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Trade Secrets: UTSA Preempts Tort Claims Based on Same Factual
Allegations
The Delaware Superior Court held in June 2022 that Utah’s
Uniform Trade Secrets Act (UTSA) preempted tortious interference
with contractual relations claims based on the same set of facts as
a UTSA claim. In Pascal Metrics, Inc. v. Health Catalyst,
Inc., Pascal alleged it developed algorithm-based products
to detect health events. Pascal required all employees to sign
confidentiality agreements to protect this technology. After Health
Catalyst hired three Pascal employees, Pascal filed suit for
misappropriation of trade secrets and tortious interference with
contractual relations. Health Catalyst moved to dismiss the
tortious interference claim arguing it was preempted by the
UTSA.
Under Utah law, the UTSA “preempts conflicting tort,
restitutionary, and other law[s] [of Utah] providing civil remedies
for misappropriation of a trade secret [and preempts] any state law
claim that is based on allegations of misuse of confidential
information, regardless of whether the claim contains additional,
separate allegations.” Giles Const., LLC v. Tooele
Inventory Sol., Inc., 2015 WL 3755863, at *6 (D. Utah). Pascal
argued that the UTSA does not affect contractual remedies and that
tortious interference is a “secondary means to vindicate
contract rights against those not in privity on the
contract.” The court rejected this argument and dismissed the
tort claims, holding that “Pascal’s claim for tortious
interference [wa]s based upon the same facts as the allegations of
misappropriation of trade secrets.”
Patents: Federal Circuit Overrules PTAB’s Invalidation of
Expired Patent on Mootness Grounds
In June 2022, a split panel of the US Court of Appeals for the
Federal Circuit vacated the Patent Trial and Appeal
Board’s rejection of claims in a power converter patent
because the patent had expired before the Board made a final
determination. In 2011, after SynQor filed a patent infringement
action in the US District Court for the Eastern District of Texas,
Vicor requested inter partes reexamination of several asserted
patents including the patent at issue, US Patent No. 7,272,021. The
Patent and Trademark Office granted Vicor’s request, and the
examiner rejected all challenged claims including two claims that
SynQor sought to add during the reexamination process. After
several appeals, the ‘021 patent expired in January 2018,
before the Board issued its remand decision. Unaware the patent had
expired, the Board finally issued its remand decision a year later,
in February 2019, finding the two claims at issue unpatentable.
When SynQor petitioned for rehearing and informed the Board that
the patent had expired, the Board declined to vacate its decision
on the merits, prompting SynQor to appeal to the Federal
Circuit.
On appeal, SynQor argued that its ability to seek appellate
review of the Board’s merits decision was “frustrated
by the happenstance of patent expiration,” relying on
the Munsingwear vacatur doctrine. That doctrine
permits appellate courts to “vacate a lower court decision
when review of that decision on the merits is ‘frustrated by
the vagaries of circumstance’ and ‘without fault of the
[appellant].’” U.S. Bancorp Mortg. Co. v.
Bonner Mall P’ship, 513 U.S. 18, 25 (1994). In response,
Vicor contended SynQor had forfeited its equitable right when it
failed to take any action to inform the Board of the patent’s
expiration.
The Federal Circuit majority vacated the Board’s 2019
finding because “the patentability determinations for those
claims are moot.” US Circuit Judge Alan David Lourie
dissented because 13 months had passed during which the ‘021
patent appeal was pending and SynQor did nothing to notify the
Board that the patent had expired.
Copyright: Texas A&M’s “12th Man” Saga
Continues with US Cert Petition Raising State Sovereign
Immunity
A sports publisher has petitioned the US Supreme Court to
reevaluate whether states can be liable under federal copyright
laws, after the Fifth Circuit ruled that Texas A&M University
employees were immune from suit for allegedly repurposing a sports
biography to bolster the school’s own “12th Man”
trademark enforcement efforts.
The high court petition is the latest move in a five-year legal
saga kicked off by self-styled researcher Michael Bynum and
publisher Canada Hockey, which releases books under the Epic Sports
imprint. They claim Texas A&M’s website published, without
permission, sections of a biography Bynum authored about the life
of E. King Gill, a basketball player who also occasionally played
on A&M’s football team.
Gill is said to have inspired the school’s “12th
Man” tradition by suiting up in football gear and standing in
the bleachers for an entire game in 1922. The university more
recently repurposed this tradition into intellectual property that
its lawyers have spent two decades vigorously defending, using it
to file lawsuits followed by licensing deals with teams like the
Seattle Seahawks and Buffalo Bills. Recently, they sued the
Indianapolis Colts over using the phrase, a case that was later
settled.
The school maintains that it and its employees are protected
from suit by sovereign immunity for allegedly violating federal
copyright laws that may protect the text, legally the property of
Bynum and Epic Sports. A federal judge in Texas agreed, as did
a panel of the Fifth Circuit.
But the pair of law professors who have taken up the Epic Sports
case, Ernest Young and Ralph Oman of Duke University and George
Washington University Schools of Law, respectively, say the case is
an opportunity for the Supreme Court to clarify the reach
of Allen v. Cooper, a two-year-old case in which the
Court unanimously ruled that North Carolina state employees enjoyed
sovereign immunity from copyright liability for lifting footage of
a famous pirate shipwreck for their own ends.
“The great Julie Andrews, playing the young nun Maria in
The Sound of Music, famously said, ‘When the lord closes a
door, somewhere he opens a window,'” the high court
petition colorfully reads. “In Allen v. Cooper, this court
closed the door of prophylactic abrogation of state immunity for
copyright claims … yet the court remained concerned that
copyright holders should have some remedy for egregious state
violations. Justices Breyer and Kavanaugh both questioned counsel
for North Carolina about ‘rampant … states ripping off
copyright holders.'”
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