Posts in Trade Secrets

Over the course of two weeks, the United States has imposed tariffs on hundreds of billions of dollars of Chinese goods and has blacklisted Huawei, the world’s largest telecommunications company, on national security grounds. Google, Intel, Qualcomm and Micron have announced that they will stop doing business with the company. The United States has even threatened to withhold intelligence from our key allies if they go forward with plans to use Huawei equipment. Although there are many issues driving this newly escalated trade war between the United States and China, chief among them is the concern that China and its companies are engaged in intellectual property theft. Say what? Upend global markets over infringement of private technology rights? This must be pretty serious. Let’s take a closer look.

This week in Other Barks & Bites: Chinese state media pushes back on the United States’ claims of intellectual property theft; a bipartisan coalition from both houses of Congress releases a draft proposal of Section 101 patent law reform; Senator Coons seeks more information on Amazon’s privacy practices for Alexa devices; the city of Baltimore files a lawsuit over a scheme to delay market entry of a generic to the Zytiga prostate cancer treatment; the USITC institutes a patent infringement investigation of Comcast after several complaints from Rovi; USPTO Deputy Director Peters files a petition brief in a Supreme Court case over USPTO personnel expenses incurred during litigation instigated by patent applicants; and Qualcomm plans to appeal adverse ruling in Northern California antitrust case brought by the FTC.

This week in Other Barks & Bites, IPWatchdog’s IP news roundup: the House of Representatives passes drug patent legislation, while antitrust legislation targeting patent-related activities is introduced into the Senate and the Trump administration mandates pricing information for pharmaceutical ads; the Patent Trial and Appeal Board (PTAB) issues a pair of precedential decisions on cases with multiple petitions; the USPTO issues marijuana-related trademark guidelines and a notice on modifying patent term adjustment practices; Gilead strikes a settlement with Teva to bring generic Truvada to the U.S. market in 2020; a new music licensing entity is created in Canada; Fourth Circuit rules that bankruptcy can eliminate damages for trade secret violations; and several amicus file briefs asking the U.S. Supreme Court to eliminate the Federal Circuit’s “blocking patent” doctrine.

This week in IP news: the CASE Act, which would create a small claims system for copyright claims, is reintroduced in both houses of Congress; Qualcomm earns a massive $4.5 billion payment from its settlement with Apple; the U.S. Supreme Court seeks input from the Solicitor General on Oracle v. Google; and China amends its trademark law, increases copyright actions, and earns more than one-third of all 5G SEPs.

On April 25, the Office of the U.S. Trade Representative (USTR) released both its annual Special 301 Report and an updated Notorious Markets List, each of which highlights international issues facing U.S. intellectual property owners living in the United States and abroad. The Special 301 Report this year includes 36 countries that have been placed on watch lists for either inadequate IP protections or denying IP rights to U.S. rights holders. Similarly, the Notorious Markets List includes a non-exhaustive collection of online and physical markets that are alleged to have contributed to piracy and counterfeiting activities around the world. The Special 301 Report makes it clear that China is the source of greatest concern for U.S. owners of all types of intellectual property. The report’s executive summary notes that China remains on the USTR’s Priority Watch List for various reasons, including forced tech transfer, discriminatory licensing practices and high-volume counterfeit manufacture. Other countries included on the Priority Watch List are India, where the national government has restricted transparency on state-issued pharmaceutical manufacturing licenses and expanded patentability exceptions for rejecting pharmaceutical patents; Indonesia, where concerns have been raised over patentability criteria and compulsory licensing; and Saudi Arabia, which has failed to address concerns involving lack of IP protection for pharmaceuticals and the illicit pirate service BeoutQ.

In 1994, the United States was winding up the Uruguay Round of trade negotiations leading to the establishment of the World Trade Organization (WTO). Tucked in among the toothbrush and rice tariffs was the Agreement on Trade-Related Aspects of Intellectual Property. The TRIPS Agreement was seen as a breakthrough, setting common standards for protecting IP, including provisions on trade secrets that closely aligned with U.S. law. Twenty years later, I visited a friend at the WTO to find out what had actually been happening as a result of TRIPS. I was especially interested in what countries had done since 1994 to bring their national laws into harmony with the trade secret requirements. Because each member of the WTO was supposed to submit reports on its compliance, I asked about them. Yes, we have them, my friend told me. They were in boxes in the next room. But no one had ever read them. Just months before my visit, the European Commission had received an industry report lamenting the legal chaos facing companies that tried to enforce their trade secret rights in Europe. Although every one of the 27 member states of the EU was also a signatory to the TRIPS agreement, virtually none of them was in compliance. In response, the Commission issued a “Directive,” instructing all member states to (finally) harmonize some basic aspects of their trade secret laws.

Earlier this week we reported on Lori Cheek, an independent inventor who is defending herself for the second time against accusations brought by Alfred Pirri, Jr. of fraud and misappropriation of trade secrets, among other claims, and who feels like the U.S. patent and legal systems have done her few favors thus far. Following publication of the article, Pirri’s lawyer, Steven Fairchild, sent a letter to IPWatchdog claiming that, since the previous suit was thrown out in pre-trial conference, before discovery or a decision on the merits, the “present suit will uncover the truth of what happened with Mr. Pirri’s invention.” Fairchild specifically points to notarized documents from 2006 that he claims prove Pirri invented the dating cards and their spin-off use for business, which Fairchild says Cheek copied in her other company, Networkd. As mentioned in the previous article, Cheek denies she has ever met Pirri’s therapist, Joanne Richards, whom Pirri claims told Cheek about his idea. She and Richards have signed sworn affidavits attesting to as much, and Cheek insists there is simply no way she could have come in contact with Richards.“Discovery will reveal the truth of the relationship between Ms. Richards and Ms. Cheek,” wrote Fairchild in his letter to IPWatchdog.

This week in other IP news, recently released data shows that worldwide revenues for music copyright exceeded $28 billion in 2017, up $2 billion over 2016; reports surface about the  “reverse patent trolling” issue in China; Google retains Williams & Connolly for Supreme Court battle with Oracle despite Shanmugam exit; the Copyright Office holds roundtable discussions on detecting online copyright infringement; Twitter takes down a tweet from President Donald Trump after a copyright complaint; “KINKEDIN” trademark for computer dating site successfully opposed in the UK by LinkedIn; EU antitrust regulators are petitioned to look into Nokia patent licensing practices; and loss of patent exclusivity leads to major job cuts at Gilead Sciences. 

Scott Elmer is Director, Office of Technology Licensing, at St. Jude Children’s Research Hospital, one of the leading pediatric cancer hospitals in the country. The institution is focused on treatment of and research on children’s catastrophic diseases, particularly leukemia and other cancers. The hospital costs about $2.8 million a day to run and is 100% free to patients. St. Jude and more than 46 of its staff have been the recipients of prestigious awards and achievements, including the 1996 Nobel Prize in Physiology or Medicine, which went to St. Jude faculty member, Peter C. Doherty. Recently, Elmer read Sherry Knowles’ John Marshall Intellectual Property Law Review article, Unconstitutional Application of 35 U.S.C. §101 by the U.S. Supreme Court and was inspired to write her in support of her argument that the Supreme Court’s misreading of the patent statute is causing real harm to inventors and industry on the ground. “I reached out to Sherry because I thought her article was well written and took a different approach to something that’s been a concern for a long time,” Elmer told IPWatchdog. “Sherry made the point that the Supreme Court’s more recent patent eligibility decisions have failed to recognize the patent statute’s reference to the term ‘discovery’ as a basis for the generation of patent-eligible subject matter, which particularly impacts diagnostics.”

We all talk about the importance of data as business assets, but when it comes to buying and selling the companies that own them, we seem not to pay much attention. My anecdotal survey reveals that colleagues who focus on mergers and acquisitions  confess to a lack of focus on trade secrets. This may seem odd, even crazy, given the increasing percentage of industrial property represented by intangible assets—up from 17% in 1975 to 84% in 2015. The problem appears to start with the fact that secret information, no matter how central to the success of the business, is mysterious. Unlike the “registered rights” of patent, copyright and trademark, there are no government certificates defining secrets; and valuing them is hard. Add to that the imperative to get deals done faster and cheaper, and it’s easy to see how secrecy may have become the blind spot of transactional IP.

This week in Other Barks & Bites: the Supreme Court asks for the U.S. Solicitor General’s view on whether patents that claim a method of medically treating a patient automatically satisfy Section 101; a jury gives Qualcomm a win in its ongoing patent battle with Apple; the World Intellectual Property Office announces record-breaking totals for international patent applications and cybersquatting actions; Cisco avoids a nearly $60 million damages award at the Federal Circuit; McDonald’s appeals its loss in the EU over its Big Mac trademark; Tesla files trade secret lawsuits against former employees; Peloton faces a copyright suit from music publishers who are seeking $150 million; and Google gets another billion-dollar-plus fine from antitrust regulators in the EU.

Representative Steve Stivers (R-OH) and Representative Bill Foster (D-IL) introduced the Support Technology & Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act, which would in part restore injunctive relief as a remedy for patent infringement, in the U.S. House of Representatives in March of last year. While there has been much talk about closed-door discussions taking place on Capitol Hill recently around fixing Section 101 law, the House has not yet re-introduced the STRONGER Patents Act, and has thus far been focused on other issues this term. But Rep. Stivers seems confident that the Act has a chance this term, and says that this could be the consensus legislation the House needs. Read below for more on Rep. Stivers’ thoughts about patent reform in the 116th Congress, where the America Invents Act went wrong, and how we ensure the U.S. patent system is restored to number one.

While a preliminary trade deal seems to have been struck between China and the United States over tariffs, the two sides have yet to seriously address the toughest and perhaps most economically crucial issues on the table: China clinging to a tech policy based on systematic theft of U.S. intellectual property (IP), forced technology transfer, and cybertheft.President Trump has paid lip service to the need for any deal to include IP protections, and China responded on March 14 by rushing a law that would, according to CNBC, “prohibit the forced transfer of technology from foreign-invested businesses in China, step up protection of intellectual property and claim to give the companies equal footing with domestic players.”  Nevertheless, China watchers are skeptical that these commitments remain cosmetic, while it remains clear that Trump has focused his negotiators chiefly on those things nearest and dearest to his heart: physical goods and tariffs. As talks move forward, the question remains—how will U.S. Trade Representative (USTR) Robert Lighthizer resolve these challenges for the benefit of IP holders?

Today, March 13, the Senate Subcommittee on Intellectual Property met to discuss “Oversight of the United States Patent and Trademark Office,” with USPTO Director Andrei Iancu as the sole witness. IPWatchdog will report the details of that hearing in full, but in the meantime it is worth reviewing what the Subcommittee covered in its first hearing, held February 26, which included the report of the Intellectual Property Enforcement Coordinator (IPEC) on the findings of the IPEC’s Annual Intellectual Property Report. While the hearing was nominally about the IPEC report, comments made and questions raised by Subcommittee members throughout the course of the hearing made it clear that the Subcommittee intends to play an important role in the debate around IP and patent law during the 116th Congress.

The U.S. Supreme Court’s 2013 ruling in Association for Molecular Pathology v. Myriad Genetics changed the landscape of what is considered patentable material in the context of genetic inventions. In the five years since Myriad, companies have pushed the boundaries of patenting certain types of genetic materials. Despite Myriad’s express statement that it was not considering “the patentability of DNA in which the order of the naturally occurring nucleotides has been altered,” the courts have not yet established the contours of how much nucleotide sequences need to be altered in order to “create something new” in order to be patentable. However, as we discuss in the next section, we expect the Court to address these questions as biotechnology companies increasingly invest resources into emerging, expensive technologies involving genes and seek to protect their investments through patents.