The Federal Circuit has reversed a preliminary injunction order in a trade secret misappropriation case, finding that the district court abused its discretion by failing to properly evaluate the likelihood of success on the merits and the balance of harms. Insulet Corp. v. EOFlow, Co., No. 2024-1137 (Fed. Cir. June 17, 2024). The appellate court held that the district court’s analysis was deficient in several key respects, including not addressing the statute of limitations defense, defining trade secrets too broadly, and not sufficiently assessing irreparable harm and the public interest.
This classic trade secret case involves former employees left to join a competitor. As free humans, they are permitted to take their skill and wisdom to the new jobs, but are forbidden from misappropriating trade secret knowledge. That line drawing is particularly difficult, and one reason why many employers moved toward contractual non-compete agreements. The case is also complicated because the defendant here admit to reverse engineering that apparently lead to some substantial similarities between the products.
The decision highlights a high bar for obtaining a preliminary injunction, even in trade secret cases involving competitors where we previously may have assumed irreparable harm. The Federal Circuit here explained that lower courts are required to individually evaluate each of the four injunction factors – likelihood of success on the merits, irreparable harm, balance of hardships, and public interest. Conclusory assertions of competitive harm are insufficient to show irreparable injury. For trade secret claims in particular, the alleged trade secrets must be defined with specificity. But, this proof is often difficult at the preliminary injunction stage of a case when the particular knowledge used by the defendant has not been fully discovered.
The Federal Circuit has been seen as largely supporting strong trade secrecy rights. However, this decision may put a damper on forum shopping attempts. (more…)
I have been following the ongoing case of Natera v. NeoGenomics that is currently on appeal before the Federal Circuit. Docket No. 24-1324. The technology in these cases has amazing potential and I have several friends who have used these techniques to detect early stage cancer.
The particular litigation here centers on Natera’s US Patent No. 11,519,035 issued on December 6, 2022 that covers a method of detecting cancer through analysis of cell-free DNA (cfDNA) obtained from blood samples. The basic idea is that small fragments of DNA that are released into the bloodstream by cells, including cancer cells. High throughput extraction and sequencing technologies can then be used to detect mutations and their potential associated risk factors, including the presence of cancer and the specific type of cancer. cfDNA cancer screening has lots of advantages, most notably, it is almost non-invasive (blood sample) and provides potential early across the entire body. It can be particularly effective for detecting reemergence of cancer for someone in remission because the particular mutation is already known. This is known as a “tumor-informed” test.
Natera’s ‘035 patent is directed to methods for amplifying and sequencing cell-free DNA (cfDNA) to detect cancer. The claimed invention involves three key steps: (1) tagging cfDNA with universal adaptors, (2) amplifying 25-2,000 single nucleotide polymorphism (SNP) loci in a single reaction volume, and (3) performing massively parallel sequencing. Each of these steps were known in the prior art, but the combination of all three appears to be new. NeoGenomics is accused of infringing through its use of its RaDaR, an independently developed cancer-detection test that purportedly employs a similar process for analyzing cfDNA to provide highly sensitive detection of cancerous mutations. NeoGenomics disagrees, arguing the claims require the tagging and targeted amplification to occur in separate PCR reactions with different primer sets, and that its approach combines this process. (more…)
Rule 1 of the Federal Rules of Civil Procedure sets out a bold goal for civil litigation: “the just, speedy, and inexpensive determination of every action.” Patent litigation is rarely speedy; quite expensive; and, many would argue, often unjust. In the case below, one party attempted some quick relief via preliminary injunction, but the Federal Circuit has vacated on free-speech grounds.
Light-Netics owns U.S. Patent Nos. 7,549,779 and 8,128,264 that cover easy-to-hang Christmas lights. These lights include a magnetic backing that can attach easily to metal surfaces (such as a metal roof). Light-Netics sued after discovering competing products on sale from Holiday Bright Lights (HBL). And, in addition, Light-Netics sent a notice to various light stores warning them that HBL lights were infringing. Lite-Netics LLC v. Nu Tsai Capital LLC (DBA Holiday Bright Lights), — F.4th — (Fed. Cir. 2023).
Light-Netics sued for infringement, HBL responded with unfair competition counterclaims. The district court quickly issued a TRO followed-up with a preliminary injunction against the patentee. Judge Buescher (D.Neb.) ordered the patentee to (1) stop publicly stating that HBL copied the invention and (2) stop telling HBL customers that they could also be liable for infringement. Part of the district court’s justification here was a preliminary consideration of the merits of the lawsuit: narrowed claim construction eliminated literal infringement; and a finding that the patentee was estopped from asserting DOE. At base, the issue has to do with the meaning of the article “a”: can “a” be plural? Here, the claim requires a light socked with “a neodymium magnet [having] a pull strength of at least five pounds” while the accused device uses several magnets.
On appeal, the Federal Circuit has vacated and remanded — holding that the district court went too far in restricting the patentee’s protected speech.
Objectively Baseless: The Federal Circuit has given patentees a fairly-wide berth with regard to public accusations of infringement and customer cease-and-desist letters. In particular, the court has held that state court tort claims associated with out-of-court patent enforcement activities are preempted by federal law unless the patent holder “acted in bad faith.” Breaking this down, the court requires that the infringement allegation be “objectively baseless” and that the patentee conducted its affairs with subjective bad faith. Although the court does not conduct a full First-Amendment analysis, the high burden is justified by our individual liberty interest (that includes corporate commercial speech).
In its decision, the Federal Circuit concluded that it is not-unreasonable for a patentee to assert that a claimed “magnet” could be infringed by two or more magnets.
Decisions of this court lend strong support to the proposition that, “in patent parlance,” at least in an open-ended “comprising” claim, use of “a” or “an” before a noun naming an object is understood to mean to “one or more” unless the context sufficiently indicates otherwise. . . .
The patent uses “the” or “said” when referring back to an antecedent “a” phrase, but that usage does not itself suffice to demand the singular meaning because if the “a” phrase means “one or more,” so would the subsequent reference-back phrases.
Slip Op. The court notes that the patentee’s embodiments all just show a single magnet, but the court found nothing in the specification that limits the claim to that embodiment.
There is no “present invention” or other specification language that restricts the invention to a single (or single-piece) magnet, and there are no structural limitations in the claims that implicitly demand such a configuration. Importantly, and more generally, nothing in the ’779 patent indicates that the evident purpose of the magnet on the socket base (to attach the light string to a metal surface) can be achieved only, or with specified effectiveness, through a single (or single-piece) magnet, rather than a plurality of magnets collectively having the specified pull force.
Id. Likewise, the Federal Circuit also concluded that the doctrine of equivalents could be pursued. The patentee had argued that “two semicircular magnets in the Magnetic Cord light-fixture bases are equivalent to the one [claimed] magnet.” The Federal Circuit found “nothing unreasonable” about that allegation. Further, Lite-Netics did not make any amendments or statements during prosecution concerning the number of magnets in a way that would create estoppel.
On remand, the patentee may seek a narrower preliminary injunction — focusing on the patent not discussed by the Federal Circuit. Still, the Federal Circuit’s discussion gives a big boost to the patentee’s case.
Noted below, Akin Gump had sued a former vendor, Xcential, arguing that its lawyers had invented what Xcential had sought to patent. In response to the firm’s suit, Xcential filed five counterclaims, essentially asserting Akin Gump had misused information that Xcential had disclosed to Akin Gump.
As noted below, Akin Gump moved to dismiss those counterclaims and, further sought a preliminary injunction.
The district court denied the motion to dismiss four of the five, essentially holding Xcential had plead plausible facts that Akin Gump had misappropriated Xcential’s confidential information for the firm’s own benefit. The order is here. (Call me Nostradamus, but I’d bet Akin Gump’s motion for preliminary injunction will be denied, too.)
On the main page, Dennis posted about a case raising somewhat similar ethical concerns, United Cannabis Corporation v. Pure Hemp Collective Inc., Docket No. 22-01363 (Fed. Cir. 2023), which involved a firm’s admitted use of text from one patent application in an application for another client in closely related cases. It’s not clear, in either instance, whether any of the firms engaged in improper conduct, but it is not a good look where a firm is prosecuting cases for different clients in technologies so closely related that one client’s application provides a head start on another’s, or allegedly taking a vendor’s confidential information and using it for the law firm’s own benefit.
