Lit Alerts—June 2022

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.'"

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.