Skilled in the Art: Data Can Be a Trade Secret, No Matter How Big | Plus, Better Focus Needed on ADHD Patents, and K&L Gates Reprises Carnegie Mellon Suit
Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. I hope you all had plenty to be thankful for over the holiday. Today I'm catching up on a couple of interesting decisions from the last few weeks, one involving pharma patents, the other a dispute between online chat platforms that raises novel AI issues. And I'll look at who got the work as Carnegie Mellon University reprises patent litigation that previously won it $750 million. As always please feel free to email me your thoughts and follow me on Twitter.
Federal Circuit Judge Raymond Chen.
District Judge Not Sufficiently Focused on ADHD Patents
Usually when the Federal Circuit complains that an opinion it's reviewing is “very cursory,” includes “a mere recitation of an expert's testimony,” and fails to “explain why and how the testimony supports its conclusion,” I would figure the court is talking about the Patent Trial and Appeal Board.
Not so in Tris Pharma v. Actavis Laboratories. In this instance, recently retired U.S. District Judge Gregory Sleet of Delaware is the culprit. After a five-day bench trial last year, Sleet invalidated all asserted claims of five patents covering Tris Pharma's Quillivant XR, an extended release version of methylphenidate hcl. That is the active ingredient in the attention deficit hyperactivity disorder medication popularly known as Ritalin.
Actavis is seeking to market a generic version of Quillivant, which notched sales of $192 million in 2016. Quillivant takes effect quickly and lasts 12 hours at the same level of strength, whereas other branded formulations of the drug last only a few hours, have a longer onset, or variable peak profiles. But Sleet agreed with Actavis that the Quillivant patents were obvious when the other formulations were considered in combination.
A Milbank, Tweed, Hadley & McCloy team led by partners Errol Taylor and Fred Zullow persuaded the Federal Circuit to reverse. “This was a nice turnaround on something that was very important to our client, Tris,” Taylor said, noting that Tris obtained the full rights to Quillivant from its partner Pfizer two months ago.
Judge Raymond Chen's Nov. 20 opinion for the Federal Circuit didn't pull any punches. “In view of the errors we identified above, we invite the district court to reconsider all the evidence of objective indicia in its overall determination of obviousness,” he wrote. Judges Pauline Newman and Kathleen O'Malleyconcurred.
Of course, Judge Sleet retired in September and is now a private mediator and arbitrator at JAMS, so he won't be able to accept the Federal Circuit's invitation. I wasn't sure what to make of the court inviting a judge no longer on the court to “reconsider” all the evidence, so I asked Villanova professor and Written Descriptoncontributor Michael Risch for his take.
He said the most likely explanation is the Federal Circuit, naturally, considers the judges of a district court interchangeable, and may have been sending a message to whomever is assigned the case on remand not to feel they must defer to Judge Sleet's findings in this instance.
Milbank's team also included associates Anna Brook, Jordan Markham, Kyanna Lewis Sabanoglu and Venus Allahyarzadeh. Actavis was represented by Goodwin Procter.
Big Data Can Be a Big Trade Secret
The artificial intelligence IP wars are heating up. A recent development comes from the San Francisco courtroom of U.S. District Judge Jon Tigar, where a trade secret dispute between competing providers of customer service chat platforms has been cleared for trial.
New York-based LivePerson says it entered into a series of agreements with San Jose's 247.AI during the early 2000s so that they could mutually serve three customers: Capital One, Sears and Optus. LivePerson provided a rules-based platform for identifying when starting a chat is most likely to produce a positive outcome, according to court filings. 247 provided the human customer service agents who conducted the chats.
Backed by Kirkland & Ellis, LivePerson alleges that 247 improperly used the predictive analytics and customer data it gained access to during the partnerships to develop a competing “smart” chat platform—and stole the customer relationships in the process. 247, which is represented by O'Melveny & Myers, says it made no unauthorized use, and that LivePerson simply can't accept that a competitor developed better technology and offered it at a lower price.
Judge Tigar granted in part and denied in part 247's motion for summary judgment in an order unsealed Nov. 7. He made several notable rulings along the way:
➤ 247 touted itself as “the industry's first smart chat that uses prediction and real-time decisioning with big data to drive customer experience.” The use of “smart” and “predictive” in that context is not mere puffery, but sufficiently specific to be actionable under the Lanham Act, Tigar ruled. (247 ultimately defeated the Lanham Act claim because LivePerson could not prove 247's advertisements were a material cause of lost business.)
➤ XML data generated by LivePeron's chat platform analytics for Capital One, Sears and Optus over the course of several years is sufficiently particular to constitute a trade secret, Tigar ruled. Under New York law, a compilation of information used in one's business is a trade secret, and “247 points to no authority suggesting that the breadth of such a compilation is itself disqualifying,” he wrote.
➤ Nor is such data too ephemeral to be protected, Tigar ruled. “Because the data reflects the application of LivePerson's rules and models to test real world situations, it is more akin to 'test data,' a protectable category of trade secret,” the judge wrote.
Tigar's order clears the way for trial in April on LivePerson's allegations that 247 misappropriated trade secrets by improper means. Kirkland's team was led by partners Michael De Vries, Adam Alper and Sharre Lotfollahi.
LivePerson's case is "very reflective of the current technology landscape" in that many companies have identified compilations of data as a primary IP asset, De Vries said. "And I think the judge's order reflected that."
Who Got the Work?
Carnegie Mellon University is known as a global research university founded by industrialist Andrew Carnegie. It's also known in IP circles for a $1.5 billion patent infringement judgment against Marvell Technology Group that settled in 2016 for $750 million. Backed by much of the same K&L Gates team, the university is now asserting the same patents against two other manufacturers of hard disk drives, LSI Corp. and Avago Technologies. Foley & Lardner is defending the two Broadcomsubsidiaries in the San Francisco courtroom of U.S. District Judge James Donato.
➤ The dispute: Carnegie patented a method for reducing noise when writing data on hard disk drives. The technology was pioneered by professor Jose Moura and his doctoral student Aleksandar Kavcic. As with the Marvell litigation, Carnegie allegesthat LSI employees have virtually admitted to using the technology. An LSI vice president stated in a 2010 email that “we cannot run channels w/o Kavcic's DDNP algorithms.” Numerous Broadcom patents refer to DDNP, or data dependent noise reduction, which LSI and Avago can't likely perform without infringing Carnegie's method, the university says. It also notes that Broadcom was an amicus curiae supporter of Marvell at the Federal Circuit. LSI and Avago have moved to dismiss on the ground that Carnegie hasn't specifically alleged how the companies are infringing. “Instead of addressing the actual claim language, CMU focuses on buzz words found in a disparate array of documents, such as 'pattern-dependent filter' and 'DDNP,'” the companies contend.
➤ The attorneys: Carnegie's K&L Gates team features partners Patrick McElhinny, Mark Knedeisen, Christopher Verdini, Theodore Angelis and Michael Zeliger, plus associates Ranjini Acharya and Anna Shabalov. LSI and Avago are backed by Foley & Lardner partners Steven Rizzi, Ramy Hanna and Barry Felder, and associate Jaime Dorenbaum.
Enjoy Schlafly. Please Advocate Responsibly.
If you say the name Schlafly to someone like me who operates in legal circles, Phyllis Schlafly, the late conservative lawyer and activist, comes to mind. But mention it to a connoisseur of craft beer, like some of my ALM colleagues, and it's likely to call up thoughts of The St. Louis Brewery's Schlafly Pale Ale, or Schlafly Dry Hopped APA, or dozens of other brews that bear the Schlafly name. That's as in Thomas Schlafly, Phyllis' nephew by marriage, co-founder of the brewery, and senior counsel at Thompson Coburn.
Phyllis Schlafly, who died in 2016, was none too happy about having her name associated with beer. Nor were her sons Bruce, a physician, and Andrew, an attorney. They tried to block the brewery from registering Schlafly with the PTO, but first the agency and now the Federal Circuit have shot down their efforts, as I explain here.
It's Time for the IP Family Feud
November has been IP's family feud month. Two weeks ago New York Supreme Court Justice Andrea Masley divvied up the IP rights to the Palm chain of restaurants, which is run by two families whose roots trace to Parma, Italy.
Following a bench trial, Masley awarded more than $120 million to two Palm-related companies, with a significant share going to two grandchildren of one of the co-founders. The judgment has worsened already fractured relationships among the two families, my ALM colleague Jason Grant reports.
That's all from Skilled in the Art today. I'll see you all again on Friday.
