SHARE

December 08, 2021

The CH Trade Secrets Review: Confidentiality of Precise Information Is Not Vitiated by Public Disclosure of More General Details, Supporting a Preliminary Injunction

You've Reached Your
Free Article Limit This Month
Subscribe now to get unlimited access to all Law.com OnPractice content. Your subscription is free.
Subscribe Now

A review of significant developments, cases, and verdicts throughout the United States in 2021 in trade secrets law

Confidentiality of Trade Secrets

A powerful legal tool in the toolbox for a company seeking to foil expected or ongoing misappropriation of its trade secrets is the issuance of a preliminary injunction before its lawsuit proceeds to trial. But that entails demonstrating to the court that the company has sufficient evidence to prove its case and is likely to prevail at trial, no small feat. In Life Spine Inc v Aegis Spine Inc., decided by the Seventh Circuit Court of Appeals, Life Spine prevailed in its claim that Aegis misappropriated the exact dimensions of Life's patented expandable spinal implants when Aegis released a competing device shortly after Aegis had begun distributing Life Spine's product. Life Spine's application for injunction resulted in a nine-day evidentiary hearing with testimony from the parties and an expert witness. Life Spine sued under both the federal Defend Trade Secrets Act and the Illinois Trade Secrets Act.

Life Spine had to overcome significant challenges in order to prevail, which it ultimately did when the trial court enjoined Aegis and its business partners from making, marketing, distributing, selling, or obtaining intellectual property rights in Life Spine's implants. Aegis contested the trade secret claim on the premise that Life Spine lost the element of confidentiality when it disclosed information about the implants in its patent application. Life Spine demonstrated that notwithstanding the limited disclosure to the government and hence the public, its trade secrets claim was limited to the precise specifications and granular measurements of the implants which were not published in the patent. These measurements were beyond standards in the industry and not common knowledge.

Life Spine demonstrated that it employed reasonable measures to maintain the confidentiality of not only specifications but also the implants themselves to guard against reverse engineering. Life Spine monitored access to devices in its marketing and sales displays. Life Spine sold its devices only to hospitals and surgeons. The device packages were only opened during surgical operations, for confidentiality and sterilization purposes. Even then, distributors were required to be present during the procedure. Absent Aegis's access due to its distributor relationship and violation of the anti-reverse engineering provisions of the non-disclosure agreement, Aegis would not have been able to obtain the device and ascertain its exacting measurements, nor pricing which helped it undercut Life Spine's prices. Aegis's violation of the non-disclosure agreement not only constituted breach of contract, it was integral to its ability to misappropriate Life Spine's trade secrets through reverse engineering.

A misappropriation of trade secrets action, by its very nature, mandates a case-by-case analysis. More often than not, a motion for preliminary injunction will be decided on the papers rather than an evidentiary hearing with testimony. Honing in and limiting the information a plaintiff claims to constitute a trade secret is instrumental to obtaining injunctive relief. Resisting the temptation that grips many a plaintiff to liberally identify all its stolen information as trade secrets becomes more critical where a company's primary litigation objective is to prohibit ongoing misappropriation of its trade secrets rather than recover damages. Many trade secrets cases will not have a clear record of public disclosure as existed in Life Spine, which helps a company resist the temptation. A thorough legal and factual analysis at the outset is therefore integral to achieving success of a company's objectives.

The views and opinions expressed in the article represent the view of the authors and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is intended to be a substitute for professional legal advice.

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

More From Clark Hill, PLC

What the California Environmental Quality Act Means for Cannabis Operators in the Golden State

By Steven L. Hoch Clark Hill, PLC March 22 , 2022

Cannabis is big business in California.

EPA Proposes Updates to the Hazardous Air Pollutant Copper Smelting Rules

By Danielle M. Hazeltine Clark Hill, PLC March 22 , 2022

On Jan. 11, EPA proposed more stringent National Emissions Standards for Hazardous Air Pollutants (NESHAPs) that apply to both major and area source primary copper smelters.

Investing in State Law Compliant Cannabis Businesses: Part 2 - Diving Deeper

By Sander C. Zagzebski Clark Hill, PLC March 21 , 2022

In Part 1 of this two-part series, we addressed the high-level concerns that a new investor should consider in making an investment in a state legal cannabis company. In this follow up, we address some of the more nuanced issues that investors should consider before deciding to invest in a specific cannabis company.

More From Trade Secrets

Don't Miss the Easy Jumps! Design Patents, An Often-Overlooked Form of IP Protection for the Equine Industry

By James J. DeCarlo Greenberg Traurig May 10 , 2022

Intellectual property (IP) law allows individuals, in certain circumstances, to protect “creations of the mind,” providing the owner with exclusive ownership and the right to monetize in various ways, depending on the type of IP at issue. When considering protection for IP in the equine industry, trademarks, copyrights, and rights of publicity most immediately come to mind. But there is another type of intellectual property protection, often overlooked, that can be a powerful tool – design patents.

Expediting Examination - Pre-Assessment Letters

By Yuri Chumak Dickinson Wright PLLC May 03 , 2022

The Canadian Trademarks Office (TMO) has taken several steps to reduce the backlog of trademark applications awaiting examination that now exceeds 39 months for national applications.

Under Dutch law, a lookalike in a commercial may be a so-called portrait that the person portrayed may be able to resist": Supreme Court of the Netherlands

By Thomas van Weeren Greenberg Traurig April 29 , 2022

Imagine this: what if Dutch Formula-1 racecar driver Max Verstappen would deliver your groceries? That would be something, right? Although – according to a 2016 commercial – when doing so, Verstappen unfortunately would not be driving his Formula-1 racing car, but rather a plain and ordinary delivery truck. Even still, with Verstappen behind the wheel, your groceries would most likely arrive at your doorstep faster than ever before.

Featured Stories
Closeclose
Search
Menu

Working...