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Skilled in the Art: IBM and Microsoft Settle; K&L Gates Throws Down

Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham, and this week I'm wondering what would happen if I joined BNA and started a newsletter called PHOSITA. Hypothetically! As you'll see, I've got trade secrets and non-competes on the mind this week. I've also got an update on Finjan's patent settlement with Symantec and Apple's patent win over a very active NPE. As always, email me tips on anything IP and find me on Twitter @scottkgraham.

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IBM, Microsoft Call Off the Dogs on Diversity

IBM and Microsoft have wisely split the baby in a trade secrets dispute that wasn't making either side look good. IBM sued its former chief diversity officer, Lindsay-Rae McIntyre, last month shortly after she resigned to accept the same position with Microsoft. IBM v. McIntyre set off a vigorous debate in the IP and employment bars over whether knowledge of a company's diversity efforts—as opposed to software code or customer lists—could be considered a protectable trade secret. Just as important was the debate over whether it should be. Lawyers like Winston & Strawn's Silicon Valley manger, Kathi Vidal, questioned the morality of "siloing" ideas to advance diversity and inclusion. “There’s something about the optics of going after a diversity officer that just felt weird to me," IP litigator Venkat Balasubramani of Focal PLLC told GeekWire. "That made me think, ‘Wow, I wonder if they may regret doing so,’ just because I could see people looking at it and saying, ‘This is really scorched earth.'” So IBM was getting beaten up for locking down its diversity magic. At the same time, IBM never missed a chance to remind everyone that Microsoft is facing a high-profile gender diversity class action where it tried tomaintain confidentiality of its own diversity data. Rather than rain down crap on each other indefinitely, IBM agreed that McIntyre can start at Microsoft in July, six months into her one-year non-compete agreement. From the law perspective, I'm counting this as a slight win for IBM. The company was trying to expand the definition of a trade secret in a state that generally disfavors non-compete agreements. This deal will probably make other employees at least think twice before joining a direct competitor, and it sure beats losing. IBM was represented by a Paul, Weiss, Rifkind, Wharton & Garrison team led by partner Bob Atkins. Microsoft, on the other hand, gets its woman, albeit six months later than planned. The publicity around the suit will add to McIntyre's cachet as a recruiter while broadcasting Microsoft's intent to do better on diversity. From the real world perspective, I give the W to Microsoft. An Orrick, Herrington & Sutcliffe team led by partner Mike Delikat plus counsel from Morgan, Lewis & Bockius repped Microsoft. Kemer, Van Nest & Peters IP partner Warren Braunig, who's helped guide my understanding of this case, I think is mostly with me. "It’s only a win for IBM if you start with the premise that these were not trade secrets to begin with," says Braunig. "Given the challenges IBM would’ve had in establishing misappropriation or the need for a restrictive covenant, putting [McIntyre] on the bench for five months is a decent outcome." Braunig, who says IBM's goal was "fundamentally anti-competitive," suggests that the settlement is unsatisfying from the litigator's perspective. "Nothing in this settlement resolves the question of whether a public company’s diversity data or hiring strategies qualifies as a trade secret," he said. "That novel theory will have to await another day."

Who Got the Work?

While we're on the subject of trade secrets, K&L Gates is representing one of the world's largest commercial real estate services firms in a suit against a 30-year employee who launched a competing company last month. ➤ The dispute: Richard Rizika has been working for CBRE Inc. and its predecessors since 1986, climbing through the ranks to vice chairman of retail sales for South Bay Los Angeles. Rizika and another member of his sales team gave notice Feb. 23. According to CBRE, they'd spent the previous month setting up a competing company called Beta Retail. The next day, Rizika invited four other CBRE employees to his home for a presentation about his new company. Two joined on the spot and others followed within days. Departing employees downloaded more than 500,000 files from CBRE's password-protected computer systems, CBRE alleges. The case has been assigned to U.S. District Judge Michael Fitzgerald of Los Angeles. The parties indicated Monday they're making progress toward a settlement. ➤ The attorneys: CBRE is represented by K&L Gates partner Christina Goodrich of Los Angeles and associate Kacy Dicke of Chicago. Beta Retail and Rizika are represented by partners Victor Fu and Albert Liou of Los Angeles' LKP Global Law.

 

Finjan Deal Could Be Worth $110 Million

Last month I reported that Finjan Inc. and Symantec subsidiary Blue Coat Systems had settled their second patent infringement trial. At the time Finjan was a little coy about the deal's breadth, but now it's official: All of the litigation between the companies, including a Federal Circuit appeal, have been settled, and Symantec is paying a $65 million license, plus $45 million to license certain acquisitions Symantec could make over the next four years. Finjan reported multimillion dollar licenses or settlements in 2017 with AvastAviraFireEyeSophos and Veracode. The company noted last month that it still has pending infringement lawsuits against Palo Alto Networks, ESET, Cisco Systems, Sonicwall, Bitdefender, Juniper Networks and Zscaler. The Symantec deal will boost Finjan's war chest, while cementing the Federal Circuit's ruling that its 6,154,844 patent is eligible for protection. Finjan stock has been on a tear, up 79 percent since the initial Symantec settlement announcement on Feb. 12. The company has been represented in the Symantec litigation by Kramer Levin Naftalis & Frankel. Competitor Case Update: I mentioned last week that I'm working on an article about competitor patent cases. After receiving feedback from a few firms, RPX Corp., which has been doing the heavy lifting on research, has decided to take one more pass at the data. Look for the article later this month.  

Apple Crunches Two NPE Patents

Personalized Media Communications (PMC) is a non-practicing entity that's sued Apple, Samsung, Amazon and a host of other tech companies over its patents on signal processing technology. Apple is now off the hook—its Kirkland & Ellis counsel obtained a final written decision from the Patent Trial and Appeal Board last month invalidating the last of the patent claims PMC is asserting against Apple in the Eastern District of Texas. (The remainder of claims asserted against Apple were invalidated in two PTAB decisions last fall.) A quick shout-out to Kirkland partners Marcus Sernel, Joel Merkin, Eugene Goryunov, Gregory Arovas and Alan Rabinowitz, who comprised Apple's PTAB team. That's all of Skilled in the Art for this week. I'll be back Friday with a special post-Berkheimer Section 101 edition.