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New and Useful - July 10, 2013

July 10, 2013
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· InConvolve v. Compaq Computer the Federal Circuit affirmed in part the United States District Court for the Southern District of New York ruling that Compaq Computer Corp., Seagate Technology, LLC., and Seagate Technology, Inc. did not misappropriate 11 of 15 alleged trade secrets from Convolve, Inc. In addition, the Federal Circuit affirmed the district court’s judgment that 8 claims of U.S. Patent No. 4,916,635 (“the ’635 patent”) are invalid. However, the Federal Circuit vacated the district court’s ruling that Compaq did not infringe several claims of U.S. Patent No. 6,314,473 (“the ’473 patent”), and remanded the case for further proceedings relating to that patent.

Convolve and Massachusetts Institute of Technology (“MIT”) sued Compaq and Seagate for both trade secret misappropriation and patent infringement, all related to technology developed by Dr. Neil Singer while a graduate student at MIT. The technology involves seeks in computer hard drives, and minimizing the vibrations created by those seeks—the ’635 patent discloses a method “for generating an input to a system to minimize unwanted dynamics in the system response and to reduce energy consumed by the system during moves,” and an apparatus for shaping commands to a system “to reduce endpoint vibration.” The ’473 patent covers the same type of technology, but relating specifically to data storage devices such as computer disk drives. The ’473 patent is owned by Convolve, a company owned by Dr. Singer, and the ’635 patent is owned by MIT. Convolve is the exclusive licensee of MIT software motion control technology called Input Shaping, which Convolve alleges is covered by the trade secrets and patents involved in the case.

Convolve entered into licensing discussions with Compaq, which included a non-disclosure agreement (NDA) signed by both parties and covering confidential information disclosed between August 13, 1998 and October 15, 2000, but explicitly excluding any information that: (1) the recipient possessed prior to disclosure; (2) was a matter of public knowledge; (3) was received from a third party without a duty of confidentiality attached; (4) was independently developed by the recipient; (5) was disclosed under operation of law; or (6) was disclosed by the recipient with the discloser’s prior written approval. The NDA further stated that any confidential material or presentations must be particularly identified as confidential. Compaq sought to include Seagate as the potential designer and manufacturer of hard disk drives incorporating Convolve’s technology to include in Compaq’s computers. Convolve then disclosed its technology to Compaq and Seagate, but Convolve and Compaq/Seagate never entered into a licensing agreement.

Convolve filed suit alleging breach of contract, misappropriation of trade secrets, patent infringement of the ’473 patent, ’635 patent and breach of good faith and fair dealing. The district court granted Compaq and Seagate’s motions for summary judgment, dismissing Convolve’s claims of breach of contract, infringement of the asserted claims of the ’473 and ’635 patents, and misappropriation of a subset of the trade secrets asserted against Compaq and Seagate; and granting Seagate’s motion for summary judgment for invalidity of the ’635 patent.

Regarding the alleged trade secrets, the Federal Circuit upheld the district courts findings and judgment that Compaq and Seagate had not misappropriated 7 of the asserted trade secrets because Convolve disclosed the information in the absence of a written confidentiality follow-up memorandum mandated by the NDA. The Federal Circuit also affirmed the district court’s ruling that 6 of the asserted trade secrets were either generally known before any disclosure by Convolve or were not used by Seagate following any disclosure by Convolve. Further, the court rejected Convolves argument that Seagate’s actions constituted trade secret misappropriation under the California Uniform Trade Secret Act notwithstanding the NDA, concluding that where the parties have contracted the limits of their confidential relationship regarding a particular subject matter, one party should not be able to circumvent its contractual obligations or impose new ones over the other via some implied duty of confidentiality.

The Federal Circuit vacated the district court’s grant of summary judgment to Seagate and Compaq for non-infringement of the asserted claims of the ’473 patent, concluding that there were material issues of fact that precluded a grant of summary judgment as to direct or indirect infringement. The court also concluded that there was sufficient evidence to preclude summary judgment for induced infringement on the basis of the court’s recent holding inToshiba Corp. v. Imation Corp. that when an alleged infringer instructs users to use a product in an infringing way, there is sufficient evidence for a jury to find direct infringement.

· The Federal Circuit inWyeth v. Abbott Laboratories upheld the U.S. District Court for the District of New Jersey's grant of summary judgment that claims 1 and 2 of U.S. Patent No. 5,516,781 and claim 1 of U.S. Patent No. 5,563,146 are invalid for nonenablement. The patents relate to the use of rapamycin for the treatment of restenosis. The patents disclosed use of the rapamycin species sirolimus to reduce thickening of arterial walls. Wyeth sued the defendants for patent infringement for their products that elute everolimus and zotarolimus. These compounds fall under the umbrella of rapamycin, but are not mentioned in the specification of the Wyeth patents.

The main issue on appeal was whether practicing the full scope of the claims requires excessive experimentation. The specification describes assays used to determine whether a potential rapamycin compound exhibits the desired characteristics of immunosuppressive and antirestenotic effects. Wyeth argued that even though millions of compounds would meet these criteria, one of skill in the art would know that an effective compound had to be small enough to permeate cell membranes. However, that still leaves tens of thousands of compounds to test and the specification gave no indication of which types of rapamycin compounds would be preferable over others, leaving scientists to synthesize and screen each and every compound.

While synthesizing and screening compoun


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