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In Trade Secrets Case Related to Barnes and Noble’s Nook Device: Court Grants Partial Summary Judgment Based on Disclosure of Secrets in Patent Applications, But Rejects UTSA Preemption Argument as Premature

In Disclosure of Secret in Patent Application, Motions for Summary Judgment/Adjudication, Patents and Copyrights, Preemption on January 2, 2011 at 10:03 pm
Barnes & Noble Nook e-reader is tiny!
Image by Todd Barnard via Flickr

The Northern District of California granted partial summary judgment to a defendant in a trade secrets case on the ground that plaintiff disclosed its information to the public in its published patent applications.  Spring Design, Inc. v. Barnesandnoble.com, LLC, No. C 09-05185 JW, 2010 WL 5422556 (N.D. Cal. Dec. 27, 2010) (slip op.).  The court rejected defendant’s argument that plaintiff’s UCL claim was preempted by the UTSA because “if the confidential information is not a trade secret, then preemption would not apply because the claim would seek a civil remedy not based on the  misappropriation of a trade secret.” Id. *10.

Background

In 2006 and 2007, Plaintiff filed several patent applications which claim different variations of an eReader with a dual-display design, consisting of an electronic paper display (“EPD”) and a liquid crystal display (“LCD”).  Id. *1.  In 2009, Plaintiff and Defendant explored possible collaboration on an eReader, and the parties entered into a nondisclosure agreement (“NDA”) in which the parties agreed not to disclose, reproduce, transmit or use the other’s confidential information except to certain employees on a need-to-know basis.  Id. From February to October 2009, Plaintiff and Defendant conducted several meetings and exchanged emails regarding Plaintiff’s eReader technology.  But on October 20, 2009, Defendant announced the release of the NOOK—its Android-based, dual-screen eReader.  Id. *2.  In 2010, Plaintiff launched its competing eReader device, the Alex, which is also a dual-screen eReader. Id.

Plaintiff Spring Design, Inc. brought an action Barnesandnoble.com, LLC alleging, inter alia, misappropriation of trade secrets and violations of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code section 17200, et. seq. Id. *1.Plaintiff alleged that Barnesandnoble.com used Plaintiff’s confidential information to develop a competing eReader device, the Nook, in violation of the parties’ non-disclosure agreement. Id. The parties brought cross motions for summary judgment.

Discussion

Defendant moved for summary judgment on the UTSA cause of action on the grounds that, inter alia: Plaintiff’s information does not qualify for trade secret protection because Plaintiff disclosed its information to the public in its published patent applications.  Id. **3-4. Read the rest of this entry »

Is Trade Secret Protection Better Than a Patent?

In Patents and Copyrights on August 12, 2010 at 4:55 pm

Image by dkpto

R. Mark Halligan has published an excellent article in the American Bar Association’s Landslide.

Since every patent starts out as a trade secret, Mr. Halligan discusses whether, given the trends in patent law, it makes sense for the holder of a trade secret to pursue patent protection.

Patent applications face a Catch-22 in pursuing patents.  By “pursuing patent protection unsuccessfully, the inventor has lost both patent protection and trade secret protection because the business method is now in the public domain. This is the ‘Catch-22’ with any patent application disclosed to the public during the USPTO patent prosecution proceedings in the United States. The moment the patent application is published, any trade secret rights in the patent application are vitiated. Then if the patent does not issue, the inventor has lost all proprietary protection. In hindsight, the inventor would have been better off keeping the commercially valuable information secret if patent protection is uncertain.”

Today patents are harder to get and harder to defend.  Halligan discusses how in light of recent patent law cases, the scale has now tipped in favor of pursuing a trade secrets strategy over pursuing a patent application.  See, e.g., In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d (BNA) 138 (Fed. Cir. 2008); KSR Int’l Co. v. Teleflex, Inc., 127 S. Ct. 1727 (2007); Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997); In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007).

Mr. Halligan concludes that:

it is now time for the intellectual property bar to revisit the decision whether to protect commercially valuable information as a trade secret asset or a patent asset. In recent years, decisions by the U.S. SupremeCourt and other developments in the law have circumscribed the once broad protection afforded to patent holders as well as remedies available to patent holders. Upon consideration of all the issues discussed in this article, the protection of such assets as trade secrets may provide a better choice for your clients in today’s environment.

By CHARLES H. JUNG

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