The Federal Circuit recently affirmed the District Court for the Central District of California’s decision to issue a preliminary injunction on Masimo’s trade secret claims, finding that the district court did not err in determining that (1) Masimo was likely to establish that TSS was a trade secret, and (2) Masimo was likely to establish that True Wearables (“TW”) misappropriated Masimo’s trade secret.
The alleged trade secret in this case (“TSS”), relates to an algorithm used to solve optimization problems to ultimately make determinations of various “physiological values, including the concentration of total hemoglobin” in a user’s blood. Dr. Lamego, a previous employee of Cercacor, a company with shared ownership with Masimo, worked generally on variations of the TSS. After leaving Cercacor, Lamego founded TW, and developed a pulse oximeter that utilized TSS. Lamego filed patent applications to protect the device, and the USPTO issued a Notice of Allowance. Masimo then moved for preliminary injunction, concerned that the patent issuance would make TSS public. The motion practice hinged on arguments regarding the validity of Masimo’s trade secret.
The district court used the California Uniform Trade Secrets Act’s (“CUTSA”) definition of a trade secret, which provides that information is eligible for trade secret protection if it “(1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use,” and (2) “[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” TW argued that the district court “failed to properly consider [] evidence” that TSS was generally known. Specifically, TW presented a conference paper published by the Institute of Electrical and Electronics Engineers, which disclosed “an algorithm equivalent to the TSS” and that was apparently “cited over 1,200 times.” TW also presented expert testimony stating that variants of TSS have “appeared in statistics textbooks.” The district court disagreed that these publications precluded TSS from constituting a trade secret, stating that even though the publication was “not obscure,” existence of a publication did “not mean that the particular techniques described in them were ‘generally known’ to people who could obtain economic value[.]” Regarding statistics textbooks, the court found TSS was “known in the field of statistics,” but there was no “evidence that [it related] to the plaintiff’s field.”
Although TW could not avoid the preliminary injunction at this stage, TW is not barred from succeeding at trial. Indeed, the Federal Circuit notes that “findings of fact and conclusions of law made by a court granting preliminary injunction are not binding at trial on the merits.” While the Federal Circuit notes that the “limited record” at this stage has removed the need for the district court to substantively decide these issues, TW will be presented the opportunity to expand the record and try to further its argument that TSS is not eligible for trade secret protection under the definitions provided by CUTSA.
“We are delighted to bring Jason Keener’s eighteen years of legal expertise and experience in intellectual property and technology-related litigation to the Irwin IP team. Jason has represented clients of all sizes in a wide range of industries, including automotive, internet and software. His record as a resolute and tireless representative and advocate will be a great example for our younger associates, and a great value to our clients.”
BARRY IRWIN, FOUNDER
Jason specializes in litigating intellectual property matters involving patents, copyrights, trademarks, and trade secret disputes in areas of automotive, internet, software, and other technology areas He is a fierce advocate and representative for clients seeking to enforce or monetize their intellectual property assets as well as protecting them against claims of infringement.
Innovative solutions are an integral part of Jason’s litigation philosophy, and Jason has earned a reputation for leading his cases both effectively and efficiently, often involving pre-litigation resolutions, or resolutions early in a dispute. However, when necessary, Jason also leads the case through trial and any appeal, managing lean and scalable teams that provide clients with highly effective support.
Jason graduated first in his class from the University of Wisconsin Law School, class of 2003. He also received his B.S. from the University of Wisconsin in 2000 in only three years with majors in both Computer Science and Political Science. Jason has successfully tried cases to both juries and the bench, including multiple intellectual property trials in federal courts in Illinois and Texas, appeals before the Seventh Circuit and Federal Circuit, and in post grant proceedings before the U.S. Patent and Trademark Office.
“Joining a firm with a reputation like Irwin IP’s is an exciting opportunity and I am eager to participate in the firm’s entrepreneurial mission of providing exceptional client service at reasonable rates, and with billing integrity. It is a perfect fit for my approach of managing cases thoughtfully to allow for a measure of certainty where there are usually unpredictable litigation costs.”
JASON KEENER, SENIOR ATTORNEY
The Trademark Trial and Appeal Board (TTAB) issued the first precedential opinion of 2022 refusing registration of POTIFY and POTIFY (design) based on dilution by blurring of the mark SPOTIFY. The TTAB did not reach the alternate grounds of likelihood of confusion or dilution by tarnishment.
Applicant sought registration in International Class (IC) 9 for downloadable software relating to dispensaries, and IC 25 for apparel, IC 35 for providing consumer information related to dispensaries, and IC 42 for creating a related on-line community. The first use of the mark was on January 1, 2017. Opposer, Spotify AB, a Swedish company that provides software and services for streaming, opposed based on its statutory cause of action from registered standard character mark SPOTIFY in ICs 9, 35, 38, and 41, alleging likelihood of confusion and dilution by blurring and tarnishment.
Analyzing dilution by blurring, the TTAB first discussed at length the fame and distinctiveness of the SPOTIFY mark, derived from extensive advertising and celebrity partnerships, the number of monthly users of the streaming service, and widespread public recognition of SPOTIFY, including 23.3 million Facebook “likes.” Next, relying on timeframe-relevant monthly user data, consumer awareness, and press identifying SPOTIFY as “well known” and a “household name,” the TTAB found the mark achieved fame prior to Applicant’s first use. Lastly, the TTAB addressed the six factors pertinent to dilution by blurring: similarity, distinctiveness of SPOTIFY, opposer’s exclusive use of its mark, the degree of SPOTIFY recognition, whether the Applicant intended to create a POTIFY association with SPOTIFY, and any evidence of actual association between Applicant’s mark and Opposer’s mark. It found all but one of the factors favored dilution by blurring. As to similarity, the TTAB noted Applicant’s mark merely lacked the letter “S” at the start and both marks were used with software products that perform analogous functions (to help users find music or pot), thus Applicant’s mark would “trigger consumers to conjure up” Opposer’s famous mark. Unopposed by Applicant, the TTAB found Opposer exclusively used its mark as evidenced by vigorous enforcement. And as discussed above, SPOTIFY enjoyed wide consumer recognition. As for intent, the TTAB was incredulous about Applicant’s representations it did not intend to form an association with SPOTIFY, especially because Applicant’s founders were longtime SPOTIFY users. Finally, no evidence of an actual association between the marks existed, making that factor neutral.
In sum, because SPOTIFY is famous, widely used for known goods, highly distinctive, and predates POTIFY, the TTAB concluded dilution by blurring existed, and another cannabis mark went up in smoke. Although several states have legalized recreational marijuana use, it remains a federal crime to possess it, thus the Trademark Office has refused to register marks covering cannabis products. Even though that basis for refusal was not at issue for POTIFY, this decision underscores the uphill battle cannabis-related marks, especially those seemingly based on puns about other marks, face in seeking federal registration.
On January 3, 2022, the Court of Appeals of the Federal Circuit (“CAFC”) affirmed a Delaware ruling finding that a patent on a multibillion-dollar multiple sclerosis drug was not invalid and did have an adequate written description as to no-loading-dose and 0.5 mg daily dosage limitations despite the fact that the patent specification did not explicitly recite those claim limitations. This case revisits the issue of what satisfies the written description requirement and further muddies the waters.
Novartis Pharmaceuticals Corp. (“Novartis”)’s U.S. Patent No. 9,187,405 (“’405 patent”) claims methods to treat relapsing remitting multiple sclerosis at a daily dosage of 0.5 mg without an immediately preceding loading dose and claimed priority to a British patent application which had a 2006 filing date (“2006 application”). The specifications of the 2006 application and ’405 patent describe the use of a class of S1P receptor modulators to treat or prevent multiple sclerosis and a wide range of potential dosages; however, neither explicitly disclosed the use of no loading dose nor a 0.5 mg daily dosage.
HEC Pharm Co., Ltd. and HEC Pharm USA Inc. (collectively, “HEC”) filed an ANDA seeking approval to market a generic version of the drug and challenged the validity of the ’405 patent on the grounds that the 2006 application did not have an adequate written description of the ’405 patent claims as to the no-loading-dose limitation and for the claimed 0.5 mg daily dose. The district court found that HEC’s ANDA product infringed and that the ’405 patent’s written description was sufficient because a person of skill in the art would understand the disclosure to include both limitations. HEC appealed the court’s findings on to the sufficiency of the written description as to these two negative claim limitations.
The CAFC majority agreed with the district court’s findings that the ’405 specification included an adequate written description of the no-loading-dose and a 0.5 mg daily dose limitations and thus upheld the district court’s ruling. For the no-loading-dose limitation, the CAFC found no clear error in the district court’s conclusion that there was a sufficient written description because the specification included descriptions of studies conducted in rats and a potential study in humans. Neither study recited a loading dose. For the 0.5 mg daily dose limitation, the CAFC determined that the limitation was adequately described because a skilled artisan would understand that the inventors possessed a 0.5 mg daily dose when the potential human study described daily dosages of 0.5, 1.25, or 2.5 mg and the rat study used a dosage of 0.3 mg/kg per week. Chief Judge Moore dissented, arguing that the ’405 patent is “eerily silent” as to limitations and thus does not have a satisfactory written description. She expressed concern that this case “dramatically expands a patentee’s ability to add . . . negative claim limitations that have zero support in the written description” and as such “contradicts our well-established precedent” from the Patent Office.
As the third split decision from the CAFC on the written description requirement in the last three months, this decision further emphasizes the lack of consensus on what constitutes a sufficient written description as well as the concern for the implications of permitting leniency with the written description requirement. As such, it is best practice for an applicant to disclose all known or anticipated aspects of their patent in the written description.
Chicago attorney Barry Irwin, of the law firm Irwin IP LLC, has been named a Senior Fellow of the Litigation Counsel of America, and has been re-elected as President of the Board of Lawyers for the Creative Arts. Barry founded Irwin IP LLC in 2014, but has been litigating mission-critical, high-profile intellectual property and technology related matters in federal courts across the country for 30 years. Barry began his legal career at a prestigious boutique intellectual property law firm in Chicago. Three years later, Barry joined the Chicago office of one of the largest, most successful general practice firms in the world. There, Barry practiced intellectual property litigation for 18 years, the last 14 as a partner, and the last 10 as an equity partner.
In addition to his active litigation practice, Barry has served on the Board of Lawyers for the Creative Arts for over a decade, the last six years as a member of the Executive Committee. In 2021, Barry was elected as Board President, and recently re-elected to the serve in that same role. Barry is also an Adjunct Professor at Notre Dame Law School where he has taught both Patent Litigation and Entertainment Law for a decade. Barry was a board member of the Linn Inn American Inn of Court and still actively participates in the Linn Inn. Additionally, he also serves as an expert witness in intellectual property-related matters.
The Litigation Counsel of America is a trial lawyer honorary society composed of less than one-half of one percent of American lawyers. Fellowship in the LCA is highly selective and by invitation only. Fellows are selected based upon excellence and accomplishment in litigation, both at the trial and appellate levels, and superior ethical reputation. Senior Fellow status in the society is reserved for advanced commitment to and support of the LCA, the Diversity Law Institute and the Trial Law Institute. The LCA is aggressively diverse in its composition. Established as a trial and appellate lawyer honorary society reflecting the American bar in the twenty-first century, the LCA represents the best in law among its membership. The number of Fellowships has been kept at an exclusive limit by design, allowing qualifications, diversity and inclusion to align effectively, with recognition of excellence in litigation across all segments of the bar. Fellows are generally at the partner or shareholder level, or are independent practitioners with recognized experience and accomplishment. In addition, the LCA is dedicated to promoting superior advocacy, professionalism and ethical standards among its Fellows.
Lawyers for the Creative Arts is a Chicago-based not-for-profit organization that provides free legal services to financially eligible clients in all areas of the arts—visual, music, dance, literary, digital media, arts education, and much more. They help individuals and organizations with business issues, contracts, copyrights, trademarks and many other legal areas. Legal advice is a necessity for all businesses, and the arts are no exception. However, most artists cannot afford market rate legal services. That’s where LCA comes in. LCA is the only pro bono legal service organization in Illinois that is an expert in all areas of the arts. They have assisted thousands of artists and arts organizations of all kinds with their legal issues. The dedicated members of their Board of Directors and several hundred volunteer attorneys are the soul of LCA.
The Federal Circuit (“CAFC”) continues to define when a party has standing to appeal the final written decision of an inter partes review (“IPR”) proceeding from the Patent Trial and Appeal Board (“PTAB”). On December 28, 2021, the CAFC ruled in a pair of precedential decisions (Nos. 2020-1664 and 2020-1828) that Intel Corporation (“Intel”) satisfied its Article III standing requirements to appeal two different final written decisions because Qualcomm Incorporated (“Qualcomm”) mapped various Qualcomm patent claims to Intel products in a prior infringement suit against Apple.
Intel filed separate IPR petitions against Qualcomm for U.S. Patent Nos. 8,229,043 (“the ’043 Patent) and 8,8837,949 (“the ’949 Patent”). Intel identified Apple as a real party in interest due to Qualcomm’s previous infringement suits against Apple relating to the patents-at-issue. The PTAB held in each of these petitions that some of the challenged claims from the ’043 and ’949 Patents were unpatentable. Intel appealed each of the Board’s decisions not to find the remaining claims unpatentable. In response to Intel’s appeal, Qualcomm asserted that Intel did not have Article III standing to appeal.
On appeal, the CAFC addressed the threshold issue of standing.[1] Although there is no standing requirement to file an IPR, the requirement activates once a party seeks a court’s review. To have standing a party must demonstrate “(1) an ‘injury in fact’ (2) ‘fairly traceable’ to the defendant’s challenged conduct and (3) ‘likely to be redressed by a favorable judicial decision.’”[2] An injury in fact is a “concrete and particularized and actual or imminent, not conjectural or hypothetical.”[3] For IPR petitioners, this injury in fact usually comes from activities that have or are likely to give rise to a possible infringement suit. Qualcomm did not sue Intel for infringement; however, Qualcomm also did not challenge the assertion that Qualcomm mapped claims of the ’043 patent against an Intel product in Qualcomm’s infringement suit against Apple. Thus, the CAFC found that Intel’s actions could serve as a basis for a possible infringement suit. The CAFC elaborated that no infringement suit against Intel was needed, as “Intel need not face a specific threat of infringement.” Further, the CAFC explained that—although Qualcomm’s refusal to provide a covenant not to sue usually is not enough to create an actual controversy and Qualcomm’s settlement with Apple usually deprives a party of standing—Intel’s continued sale of possibly infringing products to Apple supported Intel’s claim that it faces the risk of an infringement suit by Qualcomm. Therefore, Intel’s risk of an infringement “transcended mere conjecture or hypothesis” and provided Intel standing to appeal.
These decisions will certainly allow for future parties to argue that Article III standing exists, even absent pending litigation, in light of the holdings that potential infringers do not need to be sued for infringement to have standing. Parties can now seek to determine whether a patent owner has implicated their products indirectly and establish Article III standing that way.
[1] Most of the CAFC’s standing analysis is found in the court’s 2020-1664 decision. The CAFC’s decision in case No. 2020-1828 noted, for the ’949 Patent, that Intel’s activities possibly rose to direct and indirect infringement and therefore granted Intel standing to appeal.
[2] Intel Corp. v. Qualcomm Inc., No. 2020-1664, 2021 WL 6122360, at *2 (Fed. Cir. Dec. 28, 2021).
[3] Id.
Irwin IP is extremely excited to announce that our firm founder, Barry Irwin, has been elected as President of LCA continuing a career of service to the arts community. The Lawyers for the Creative Arts have been providing legal assistance to artists and arts organizations for forty-two years, and are considered the “Angel to the Arts”. Barry has been continually representing artists and musicians on a pro bono basis for nearly 30 years, beginning when he was a law student. In 2016, LCA awarded Barry with its Distinguished Service to the Arts award. Barry has represented many artists on a pro bono basis and continues to be a major legal advocate of the arts.
Recently, the Second Circuit held that it was not fair use for an artist (“Andy Warhol”), who was licensed to create an artist reference for a 1984 Vanity Fair article based on an iconic photograph of Prince, to also create a 15-work series based on the iconic photograph. Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, (2nd Cir. Aug. 24, 2021). In doing so, the Second Circuit interpreted its previous precedent of what constitutes “transformative use” narrowly.
Lynn Goldsmith photographed a portrait of Prince (“Photograph”) which was licensed to Vanity Fair magazine for use as an “artist reference” with an attribution to Goldsmith. Unbeknownst to Goldsmith, Andy Warhol was commissioned by Vanity Fair to create this “artist reference” illustration. He later created 15 additional works based on the Photograph known as the Prince Series, without attribution to Goldsmith.
After becoming aware of the Prince Series in 2016, Goldsmith registered the Photograph with the U.S. Copyright Office as an unpublished work, and subsequently filed suit against the Andy Warhol Foundation (“AWF”) for copyright infringement. The district court granted summary judgment for the AWF on its fair use defense. To determine fair use, a court weighs the following four factors: (1) purpose and character of use, (2) nature of the copyrighted work, (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and (4) the effect of the use upon the potential market for or value of the copyrighted work. The district court found that the four factors favored the AWF here because (1) Warhol’s Prince Series was “transformative” as the Photograph and the Prince Series provide different portrayals of Prince’s character; (2) Photograph was both creative and unpublished but that did not outweigh the transformative nature of Warhol’s work; (3) in creating the Prince Series, Warhol removed nearly all of the protectible elements of the Photograph; and (4) the Prince Series is not a market substitute that has harmed, nor has the potential to harm, Goldsmith.
The Second Circuit disagreed with the district court’s analysis and concluded that all four factors, weighed together in light of the purposes of copyright, favored Goldsmith. Under the first fair use factor, theSecond Circuit clarified how its precedent defined “transformative work” by stating that that “any secondary work that adds a new aesthetic or new expression to its source material is [not] necessarily transformative” as a matter of law. The Second Circuit concluded that the Prince Series is not transformative because it retains the essential elements of the Photograph without significantly adding to or altering those elements. In analyzing the second factor, the Second Circuit reasoned that because the Photograph was creative and unpublished, the scope of fair use is considerably narrower and weighs in favor of Goldsmith even if the Prince Series was transformative.
For the third factor, the Second Circuit concluded that because the Prince Series borrows significantly from the Photograph, both quantitatively and qualitatively, and the Warhol images are recognizable as depictions of the Photograph, this factor favors Goldsmith. As for the last factor, the Second Circuit concluded that this favored Goldsmith because although the primary markets for the Prince Series and the Photograph differ, the AWF’s use harms Goldsmith’s derivative market and deprives her of royalty payments that she would have otherwise been entitled. And finally, because substantial similarity is a prerequisite to a fair use defense, the Second Circuit applied the “ordinary observer test” finding the two works substantially similar and rejected the AWF’s request to apply the more rigorous “more discerning observer test.”
The Second Circuit’s ruling has increased protection for original creators and emphasized the importance of licensing to protect the secondary market for works.