,055; 11,221,486; 11,220,614; 11,219,722; 11,219,166.
IN re Vox Populi Registry Ltd. (Fed. Cir. 2021).
A few years ago, ICANN opened the door to all sorts of top-level domains. Vox jumped on-board with the “.SUCKS” domain, and is the TLD’s domain registry operator. The setup appears to be a bit of a scam.
Vox is attempting to register a both the standard character service mark .SUCKS and also the stylized version shown in the figure above. Both were rejected based upon a finding that the mark is merely descriptive and lacks distinctiveness. And, on appeal, the Federal Circuit has also affirmed. (Vox only appealed the for the stylized form).
In particular, the court found substantial evidence supporting the following:
This case is related both to TAM, BRUNETTI and also BOOKING.COM, but none of those save-the-day for Vox. The court does note that the mark may become registrable if Vox is later able to show acquired distinctiveness. In each of those recent Supreme Court cases, the Trademark Office had attempted to use some shortcut/exception to reject the trademark registration. Vox is totally different from those cases because the TTAB and Federal Circuit relied upon the core trademark principle of distinctiveness to deny registration.
USPTO has launched its new Patent Public Search Tool:
Super useful, but you are going to need a very large screen to get full utility.
by Dennis Crouch
[Survey Results at the bottom]
Astrazeneca AB v. Mylan Pharmaceuticals Inc., Docket No. 21-01729 (Fed. Cir. 2022)
In December 2021, the Federal Circuit sided with the accused-infringer Mylan on claim construction of the term “0.001%” — vacating the judgment of infringement. See Crouch, Rounding Errors in Patent Law, Patently-O (Dec 8, 2021). Now Astrazeneca has petitioned for en banc reconsideration–seeking “consistent precedent regarding significant digits.”
The panel majority overlooked and misapprehended, by failing to cite or apply, the controlling decisions of Iwasaki and Viskase, in holding that the ordinary meaning of a numerical claim term based on significant digits may be displaced, in the absence of lexicography or disclaimer, because it may encompass more than the most preferred embodiment.
AZ En Banc Petition on Rounding Errors., citing U.S. Philips Corp. v. Iwasaki Elec. Co., 505 F.3d 1371, 1377-78 (Fed. Cir. 2007) and Viskase Corp. v. Am. Nat’l Can Co., 261 F.3d 1316, 1320 (Fed. Cir. 2001).
AZ’s patent claim is directed to formulation that includes “0.001%” PVP K25. The case does not tell us the accused concentration, but Mylan admitted that it was within the standard rounding error, i.e., between 0.0005% and 0.0014. The patent document does not say anything directly about how this sort of rounding should be done, and so the district court used this standard rounding error approach for a decimal with 1 significant digit. Result was a finding of infringement. On appeal, however, the appellate majority found that the term should be given a much narrower construction. The court’s reasoning came from its reading of the specification — in particular, the patent document provides examples comparing a concentration of 0.001% against 0.0005%. The problem is that, for rounding purposes, 0.001% is not distinct from 0.0005%. The conclusion here is that the patent document is a bit sloppy with its use of significant digits and that led the court to its unusual decision that 0.001% should be construed as “that precise number, with only minor variations, i.e., 0.00095% to 0.00104%.”
Figure 3 from the patent (above) provides an example of the confusion regarding significant figures. The single chart shows effectiveness of various concentrations of PVP K25–each one at a different level of significance. The chart particularly appears to distinguish between a concentration of 0.001% and a concentration of 0.0005%. However, the patentee in the petition argues that 0.001% encompasses a reading of 0.0005%.
Judge Taranto dissented from the original judgment. He argued that the significant-figure convention is so well established within the scientific community that to should take much more than a stray example to shift from that basis.
I noted that the patentee-petitioner here relies heavily upon Viskase Corp. v. Am. Nat’l Can Co., 261 F.3d 1316 (Fed. Cir. 2001). One big problem though is that the court in Viskase decided that statements from the prosecution file led the court away from the traditional rounding principles, just as the majority did in Astrazeneca. In Viskase, the patent claimed “below about 0.91 g/cm3“, but the court interpreted the claim as “below 0.910 g/cm3” based primarily upon a prosecution history statement during patent prosecution. The petition apparently cites Viskase as a backstop, and then suggests that its situation is totally different since it “never expressed 0.001% PVP K25 with an additional significant digit, either in the specification or prosecution history.”
= = = =
I asked Patently-O readers what range of concentrations would they see as literally infringing a hypothetical patent claiming a concentration of “0.1%” PVP K25.
Special thanks to my friends at the MBHB law firm for being the exclusive sponsor for Patently-O. Their contribution has kept Patently-O free to the public and virtually ad-free for almost two decades. I started the blog with $0 investment, just my own time, but now I pay for the secure server, bandwidth, newsletter software, etc. All that adds up pretty quickly.
I was happy to see that Jori Fuller and Jordan Pringle have been named equity partners at MBHB. At the same time, Bryan Helwig, Ph.D., and Colin Wright were promoted from associate to partner. Congratulations!
The chart below shows a histogram of the total number of references per patent. (Utility patents issued in 2021) with the mode, median, and average noted.
Patent applicants must submit known prior art to the USPTO to assist in examination. The average number of references has grown tremendously, but not the median. The growth is driven by a small subset of applicants submitting a large number of documents. pic.twitter.com/nXQlUvU1LN
— Dennis Crouch (@patentlyo) January 27, 2022
by Dennis Crouch
Nature Simulation Systems v. Autodesk (Fed. Cir. 2022)
We have an interesting split decision focusing on the doctrine of indefiniteness in the context of an “examiner’s amendment.” Judge Newman wrote for the majority and favored the patentee; Judge Dyk wrote in dissent and concluded that the patent claims were indefinite. The judges particularly differed on what level of deference should be given to USPTO examiners with the majority holding that “[a]ctions by PTO examiners are entitled to appropriate deference as official agency actions.” The dissent argued instead that deference has no role in the definiteness inquiry:
The test …is whether the claims ‘inform those skilled in the art about the scope of the invention with reasonable certainty,’ Nautilus, not whether the claim language was added by a patent examiner or was not indefinite to the examiner.
Slip op. (Dyk, J. in dissent).
You likely know about Boolean logic operations such as AND, OR, and NOR. In CAD software, Boolean operators are similarly used to recognize intersection of geometric objects, using alternative terminology such as INTERSECT, UNITE, and SUBTRACT. Mathematical methods for performing these operators have been known for decades–as developed by “Watson.” NSS created a new version that it calls the “modified Watson method.”
During prosecution, the examiner rejected the claims as indefinite, but then withdrew the rejection based upon his own examiner’s amendment. The original claim required use of the “modified Watson method,” but the examiner suggested that was not definite enough, and suggested adding additional definitional requirements:
wherein the modified Watson method includes removing duplicate intersection points, identifying positions of end intersection points, and splitting portion of each triangle including an upper portion, a lower portion, and a middle portion;
Exr. Amendment found in Notice of Allowance.
Later, NSS sued Autodesk for infringement, and the defendant responded that the language added by the examiner was actually indefinite and created confusion as to what is actually included within modified Watson. The parties consented to have the local Magistrate Judge (Sallie Kim) hear their case, and Kim sided with the defendant. The Magistrate opinion is notable in that it does not cite to the leading precedent on definiteness – Nautilus v. Biosig (2014). Rather, the court appeared to primarily rely upon Gen. Elec. Co. v. Wabash Appliance Corp., 304 U.S. 364 (1938) or no precedent at all. The district court’s approach appears to be looking for “unanswered questions” of claim scope:
Thus, the question is thus: if the PTO issues a patent after amendment to clarify an indefinite term, but an expert later opines that a POSITA would not understand the term, how does the Court determine whether the term is indefinite? The only way to do so here is to look at each argument to see if Autodesk raises any unanswered questions.
[Nature_Simulation_Systems_Inc._62]. The Magistrate clearly missed the mark on its explanation and application of the law of definiteness. (Although Judge Dyk calls the opinion detailed and thorough).
Since indefiniteness is seen as a question of law, the court also took the second step of determining whether the erroneous application of law also led to an erroneous outcome. Yes it did. On this point, Judge Newman pointed to the specification’s offering of two algorithmic charts showing the modified Watson method and also the patent examiner’s specific determination on this very point.
The district court gave no weight to the prosecution history showing the resolution of indefiniteness by adding the designated technologic limitations to the claims. . . .
Actions by PTO examiners are entitled to appropriate deference as official agency actions, for the examiners are deemed to be experienced in the relevant technology as well as the statutory requirements for patentability.
Slip Op (majority). The court has written on this very point in some prior cases — perhaps most pointedly in Tinnus Enters., LLC v. Telebrands Corp., 733 F. App’x 1011, 1020 (Fed. Cir. 2018) (“We presume that an examiner would not introduce an indefinite term into a claim” with an examiner’s amendment). Judge Newman cited Tinnus, but did not mention that the case was non-precedential.
For his part, Judge Dyk argues that the test for indefiniteness is an objective test based upon the understanding of those skilled in the art “not whether the claim
language was added by a patent examiner or was not indefinite to the examiner.” The majority responded to this criticism by noting that an examiner is presumptively a person of skill in the art.
Here is a fun chart showing the percentage of U.S. patents that cite to Wikipedia as prior art. I created this from data downloaded from the USPTO.
by Dennis Crouch
Masimo Corp. v. True Wearables, Inc. (Fed. Cir. 2022) (nonprecedential)
This trade-secrecy decision includes a few interesting holdings:
The companies here compete in the market for creating specialized finger-LED equipment and accompanying data analysis services. This case focuses on calculating total hemoglobin (“SpHb”) based upon light absorption readings from the finger-LED.
How does it work: The LED emitter sends out a pulse of light through the fingertip; a sensor on the other side then measures how much light passed through at various wavelengths. Hemoglobin has a particular light adsorption pattern, and so those results can be used to calculate a relative amount of Hemoglobin. They do this with a simple linear aggregation: “SpHb = Ax + By + Cz . . .,” where x, y, and
z are various absorption measurements from the monitoring device (such as different wavelength readouts) and A, B, and C are coefficients that reflect the relative importance of the different measurements.
Each product line will have a different equation because it will likely have a different LED configuration; have different sensors; and have a different physical form. So, a product developer needs to run a clinical trial of its product in order to estimate the most accurate coefficients. For each person in the trial, you do a blood test for SpHB level (the gold standard) and then also take measurements with the finger LED.
What is the Trade Secret: The trade secret at issue here is the optimization algorithm for determining all the equation coefficients. How do you take data from the clinical trials and turn that into an operational equation for measuring SpHB?
Answer, if you have studied linear algebra this is all straightforward and largely developed in the 1960s. Math and engineering students across the country take classes on linear programming and linear optimization and have done so for decades. These same models are a basis for most of the system we call “AI.”
The defendants pointed to a particular 2008 IEEE article that spells out the particular approach claimed to be a trade secret here — – the parties refer to this algorithm as “TSS.” We don’t know the title of this article (it is redacted), but we do know that this is a very well known article with 1,200+ citations. The description below comes from the appellate briefing:
The footnote explains: “[T]he complete citation for this publication is not reproduced in this brief as Masimo has asserted that the identity of the publication is confidential.”
Under California law, information that is “generally known” cannot be a trade secret. Here, however, the Federal Circuit affirmed the lower court ruling that the publication did not render the information “generally known” to folks in the particular field in question.
Under some circumstances, the publication of an alleged trade secret will clearly be sufficient to indicate that the information is generally known. However, the fact that the trade secret has been revealed in some publication somewhere [even if highly cited] does not necessarily compel a finding that the information cannot maintain its status as a trade secret for a party in an entirely different field from the one to which the publication was addressed.
Slip Op. The Federal Circuit previously wrote that disclosure in a patent renders information “generally known” for trade secrecy purposes, but endeavored to distinguish that conclusion here. Ultimax Cement Manufacturing Corp. v. CTS Cement Manufacturing Corp., 587 F.3d 1339, 1355–56 (Fed. Cir. 2009).
I’ll note here that there are some other factors at play – namely, the founder of True Wearables (Dr. Lamego) is a former Masimo employee. He is the one that mathematically derived implemented the TSS algorithm at Masimo. And, while there, labeled it a “trade secret.” These actions of the parties tend to make it look like a trade secret.
I have a Serious Question: On appeal, the Federal Circuit did conclude that the trade secret issue was questionable, but still found that the plaintiff had raised a “serious question as to the validity of the trade secret” which is apparently sufficient for a preliminary injunction. That appears to be a lower standard than the more traditional “likelihood of success.”
The Preliminary Injunction: Lamego has several patent applications pending, and the preliminary injunction orders Lamego to make sure that those applications do not become public. Here, the court found the remedy appropriate since “Once the information is in the public domain and the element of secrecy is gone, the trade secret is extinguished.” (Quoting Ultimax). In this portion of the opinion the court did not contend with its statement a few paragraphs before that publication does not necessarily extinguish a trade secret.
Appleton v. Bacon, 67 U.S. 699 (1862)
John North was an employee of American Book and Paper Folding Company, hired to design and improve various paper folding machines. That company ceased operation in 1857 and Bacon purchased all the patents, including one issued to North.
North kept a machine he had been working on and improved it further in 1858 before filing for patent protection and that patent issued later the same year. And, at that point North assigned rights to Appleton. One oddity – the patent office actually issued the new patent in Bacon’s name, something that the Supreme Court called “a very grave irregularity” that “has not been explained.”
On appeal, Bacon argued that he owned the invention based upon the prior employment agreement. However, the Supreme Court sided with Appleton, concluding that the keys to the invention came-about after North’s contract had ended.
Parties engaging the services of an inventor, under an agreement that he shall devote his ingenuity to the perfecting of a machine for their benefit, can lay no claim to improvements conceived by him after the expiration of such agreement.
Id. See Catherine L. Fisk, Removing the “Fuel of Interest’ from the “Fire of Genius’: Law and the Employee-Inventor, 1830-1930, 65 U. Chi. L. Rev. 1127, 1198 (1998) (“The question the Court resolved was simply one of fact: who was the inventor working for at the time he developed the patented invention?”).
* Note – the quote above comes from the syllabus of the case as issued by the court in 1862.