Intellectual Property News and Reports

This is the first Defend Trade Secrets Act case that has reached our court. 18 U.S.C. § 1836 (effective May 11, 2016). But the appeal does not require us to decide anything about trade secrets. It instead raises a question of attorney’s fees that we have addressed in the context of other federal statutes that allow prevailing parties to recover fees: Is a defendant eligible for fees when the plaintiff obtains a dismissal without prejudice? Because such a dismissal does not establish the winner of the dispute, we AFFIRM the denial of fees.

Download Dunster Live LLC v. LoneStar Logos Management Co.

Yellowfin Yachts, Inc. is a manufacturer of high-end fishing boats. Since 2000, Yellowfin has produced predominantly “center-consoled, open-fisherman styled boats” ranging between twenty-one and forty-two feet. According to Yellowfin, these boats all have the same “swept” sheer line, meaning a gently sloped “s”-shaped line that runs upward from the point at which a boat’s hull intersects with the deck to the boat’s lofted bow. This swept sheer line, described by Yellowfin as “unique,” is the subject of its trade dress claims.

Yellowfin hired Kevin Barker in 2006 as a vice president of sales. Although Yellowfin presented Barker with a proposed employment agreement which included confidentiality clauses, Barker never executed the agreement. Barker left Yellowfin in 2014—not encumbered by a noncompetition or nonsolicitation contract—and founded a competitor, Barker Boatworks, LLC. On his last day at Yellowfin, Barker downloaded hundreds of files from Yellowfin’s main server. These files contained “detailed purchasing history and specifications for all of Yellowfin’s customers,” as well as “drawings” and “style images” for Yellowfin boats and “related manufacturing information.”

After leaving Yellowfin, Barker retained marine architect Michael Peters to design a twenty-six-foot bay boat based on Barker’s specifications. These specifications, according to Yellowfin, were derived directly from Yellowfin’s own bay boats, and the Barker boat’s sheer line nearly replicated that of Yellowfin. Barker Boatworks opened for business in July 2014 and has since competed with Yellowfin in the same “niche” center-console fishing-boat market.

In April 2015, Yellowfin filed a complaint against Barker Boatworks and Kevin Barker4 in the United States District Court for the Middle District of Florida. With leave of court, Yellowfin filed its First Amended Complaint, the operative complaint here, in September. In this complaint, Yellowfin pleads claims for trade dress infringement and false designation of origin under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), common-law unfair competition, common-law trade dress infringement, and violation of Florida’s Trade Secret Act.

After unsuccessfully moving to dismiss Yellowfin’s complaint, Barker Boatworks moved for summary judgment on all of Yellowfin’s claims. The District Court granted the motion in full. First, the Court provided three reasons why Yellowfin’s Lanham Act trade dress claim failed: Yellowfin did not adequately describe any distinctive feature of its sheer line, its sheer line is functional and thus not protectable as trade dress, and no reasonable jury could conclude that a potential buyer would likely confuse a Barker boat for a Yellowfin. The Court then held that, because a reasonable jury could not conclude that a potential buyer would likely confuse the two boats, Yellowfin’s claims of Section 43(a) false designation of origin, common-law trade dress infringement, and common-law unfair competition also fail. Finally, the Court found that Yellowfin failed to identify a protectable, misappropriated trade secret, and, regardless, that Yellowfin did not make “reasonable efforts” to protect all of its alleged trade secrets. The Court therefore rejected Yellowfin’s trade secret claim. Yellowfin appeals these rulings.

We review a district court’s grant of summary judgment de novo and construe the evidence and draw all reasonable inferences therefrom in the light most favorable to Yellowfin. Ziegler v. Martin Cty. Sch. Dist., 831 F.3d 1309, 1318 (11th Cir. 2016). We first address the District Court’s trade dress rulings.

Download Yellowfin Yachts Inc. v. Barker Boatworks LLC

These consolidated appeals arise from a district court action filed by Raytheon Company (Raytheon) against Indigo Systems Corporation and FLIR Systems (FLIR) (collectively, Indigo) for trade secret misappropriation and patent infringement. The patent infringement claims were settled by the parties and dismissed. After a threeweek trial, a jury found that Indigo did not misappropriate Raytheon’s trade secrets relating to the production of infrared cameras. The district court then entered final judgment in favor of Indigo. Raytheon appeals from the district court’s denial of its motion for judgment as a matter of law and motion for new trial regarding two of the alleged trade secrets. Indigo cross-appeals from the district court’s decision denying its motion for attorney fees.

For the reasons that follow, we affirm the judgment of no liability in favor of Indigo. We also affirm the district court’s denial of attorney fees.

Download Raytheon Co. v. Indigo Systems Corp.

Replacement lenses used to treat eye cataracts have a limitation—the new lenses focus only at one distance. In most cases, reading glasses are still required after surgery. Elenza, Inc. thought it had a solution to the problem—an electroactive intraocular lens (“EAIOL”) that used electric power and changes in eye pupil size to “trigger” the focus of an artificial lens. If it worked, patients could see clearly at multiple distances without glasses.

Alcon Laboratories Holding Corporation, a developer of artificial lenses, was also exploring EAIOL lenses. Elenza and Alcon decided to jointly pursue the technology, first by signing a Non-Disclosure Agreement (“NDA”), followed by a Stock Purchase Agreement (“SPA”). Unfortunately, the project fizzled after Elenza failed to meet development milestones in the SPA. Much to Elenza’s surprise, two years later, Alcon filed a patent application for an EAIOL and announced that it was working with Google, Inc. to develop an EAIOL.

Elenza filed suit in Superior Court and claimed that Alcon breached its agreements with Elenza and misappropriated Elenza’s EAIOL trade secrets. Before trial, the Superior Court granted in part Alcon’s motion for summary judgment, finding that Elenza failed to support its trade secret claims. The court also limited Elenza’s damage claims. Elenza’s contract claims went to trial. A jury found against Elenza on all claims.

On appeal, Elenza argues that the Superior Court erred when it granted summary judgment on its trade secret claims. According to Elenza, at the summary judgment stage, its trade secret disclosures were sufficient to prove that trade secrets existed and that Alcon used or disclosed those secrets in its later development efforts. We need not, however, reach Elenza’s claim on appeal that it raised disputed factual issues about the existence of trade secrets because we agree with the Superior Court that, at summary judgment, Elenza failed to support its claim that Alcon improperly used or disclosed any of Elenza’s alleged trade secrets. Thus, we affirm the Superior Court’s judgment.

Download Elenza Inc. v. Alcon Laboratories Holding Corporation

Defendant Donald Bowers was previously involved in a civil trade secret misappropriation case that was litigated in the United States District Court for the District of Utah. During the course of that litigation, Bowers willfully and repeatedly violated a permanent injunction issued by the district court presiding over the case, and also refused to purge himself of civil contempt. His actions resulted in findings of civil contempt against him, judgments against him for the plaintiff’s attorneys’ fees, and, ultimately, a criminal referral to the United States Attorney for the District of Utah. A federal grand jury subsequently indicted Bowers on two counts of contempt, in violation of 18 U.S.C. § 401(3). The case proceeded to trial, where a jury found Bowers guilty of both counts. Bowers was sentenced to a term of imprisonment of fifteen months, to be followed by a thirty-six month term of supervised release. He was also directed, as a condition of supervised release, to make monthly payments on the outstanding amount owed by him to the plaintiff in the underlying civil case.

Bowers now appeals, arguing that the district court erred in (1) imposing a special condition of supervised release requiring him to make monthly payments on the outstanding judgments owed to the plaintiff in the civil case, (2) denying his motion for disclosure of the criminal referral, and (3) sentencing him to a term of imprisonment that exceeded six months. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm in all respects.

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Software maker GlobeRanger obtained a $15 million judgment in a trade secret misappropriation trial against competitor Software AG. Software AG challenges that result on a number of grounds, but its principal argument is that GlobeRanger finds itself in a jurisdictional Catch-22. It argues that GlobeRanger’s trade secret claim is preempted by federal copyright law, but if not, then the result is no federal claim to support jurisdiction. Because we find that the trade secret claim is not preempted but that a dismissed conversion claim was preempted and supports federal jurisdiction, we also consider challenges to the sufficiency of the evidence, the damages award, and jury instructions. Finding no reversible error on those grounds, we AFFIRM.

Download GlobeRanger Corp. v. Software AG

The panel affirmed in part and reversed in part the district court’s summary judgment in favor of defendant Electronic Arts, Inc., in a copyright infringement and trade secrets case. Electronic Arts, maker of The Sims, a computer game, contracted with a production company to produce a USB flash drive shaped like a “PlumbBob,” a gem-shaped icon from the game. That company contracted with Direct Technologies, LLC, to produce a prototype. Electronic Arts approved the prototype but had the flash drives produced by a company in China. Direct Technologies sued under the Copyright Act and the California Uniform Trade Secrets Act. Reversing as to the copyright infringement claim, the panel held that the district court erred in ruling as a matter of law that the flash drive was not sufficiently original when compared to the PlumbBob icon to qualify for copyright protection as a derivative work. The panel held that there was a genuine issue of material fact as to whether Direct Technologies’ cut-away design for removing the flash drive from the PlumbBob object was sufficiently non-functional and non-trivial to warrant copyright protection. There was also a genuine issue of material fact as to whether Direct Technologies was sufficiently in control of its artistic contribution to qualify as a joint author in the flash drive prototype. DIRECT TECH. V. ELECTRONIC ARTS 3 Affirming as to the trade secrets claim, although relying on different grounds than the district court, the panel held that Direct Technologies’ contribution to the PlumbBob USB drive, a design for the flash drive’s removal from the PlumbBob object, did not derive independent economic value from not being generally known to the public. The panel also held that the district court did not clearly err or otherwise abuse its discretion in denying Electronic Arts attorneys’ fees for the trade secrets claim.

Download Direct Tech. v. Electronic Arts

ALAN E. NORRIS, Circuit Judge. Plaintiffs Allied Erecting and Dismantling Co., Inc. and Allied-Gator, Inc. (together, “Allied”) appeal the district court’s Federal Rule 12(b)(6) dismissal of their Ohio Uniform Trade Secrets Act (“OUTSA”) lawsuit based on diversity of citizenship jurisdiction against Genesis Attachments, LLC and its parent company, International Equipment Solutions, LLC (together, “Genesis”). For the reasons that follow, the judgment of the district court is affirmed.

Download Allied Erecting & Dismantling Co. Inc. v. Genesis Equip. & Mfg., Inc.

Plaintiff Cypress Semiconductor Corporation (Cypress) brought this action alleging that defendant Maxim Integrated Products, Inc. (Maxim), had misappropriated a trade secret, or was in the process of doing so, by seeking to hire away specialists in touchscreen technology, a field in which Cypress and Maxim compete. Maxim responded that it was entitled to solicit prospective employment candidates in Cypress‟s workforce and that there was no evidence it had acquired, or was seeking to acquire, any trade secret. After failing to secure temporary injunctive relief, and failing to obtain an order placing under seal evidence derived by Maxim from public sources, Cypress dismissed the action. The trial court awarded Maxim its attorney fees pursuant to Civil Code section 3426.4 (§ 3426.4), which authorizes such an award to the prevailing party where a claim for misappropriation of trade secrets is found to have been made in bad faith. Cypress contends that this was error because the trial court could not properly find that Maxim was the prevailing party, or that Cypress brought the action in bad faith. We have concluded that (1) the trial court‟s findings are free of procedural error; (2) the finding of bad faith is amply supported by evidence that defendants did no more, and Cypress accused them of no more, than attempting to recruit the employees of a competitor, which Maxim was entitled to do under the laws of this state; and (3) Maxim prevailed when, as the trial court impliedly found on substantial evidence, Cypress dismissed the suit to avoid an adverse determination on the merits. Accordingly, we will affirm the judgment.

Download Cypress Semiconductor Corp. v. Maxim Integrated Prods., Inc.

LG Electronics, Inc. (“LG”) and the defendants are parties to an arbitration before the International Centre for Dispute Resolution. After LG filed the arbitration, the parties entered into a non-disclosure agreement, titled “Agreement Governing Confidential Settlement Communications” (the “NDA”). LG alleges in this action that the defendants, whom this decision refers to collectively as “InterDigital,” breached the NDA by submitting certain documents to the arbitrators. As a remedy, LG seeks a permanent injunction compelling InterDigital to withdraw the offending documents and to refrain from further breaches of the NDA. InterDigital has moved to dismiss on the grounds that LG‟s claims are properly before the arbitral tribunal and this court should defer to the tribunal under McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co., 263 A.2d 281 (Del. 1970). The motion to dismiss is granted.

Download LG Elecs., Inc. v. Interdigital Commc’ns, Inc.