Apr
17

The Next Frontier in Patent Law – Can Artificial Intelligence Qualify as an Inventor?

On April 5th, a federal judge in the U.S. District Court of Virginia heard summary judgment arguments on this very issue in Thaler v. Iancu.  Thaler brought this action to challenge the current legal definition of inventorship of patent applications after the United States Patent & Trademark Office had rejected two of his patent applications for failing to identify a person as inventor in non-compliance with the Patent Statute’s statutory requirements.  Instead, he had named an artificial intelligence (AI)-based system, DABUS, as the inventor and disavowed any notion of being named a sole or at least a joint inventor.  Thaler may well have brought as a test case given AI’s increasing role in R&D in industries ranging from the life sciences to chemistry to engineering.

The judge is expected to rule in favor of the USPTO on the basis of the patent statute’s definition of inventor which states:  “The term “inventor” means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.”  Any change in the definition of inventor to include AI will require intervention by Congress.

The issue is not, however, as simple as expanding the definition to include the AI.  For example, an Inventor must contribute to the conception of the invention.  As the Manual for the Procedure for Examining Patents (MPEP) states, “[t]he threshold question in determining inventorship is who conceived the invention.  Unless a person contributes to the conception of the invention, he is not an inventor.”  MPEP § 2019.

In understanding the legal definition of inventorship, it is important to understand that the inventor is not required to reduce the invention to practice.  “Difficulties arise in separating members of a team effort, where each member of the team has contributed something, into those members that actually contributed to the conception of the invention, such as the physical structure or operative steps, from those members that merely acted under the direction and supervision of the conceivers.”  MPEP § 2019 citing a 1991 case from the Board of Patent Appeals and Interferences.

Can AI spontaneously conceive of an invention without any human input or is it actually being directed to reduce a human-inputted concept to practice?  Under this scenario, AI cannot be an inventor even if the definition for inventor is expanded to include AI.

Additionally, assignment of patent rights is a common practice.  Generally, any scientist or engineer employed by a company is required to execute and assignment of any patent rights resulting from his or her endeavors to the company-employer.  The company generally files the patent application as the assignee wherein the inventors must always be named.  Another common patent assignment scenario is one where the inventor, as the patent owner, assigns another person, often a business entity, to commercialize the patent.   Patent licensing is another common business transaction surrounding issued patents.   These routine contractual business transactions will clearly become complicated if AI is allowed to be named as an inventor.  Why? Because the party to an agreement must have the requisite intent to enter into the agreement.   Can AI have that requisite invent to assign its patent rights or enter into a licensing agreement?

Other considerations include:  1) An AI machine’s ability to have standing to sue or be able to testify as the inventor in a patent infringement lawsuit; 2) Ownership rights in any resulting patentable invention if the AI machine was designed by an independent person and purchased by the inventor.  Here, any purchase contracts should unequivocally state that any resulting patentable technology resulting from the usage of the AI machine belongs to the purchaser of that machine.  But what if the AI machine is named as the inventor?  The point is that any such contracts involving AI must be carefully tailored to anticipate possible scenarios.

This commentator is not in favor of having AI named as an inventor perhaps because of a bias in favor of the human brain as the ultimate source of creativity and ingenuity.  Instead, Congress should first address the upheaval in intellectual property law caused by simply bad court decisions in U.S. patent law concerning patent eligibility under § 101 and just this month, the questionable application of the fair use doctrine in a copyright law case.  Click here for a link to the blog on the copyright case.  There is also no question that human ingenuity is what created AI in the first place and that AI is here to stay.

As an alternative to complicating the patent law business transactions that are so essential to acquiring investment funding and commercially exploiting patented inventions, a separate statute for thoughtfully addressing the unique aspects of AI-involved inventions is suggested.  This suggestion of a separate patent classification has precedent through plant patents and design patents – types of patents that are separate and distinct from utility patent applications, the very type of patent application at issue in the Thayer case.

THANK YOU FOR YOUR INTEREST IN THIS BLOG.  AS USUAL THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

 

Intellectual property law is a complex area of the law.  Contact us at 305-279-4740 for a complimentary consultation on protecting your inventions, creative works, brands, and proprietary information through patents, copyrights, trademarks and trade secrets or our litigation services involving intellectual property disputes.   We represent both individuals and business entities.  Our mission is to serve innovators and creators in protecting the fruits of their hard work and ingenuity through our Client Services Creed:  Conscientious, Rigorous, Energic, Empathetic, and Diligent legal services. 

 


© 2021 by Troy & Schwartz, LLC

 

 

 

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Apr
16

Google v. Oracle: Another Questionable Decision by the Supreme Court in the Area of Intellectual Property Law

On April 5th in Google, LLC v. Oracle America, Inc. the Supreme Court issued a 7 to 2 ruling favoring the alleged infringer of copyrighted software on fair use grounds.  Justices Thomas and Alito dissented, agreeing with the position of the Federal Circuit Court of Appeals: that Google’s use of Oracle’s copyrighted software violated the most important factor in establishing fair use – the effect of the copying on the market for the copyrighted work.  This blog discusses the decision which has created considerable consternation for the owners of registered software copyrights.  Although the commentator infrequently agrees with Justices Thomas and Alito, in this case she does.

This blog discusses the decision and its potential impact on software copyright infringement lawsuits.

A.   Why Was the Fair Use Doctrine an Issue?

       Fair use is defense used by parties accused of copyright infringement.  The Fair Use Doctrine is codified in § 107 of the Copyright Act.

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.

      In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the 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.

Google alleged that copying of nearly 11,500 lines of code from Oracle’s Java SE program  constitutes fair use.

B.  The Vexing Decision. The majority’s reasoning to find in favor of Google based on the fair use doctrine is perplexing.  Regarding the nature of the copyrighted work, the Court stated that Google’s usage of the infringing code was limited to smartphones, i.e., Google’s Android.  According to the majority, “Google, through Android, provided a new collection of tasks operating in a distinct and different computer environment.”  Why? Because was developed for use with desktop and laptop computers.    Never mind that smart phones are in essence hand-held computers as software patent law recognizes, namely that smartphones, laptops, and smartphones are indistinguishable, general purpose machines.  The Court seemed to overlook the fact that Google’s usage of the copied code is commercial to the tune of billions of dollars a year.

The Court also inexplicably focused on the amount of code Google copied, namely only 11,500 lines of the JAVA SE program, rather than the substantiality of the portion of the code.   Substantiality generally means – how important is the part of the work copied in the infringing work? In this case, the 11,500 lines of code was that portion of the Sun Java API that allowed programmers to use the task-calling system that was most useful to programmers working on applications for mobile devices.  In other words, the infringed code was essential for speeding up the development of Android apps.

Google argued that its copyright infringement was somehow justified because it “wanted millions of programmers, familiar with JAVA, to be able to easily to work with its new Android platform” and develop applications for the Android.  The Court bought this rationale of Google’s purported interest in benefitting millions of programmers who are familiar with Java as justification of its copying of the Java SE program.  According to the Court’s rationale, Google’s 3rd party beneficiary argument on behalf of “millions of developers” gave Google the unfettered right to copy Java’s code rather than negotiate a licensing agreement with Oracle.  Yet, Google intentionally and knowingly used copyrighted code to enhance its APP profile in the marketplace of mobile devices.

Perhaps the Court’s most egregious error, as the dissenting opinion asserts, was its failure to give proper consideration to factor 4, the effect of the use [of the copyrighted content] upon the potential market for or value of the copyrighted work.  In a 1985 case, Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985), the Court had held that the effect of the use upon the potential market for or value of the copyrighted work was the most important factor in a fair use analysis.  That earlier case also stood for the proposition that only 300 to 400 words of an entire Presidential memoir [or entire work] can be infringing when the value of the copyrighted work is affected by the taking. Fast forward to 2021 where the Court has effectively overturned its own precedent because clearly the “mere” 11,500 lines Google decided to use in the multi-billion dollar Android platform has without question destroyed Oracle’s ability to license.  And why should other parties now seek a license with Oracle when apparently the 11,500 lines of code are free for the taking?  Nor is Google “giving away” the infringed code.  Instead that code is contributing to Google’s bottom “Android” line.

C.    Should Software Be Copyrighted After Google v. Oracle?

First with patent law and now copyright law, the Court’s tunnel vision negatively impacts intellectual property law and the rights of inventors and creators.  The Court seems to have forgotten that the Founding Fathers recognized the importance of rewarding creativity and innovation.  It is that very creativity and innovation that has resulted in the technical advances that have been made during the past two over two hundred years including the technology so many have relied on during the pandemic including the courts.  The Founding Fathers had the idea that creators and innovators willing to spend time and money in realizing a dream should be rewarded rights such as the right to take legal action to prevent others from the unauthorized usage of a patented invention, copyrighted works, etc.  Absent action by Congress to correct the actions taken by the Court in its numerous patent law decisions including the infamous Alice and Prometheus decisions and now this Google copyright decision, that lofty idea will continue to be eroded by cynicism and bad players.

As an IP attorney, the commentator has registered software codes with the U.S. Copyright Office on behalf of clients.  After this decision, is there any point in obtaining a registered software copyright?

It is my hope that the Google decision turns out to be an aberration.  In the meantime, software developers and/or the companies they work for have the following options to protect their code:  trade secret maintenance, software registration, or a combination of the two.  Copyright registration is not costly compared to, e.g., patent procurement. Therefore, copyright registration should still be considered.  At the very least, registration is a prerequisite to commencing a copyright infringement lawsuit.  Moreover, Google relied on the argument that its actions were not really on its own behalf but on the behalf of developers which the Court bought. In the end, this disingenuous argument may well not be applicable in many situations. Nevertheless, the plaintiff in any software infringement lawsuit must be familiar with the Google decision and be prepared to thwart a fair use defense.

Intellectual property law is a complex area of the law.  Contact us at 305-279-4740 for a complimentary consultation on protecting your inventions, creative works, brands, and proprietary information through patents, copyrights, trademarks and trade secrets or our litigation services involving intellectual property disputes.   We represent both individuals and business entities.  Our mission is to serve innovators and creators in protecting the fruits of their hard work and ingenuity through our Client Services Creed:  Conscientious, Rigorous, Energic, Empathetic, and Diligent legal services. 

                       THANK YOU FOR YOUR INTEREST IN THIS BLOG. HOWEVER, IT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.  

 

© 2021 by Troy & Schwartz, LLC

 

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Apr
03

COPYRIGHT INFRINGEMENT OF CONTENT EMANATING FROM INTERNET RSS FEEDS

In MidlevelU, Inc. v. ACI Information Group, Case No. 20-10856 (11th Cir. Mar. 3, 2021) (Pryor, J.), the Eleventh Circuit Court of Appeals addressed copyright infringement issues involving Internet technology.  The case originated in the Southern District Court of South Florida, a court which is likely to increasingly be the venue for “high tech” intellectual property cases as a result of the influx of technology companies to South Florida.  The case is of interest because: 1) it involved an implied license defense in the context of RSS feeds; and 2) the issue as to whether non-registered works could be considered in determining statutory damages for registered works.

Case Background

MidlevelU published a free blog designed to attract potential customers in the midlevel healthcare market. MidlevelU made the full text of its blog articles (instead of only headlines and article summaries) available in an RSS feed. ACI is a content aggregator that subscribed to the blog’s RSS feed. ACI copied and published more than 800 entries from MidlevelU’s blog by including those articles in a curated index of abstracts and full-text articles of academic blogs. ACI had no license agreement with MidlevelU.

After discovering the ACI’s activities, MidlevelU registered 50 of its most recent articles for copyright protection with the US Copyright Office. Registration of a copyrighted work is a prerequisite for a commencing a copyright infringement lawsuit in all federal courts since the Supreme Court’s March 2019 holding in Fourth Estate Public Benefit Corp. v. Wall-Street.com.   MidlevelU also sent ACI a cease-and-desist letter demanding that its content be removed from ACI’s index. ACI removed the content from the index and coded links to index entries for MidlevelU’s articles so that they would redirect to the MidlevelU’s website. Months later, MidlevelU discovered that, although its content was no longer available on the index website, it still appeared in the website repositories of university libraries. These entries credited ACI as the content’s publisher and directed visitors to view the blog’s full-text content in the “subscribers only” section of the blog aggregator’s (ACI’s) website.

MidlevelU sued ACI in the Southern District of Florida alleging copyright infringement of the registered articles. ACI asserted an implied-license defense.  Under the implied license doctrine, the alleged infringer argues that he had permission to use the copyrighted material even though there is no clear contract; a license may be implied where a judge or jury believes that the opposing parties would have made a contract if they turned their minds to it.  Copyright law has adopted a similar approach in terms of licenses to use a copyright work if it seems like the parties would have created a license under the circumstances. An implied license, if it exists, must, by definition, be non-exclusive because U.S. copyright law requires exclusive licenses to be in writing.

The 11th Circuit’s Holding

The Eleventh Circuit affirmed the district court’s grant of judgment as a matter of law against an alleged copyright infringer on its implied-license defense, finding that a blog operator’s publication of entire articles through a really simple syndication (RSS) feed does not give rise to an implied license without substantial evidence showing an intent to grant a license.  The decision is of interest because of its a discussion of Latimer v. Roaring Toyz, Inc. , a 2010 decision by the 11th Circuit, which set forth a test for establishing implied licenses in work-for-hire situations.  Relying on Latimer, the district court had concluded that ACI did not have an implied license.

The 11th Circuit found that the district court read Latimer too broadly by applying its holding outside of the work-for-hire context, but the Court nevertheless affirmed the district court’s decision because a jury could not have reasonably inferred from the evidence that the MidlevelU impliedly granted a license to ACI. The Court noted that it had never held that the Latimer test was the only way to prove an implied license. An implied license may arise from circumstances outside of work-for-hire situations: “Creating material at another’s request is not the essence of a license: an owner’s grant of permission to use the material is.”

ACI’s arguments to try and establish an implied license were found to be disingenuous because only when an owner clearly manifests consent to use copyrighted material is a non-exclusive implied license created.  Citing Field v. Google, Inc., a 2006 Nevada district court which involved copyright infringement allegations in the search-engine web crawler context, ACI argued that an implied license arose because the MidlevelU did not code its website to tell aggregators such as itself not to copy or display its content.  In other words, ACI blamed the blogger for not proactively warning aggregators to not copy or display content.

Without deciding whether Latimer was correctly decided, the 11th Circuit rejected ACI’s theory. The Court reasoned that although the ACI relied on a “web crawler” case, it failed to produce any evidence that it actually used a web crawler to collect the blog’s content. Rather, the evidence showed that ACI collected content by grabbing it through the blog’s RSS feeds.  “Implied permission to enter through a front door (web crawler) does not also imply permission to enter through a back window (RSS feed).”

Similarly, the Court found that MidlevelU’s affirmative steps to disseminate the full text of its articles through its RSS feed—rather than only summaries or headlines—did not give rise to an implied license. ACI failed to introduce evidence of, for example, an industry practice that would allow a jury to infer that disseminating content through an RSS feed without restrictions implies permission to copy and publish that content on another website.

The only evidence before the jury related to personal use of RSS-distributed content. This evidence constituted testimony that MidlevelU set up its RSS feed to make its content easier for readers to access, and testimony that RSS is used as an alternative to a web browser to read content—i.e., an RSS feed stores the articles received from a website, and a human then reads the articles through an RSS reader. The Court rather sarcastically explained that “[i]mplied permission to enter the front door to shop (read content through an RSS reader for personal purposes) does not imply permission to enter and throw a party (sell computer-generated summaries paired with [software] showing the full-text content).”

The Court also found that the district court did not err by instructing the jury that it could consider unregistered articles in its calculation of statutory damages for the registered works; the district court did not abuse its discretion by denying the aggregator’s motion for a new trial on the basis of the jury’s statutory-damages award; the district court did not err by failing to consult with the register of copyrights about the alleged fraud on the copyright office; and aggregator is not entitled to judgment as a matter of law on its fair-use defense.

Regarding the statutory damages award which totaled over $200,000, the 11th Circuit emphasized that the hundreds of unregistered blogs could be used to support a finding of willful infringement.   Regarding the court’s failure to consult with the register of copyrights, whether or not a district court must consult with the Register of Copyrights on a matter involving the defendant’s allegations of fraud on the copyright office, the process generally requires the district court to grant the defendant’s motion to submit the matter to the copyright office.

Finally, ACI’s actions over the years hardly constituted fair use.  The Fair Use Doctrine authorizes the copying of both published and unpublished works without obtaining permission under the following “guideline” scenarios:

  • Connection with criticism or comment on the work.
  • In the course of news reporting.
  • For teaching purposes.
  • As part of scholarship or research activity.

Defendants in Internet Copyright Infringement cases often allege Fair Use as a defense as did ACI.  Each situation is evaluated on a case-by-case basis. Here, the 11th Circuit stated that “[c]opying an entire work militates against Fair Use.”  Substantial copying occurred because ACI provided substantive access to its subscribers to the full text-content of the plaintiff’s blogs through iFrames.  MidlevelU at 29.

Comments

This case is a well-deserved win for the blogger.  The courts will continue to tackle copyright infringement against the backdrop of Internet technology which makes copyright infringement easier than ever before.  It is recommended that content creators register at least some of their works within 90 days of publication so that they will be the beneficiary of certain statutory benefits including statutory damages.  Here, the plaintiff chose statutory damages in lieu of having to prove actual damages (which can be extremely difficult to do) because she had met the 90 day window.   Otherwise, she would have had to prove her actual damages.  We presume she was also awarded attorney fees and costs at least to some extent as the statute allows if the 90 day window is met.   This decision also paves the way to use unregistered works to help establish a reasonable damages for infringement of registered works especially where the infringement was willful.

THANK YOU FOR YOUR INTEREST IN THIS BLOG.  AS USUAL THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

 

Intellectual property law is a complex area of the law.  Contact us for a complimentary consultation on protecting your inventions, creative works, brands, and proprietary information through patents, copyrights, trademarks and trade secrets or our litigation services involving intellectual property disputes.   We represent both individuals and business entities.  Our mission is to serve innovators and creators in protecting the fruits of their hard work and ingenuity through our Client Services Creed:  Conscientious, Rigorous, Energic, Empathetic, and Diligent legal services. 

© 2021 by Troy & Schwartz, LLC

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Mar
23

HAS “HIGH TECH” TRADE SECRET PROTECTION UNDER FLORIDA’S UNIFORM TRADE SECRET ACT BEEN SOLIDIFIED BY THE ELEVENTH CIRCUIT COURT OF APPEALS?

The Eleventh Circuit’s reasoning in the case this blog summarizes is encouraging for any tech company that licenses access to its proprietary information or makes some part of it publicly available.  The decision holds that under Florida’s Uniform Trade Secret Law, these partial exposures of trade secrets to the public may not be fatal to a claim for trade secret misappropriation. 

There is no question that the law continues to evolve in response to new technological developments.   For example, corporate espionage has become easier in these days of computer hacking, thereby increasing the possibility of the theft of valuable proprietary information such as trade secrets.  Does Florida’s Uniform Trade Secrets Act (FUTSA) adequately protect the trade secret owner from “high tech” misappropriation of trade secrets?  The Eleventh Circuit Court of Appeals said yes in its 2020 decision in Compulife Software, Inc. v. Newman, et al., 959 F.3d 1288 (11th Cir. 2020).   The court held that the statute’s verbiage was indeed applicable to this “industrial espionage” case.  The court also solidified the FUTSA by clarifying the definition of misappropriation.

Plaintiff Compulife Software, Inc. sells access to its online databased of insurance premium information, which synthesizes publicly available insurers’ rate tables using its proprietary method and formula.  It also provides life insurance quotes sourced from its online database.  The data base is not static but consistently updates with current information about life insurer’s rate tables and allows for direct comparison across dozens of providers.  Compulife licenses access to the data to its customers who are primarily life insurance agents who in turn seek to provide reliable insurance rate estimate to policyholders.

Interestingly, the lawsuit originating in the Southern District of Florida, did not include alleged violations of the Computer Fraud and Abuse Act (“CFAA”), the most commonly applied federal law to web scraping. Indeed, plaintiff refrained from pursuing many of the common claims that often appear in web scraping litigation, such as trespass to chattels, conversion, tortious interference with a contract, and unjust enrichment.

The defendants and Compulife are in direct competition.  The lawsuit resulted from Compulife’s allegations that the defendants gained access to its database by falsely purporting to work for Compulife’s licensed customers, hiring a hacker to scrape data from Compulife’s database, and then using the scraped data to generate life insurance quotes on their own websites.  Not surprisingly, the court described the case as one involving high-tech corporate espionage.

Website scraping using software programs known has “bots” has been quite common and is often considered legitimate.  “Bad bots,” however, fetch content from a website with the intent of using it for purposes outside the site owner’s control.  “Bad bots make up 20 percent of all web traffic and are used to conduct a variety of harmful activities, such as denial of service attacks, competitive data mining, online fraud, account hijacking, data theft, stealing of intellectual property, unauthorized vulnerability scans, spam and digital ad fraud.”  See https://www.imperva.com/blog/is-web-scraping-illegal/.

The FUTSA requires the plaintiff to demonstrate that it: 1) possessed a trade secret; and 2) the secret was misappropriated.  The magistrate in the district court did find that Compulife’s database contributed a trade secret but that the trade secret had not been misappropriated. The magistrate’s reasoning?  Compulife had not identified what legal duty the defendants had violated.

The Eleventh Circuit found the magistrate’s reasoning erroneous.  Under the FUTSA, a trade secret can be misappropriated by either acquisition, disclosure, or use.  Compulife had alleged misappropriation by acquisition and use.   Relying on the FUTSA’s own wording, the court noted that there are several varieties of misappropriation by use that do not depend on the existence of any external legal duty.  Citing Fla. Stat. § 688.002(2)(b)1, 2a, and 3, the court explained that “[w]hen for instance, a defendant knows that his knowledge of a trade secret was acquired using ‘improper means,’ or that he has acquired knowledge of a trade secret ‘by accident or mistake’ and still uses it, such use is actionable misappropriation.”  “Improper” is defined by the statute as means including theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.  The court concluded that there was enough evidence that the database had been used by either improper means or accident or mistake and that these misappropriation theories must be determined before the court can dismiss a trade secret misappropriation claim.

The district court’s magistrate had also erred by finding that because the individual insurance quotes on Compulife’s website that the hacker scraped were publicly available, the database from which those quotes were sourced could not have been misappropriate by acquisition.  The Eleventh Circuit disagreed and reasoned that even if the publicly available individual quotes did not merit trade secret protection, “taking enough of them must amount to misappropriation of the underlying secret at some point.  Otherwise, there would be no substance to trade-secret protection for ‘compilations’ [of data] which the statute clearly provides.  See Fla. Stat. § 688.002(4).

The court also concluded that the method of acquisition could determine whether the taking of the publicly available quotes constituted misappropriation.  Here, the defendants did not merely manually access quotes from Compulife’s database wherein such manual copying would likely never constitute improper means.  Instead, the defendant’s usage of a bot to collect an otherwise infeasible amount of data may well constitute misappropriation – in the same way that using aerial photography may be improper when a secret is exposed to view from above.  Citing E.I. Dupont de Neumours & Co. v. Christopher, 431, F.2d 1012, 1014 (5th Cir. 1970), a case that had nothing to do with the difficult technical issues courts are asked to address today.  The court vacated the magistrate’s dismissal of the misappropriation by acquisition claim and remanded the case.

CONCLUSION

The case is expected to have ramifications in the area of trade secret law by allowing plaintiffs to claim that usage of their “website” publicly presented trade secret information comprises trade secret misappropriation.  Generally, publicly available information has not been deemed a trade secret.  This commentator opines that the decision will not defeat the need for a case-by-case factual analysis.  Relying on a 50-year-old non-tech case in support of their decision, the Compulife court clearly felt that that the defendants had “done the plaintiff wrong” and should be held accountable.  The reach of the decision remains to be seen.    It is therefore strongly recommended that any lawsuit involving trade secret misappropriation also includes counts such as those listed above in the event the claim for trade secret misappropriation fails.

 

THANK YOU FOR YOUR INTEREST IN THIS BLOG.  AS USUAL THE CONTENT IS FOR   INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE. 

Intellectual property law is a complex area of the law.  Contact us for a complimentary consultation on patents, trademarks, trade secrets, and copyrights.  Our mission is to serve innovators and creators in protecting the fruits of their hard work and ingenuity through our Client Creed:  Conscientious, Rigorous, Energic, Empathetic, and Diligent legal services which cover both transactional and litigation services.

Have a question specific to trade secrets?  Contact us for a complimentary trade secret checklist.

 


© 2021 by Troy & Schwartz, LLC

 

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Feb
09

THE TENSION BETWEEN TRADE SECRET PROTECTION AND PATENT PROTECTION

In Dec. 2020 the U.S. Court of Appeals for the Ninth Circuit held that the publication of a trade secret in a patent application extinguishes trade secret status.  Attia Architect PC, et al.  v. Google LLC, et al.   Architect Attia developed a system and method for automated design, fabrication, and construction called Engineered Architecture (EA).    In 2010 Attia entered into a partnership with Google wherein he disclosed his trade secrets related to the technology to Google.  A year later, Google filed patent applications related to the technology’s trade secrets.  Attia executed patent assignment agreements effectively transferring any rights in the patents to Google.  The patent applications were published 18 months from the filing date pursuant to 35 U.S.C. § 122(b)(1)(A) making the alleged trade secrets publicly available.  Google then allegedly excluded Attia from the project and used EA to create a platform for use by building professionals to streamline the design process by relying on artificial intelligence.

Attia sued Google for trade secret misappropriation under California’s trade secrets statute and the federal Defend Trade Secrets Act (DTSA). The district court dismissed his federal claims with prejudice and declined to exercise supplemental jurisdiction over state law claims.  Under both California state trade secrets law and the DTSA, the disclosure of the alleged trade secrets in the published patent application publication extinguished their status as protectable trade secrets.  (Click here for a previous blog concerning the same decision which  addressed another issue involving the DTSA). Nor was this a situation where Google had filed the patent applications without Attia’s permission.

Is it possible for trade secrets and inventions to co-exist?  Maybe.  Inventors may try to maintain what they as deem as trade secrets by failing to disclose key elements of the invention in the patent application and specification.  This approach can be difficult to navigate because inventors may risk invalidating a patent by withholding critical information from the patent examiner during prosecution of the patent.   But see Pike v. Texas EMC Management, LLC (Texas state appellate court finding that EMC had “purposely excluded certain information” from its patent application in order to maintain it as a trade secret and was thus entitled to maintain its claim against Pike for trade secret misappropriation.

Any information disclosed in a patent application publication or issued patent, is by definition, published and not subject to trade secret protection.   If the invention disclosed in a patent application is or will not be the subject of a foreign application, the patent applicant can file a non-publication request under 37 CFR 1.213(a) to prevent its publication 18 months later after the filing date.  For utility applications relying on the filing date of a provisional patent application (PPA), the clock starts ticking from the PPA’s filing date.  The non-publication request will allow the application to be maintained as a trade secret over the invention during the patent application prosecution process which can take many years.

If a patent does not issue, trade secret protection will continue until when and if the trade secret(s) become publicly available, through e.g., the inventor’s failure to maintain the trade secret in confidence.  If, on the other hand, the examining attorney concludes that claims are patentable, the inventor can make the determination as to whether issuance is “worth” giving up trade secret rights in the published patent document by deciding to withdraw the patent from issuance under 37 C.F.R. § 1.313.

Take Aways

  • Dlsclose any trade secrets related to your invention to your patent attorney.  Ask the attorney whether inclusion of the trade secrets in the patent application is essential to meet the USPTO’s invention disclosure requirements.
  • Consider filing a non-publication request providing you have no intention of filing a foreign application. If you do end up filing a foreign patent application, remember that that your U.S. patent application may also become subject to publication.
  • Be sure to continue safely guarding your trade secrets quite apart from any confidential patent application.  Trade secret protection is an on-going endeavor
  • Contact us for a complimentary trade secret checklist to get you started in understanding trade secret protection.

THANK YOU FOR YOUR INTEREST IN THIS BLOG.  AS USUAL THE CONTENT IS FOR   INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

 

Intellectual property law is a complex area of the law.  Contact us for a complimentary consultation on patents, trademarks, trade secrets, and copyrights.  Our mission is to serve innovators and creators in protecting the fruits of their hard work and ingenuity through our Client Creed:  Conscientious, Rigorous, Energic, Empathetic, and Diligent representation.

 

May you and your loved ones stay safe & be well during these challenging times.


© 2021 by Troy & Schwartz, LLC

Where Legal Meets Entrepreneurship

 

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