Are Old Trade Secrets Now Patentable?

The America Invents Act’s first-inventor-to-file system has created a lot of questions in the patent community. One of the most intriguing is how the new prior art rules impact the protection of long-standing trade secrets.

As amended, 35 U.S.C. 102 (a)(1) now states: “A person shall be entitled to a patent unless—(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention…”

Questions have centered on the interpretation of the phrase “or otherwise available to the public” and whether it limits the application of secret prior art. Under existing precedent, offers-for-sale and sales in the U.S. did not need to be public in order to invalidate a patent claim.

According to the U.S. Patent and Trademark Office’s interpretation of the new language, “Residual clauses such as ‘or otherwise’ or ‘or other’’ are generally viewed as modifying the preceding phrase or phrases. Therefore, the Office views the ‘or otherwise available to the public’ residual clause of the AIA’s 35 U.S.C. 102(a)(1) as indicating that secret sale or use activity does not qualify as prior art.”

The IP community appears to agree with the USPTO’s interpretation. The American Bar Association’s IP Law Section considered the issue and concluded:

The passage “otherwise available to the public” reflects the touchstone of what constitutes prior art under the AIA under section 102(a)(1). This section requires availability to the public or public accessibility is an overarching requirement. Such accessibility is critical to provide a simpler, more predictable and fully transparent patent system. As such, for a “public use,” for a determination that an invention is “on sale,” as well as to assess whether an offer for sale has been made, the statutory requirements under the AIA require a public disclosure. Thus, non-public offers for sale (and non-public uses) would not qualify as prior art under the AIA.

The American Intellectual Property Law Association and the Intellectual Property Owners Association adopted similar position in comments submitted to the USPTO. While these interpretations seems to suggest that old trade secrets would no longer be considered prior art when filing a patent application, this issue will likely need to be resolved by the courts or clarified by Congress in a technical amendment.

How Can I Help?

If you, or someone you know, need any help with Intellectual Property issues, from filing a patent, trademark or copyright, or just need advice regarding how best to protect your inventions, ideas or your brand, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

Tougher Trade Secret Penalties.

While trade secret theft is generally addressed through civil suits, criminal punishment is increasingly being used as a deterrent by the federal government.

The Economic Espionage Act of 1996 criminalizes trade secret theft committed for personal benefit within the country or for the benefit of a foreign government. Two recent amendments to the law will broaden the government’s ability to prosecute these cases and impose tougher penalties.

The Theft of Trade Secrets Clarification Act of 2012 clarifies the scope of the Economic Espionage Act of 1996 in light of U.S. v. Aleynikov, 676 F.3d 71 (2d Cir. 2012). In that case, the Second Circuit Court of Appeals overturned the criminal conviction of a programmer who stole the source code of his employer to establish a competing firm. The court held that the computer code failed to satisfy the statute’s requirement that the “product” was “produced for” or “placed in” interstate or foreign commerce. Under the amendment, which was signed into law by President Obama in December, the prohibition against the theft of trade secrets will now apply to a trade secret that is related to a product or service used in or intended for use in interstate or foreign commerce.

The Foreign and Economic Espionage Penalty Enhancement Act of 2012 will enhance the penalties for misappropriating trade secrets to benefit a foreign government. For individual offenders, the monetary limit for financial penalties would increase from $500,000 to $5,000,000. For corporations, it would increase from $10,000,000 to the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided. The legislation was passed by Congress and is now awaiting the President’s signature.

we encourage you to contact one of our experienced intellectual property attorneys for a free 30-minute consultation.

How Can I Help?

As these new laws highlight, it is imperative for businesses to carefully guard all proprietary information and make sure that all employees understand what constitutes a protected trade secret. For more information about how to best protect your trade secrets, contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

You are hereby banned!

DuPont Co. was recently awarded a 20-year permanent injunction in a trade secrets misappropriation case involving its Kevlar technology. The court order bans Korean textile maker Kolon Industries Inc. from making a competing high-strength fiber.

The court order demonstrates the severity of the remedies available in a trade secrets case. Kolon was already ordered by a federal jury to pay DuPont $919.9 million in damages last September.

The lawsuit involved the theft of 149 trade secrets relating to DuPont’s high-strength synthetic fiber used in bulletproof vests, military helmets, tires, brakes and fiber-optic cables. DuPont alleged that Kolon recruited its former employees and used DuPont’s proprietary business information to create its competing product, Heracron fiber.

In instituting the lengthy injunction, U.S. District Judge Robert Payne noted that the damages award would not prohibit Kolon from using the stolen trade secrets at DuPont’s expense. As detailed by Reuters, Payne further stated that DuPont might have to go to South Korea to enforce the judgment.

“That Kolon found it necessary as a matter of corporate policy to misappropriate DuPont’s trade secrets to augment the knowledge and efforts of its own research staff illustrates that, left to its own devices, Kolon simply would not have developed the trade secrets it misappropriated,” Payne wrote. Kolon has requested that the injunction be stayed pending an appeal.

This case demonstrates the significant economic impacts of trade secret misappropriation. The ruling in this case, if upheld, will likely have a significant impact on the future success and failure of both companies involved.

How Can I Help?

If you need help to keep your secrets or determining how best to protect your ideas, or know someone that can use my help, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney. As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

When Does Trade Secret Theft Become a Federal Crime?

Trade secret theft is generally addressed through the civil lawsuits. However, in some cases, the misappropriation of trade secrets can rise to the level of a federal crime. The Economic Espionage Act of 1996 criminalizes trade secret theft committed for personal benefit within the country or for the benefit of a foreign government.

Section 1831 addresses foreign economic espionage and requires that the theft of a trade secret be done to benefit a foreign government, instrumentality, or agent.  The elements of the crime include:

  • The defendant intended or knew his actions would benefit a foreign government, foreign instrumentality, or foreign agent;
  • The defendant knowingly received, bought, or possessed a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; and
  • The item/information was, in fact, a trade secret.

Meanwhile, Section 1832 involves the misappropriation of a trade secret with the intent to convert the trade secret to the economic benefit of anyone other than the owner and to injure the owner of the trade secret. The elements of the crime include:

  • The defendant intended to convert a trade secret to the economic benefit of anyone other than the owner;
  • The defendant knowingly received, bought, or possessed a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization;
  • The item/information was, in fact, a trade secret;
  • The defendant intended, or knew, the offense would injure the owner of the trade secret; and
  • The trade secret was related to or included in a product that is produced for or placed in interstate or foreign commerce.

Of course, prosecutors will not pursue every case that meets the above criteria. As detailed by the Department of Justice, U.S. Attorneys will evaluate evidence of involvement by foreign agents, the type of trade secret involved, the degree of economic injury, the effectiveness of civil remedies, and the potential deterrent value before deciding whether to bring a criminal action.

How Can I Help?

Protecting against trade secret misappropriation should not just be an important priority for the federal government, but for all businesses. To make sure you are protected, please contact me for a free 30 minute consultation by sending me an email or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities.  Connect with me on Google +

Norman

Raytheon’s Second Chance Trade Secrets Case

Raytheon Co. will have another opportunity to pursue an intellectual property lawsuit against Flir Systems Inc. Raytheon alleges that the company’s Indigo Systems unit stole trade secrets regarding its infrared technology.

In 2004, Raytheon obtained an Indigo infrared camera and, after disassembling it, “found what it believed was evidence of patent infringement and trade secret misappropriation,” according to court documents. The suit was filed in 2007, within the three-year statute of limitations.

However, a federal court in Texas dismissed the case after determining that Raytheon waited too long to file its complaint. It found that Raytheon should have suspected the theft as early as 2000 when key employees left Raytheon for Indigo and Indigo started to win key defense contracts.

In a recent ruling, the U.S. Court of Appeals for the Federal Circuit disagreed, finding the lower court erred in dismissing the case. “It was for the jury and not for the district court to determine when Raytheon should have first discovered the facts supporting its cause of action,” the opinion stated.

The appellate panel further noted that the lower court placed too high a burden on Raytheon. “The district court essentially concluded that from 2000 on, Raytheon was on permanent inquiry notice and therefore had a constant duty to investigate all acts of competition by Indigo for evidence of misappropriation,” the panel wrote.

The decision allows Raytheon to pursue its claims for theft of trade secrets and misappropriation of intellectual property.

How Can I Help?

If you need help to keep your secrets or determining how best to protect your ideas, or know someone that can use my help, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities.  Connect with me on Google +

Norman

Surf the Web and Go to Jail?

If you browse the Internet while at work, a ruling by the Ninth Circuit Court of Appeals should make your browsing less risky.  Many employees use the Internet at work for some personal use during work hours.  So, many employers have adopted policies prohibiting the use of work computers for nonbusiness purposes.  In United States v. Nosal, the Ninth Circuit answered the question of whether an employee who does violates such a policy commit a federal crime?

After leaving his job at an executive search firm, David Nosal convinced some of his former colleagues to help him start a competing business.  The employees used their login credentials to download source lists, names, and contact information from a confidential company database, and then transferred that information to Nosal.  The employees were authorized to access the database, but the company had a policy that forbade disclosing confidential information.

The government indicted Nosal on a number of charges, including violations of the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030. The government contended that Nosal had aided and abetted the employees in “exceed[ing their] authorized access” with intent to defraud.

Nosal filed a motion to dismiss the CFAA counts, arguing that the statute targets only hackers, not individuals who access a computer with authorization but then misuse information they obtain by means of such access.

The court was asked to determine the boundaries of the CFAA. The Ninth Circuit agreed with Norsal that CFAA was intended to fight hacking rather than to “criminalize any unauthorized use of information obtained from a computer.”

As the court highlighted, an alternative reading of the statute would mean that “millions of unsuspecting individuals would find that they are engaging in criminal conduct” by violating their employers’ restrictions on Internet use by “g-chatting with friends, playing games, shopping or watching sports highlights.”

However, the Ninth Circuit may not have the final word on this issue. The government is still deciding whether to file a writ of certiorari with the U.S. Supreme Court.

How Can I Help?

If you have been the victim of this type of theft, there are other remedies to protect your valuable trade secrets.  If you need help to identify your trade secrets and how to protect them, or know someone that can use my help, please contact me for a free 30 minute consultation by sending me an email or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities.  Connect with me on Google +

Norman