Justia Contracts Opinion Summaries

Plaintiff ClearOne Communications, Inc. (ClearOne) filed suit against Defendants Andrew Chiang, Jun Yan, Lonny Bowers, WideBand Solutions, Inc. and Versatile DSP, Inc. (collectively the WideBand Defendants), alleging misappropriation of trade secrets. Mssrs. Chiang, Yan and Bowers are all former engineers of ClearOne who had a hand in developing "acoustic echo cancelling" technology. Prior to their departure, the technology had been licensed from ClearOne by WideBand. When WideBand ended its licensing agreement with ClearOne, ClearOne became suspicious and conducted an internal investigation to find that its former engineers were now associated with WideBand. Furthermore, WideBand was using the proprietary technology it had once licensed. The case proceeded to trial, and ClearOne prevailed on all of its claims. The district court entered a final judgment, as well as a permanent injunction in favor of ClearOne. The court later learned that the Defendants along with several interested parties violated the terms of the injunction. The WideBand Defendants and the interested parties filed a number of appeals. The Tenth Circuit consolidated twelve cases into its holding, taking each Defendant-Appellant's arguments in turn. After careful consideration of the parties' arguments, the Court found no abuse of discretion by the trial court. The Court affirmed the trial court's decision in favor of ClearOne.

The Board of Trustees of Stanford University filed suit against Roche Molecular Systems ("Roche") claiming that their HIV test kits infringed upon Stanford's patents. The suit stemmed from Stanford's employment of a research fellow who was arranged by his supervisor to work at Cetus, a research company developing methods to quantify blood-borne levels of HIV. The research fellow subsequently devised a PCR-based procedure for measuring the amount of HIV in a patient's blood while working with Cetus employees. The research fellow had entered into an agreement to assign to Stanford his "right, title and interest in" inventions resulting from his employment there and subsequently signed a similar agreement at Cetus. Stanford secured three patents to the measurement process. Roche acquired Cetus's PCR-related assets and commercialized the procedure into HIV test kits. At issue was whether the University and Small Business Patent Procedures Act of 1980, 35 U.S.C. 200 et seq., commonly referred to as the Bayh-Dole Act ("Act"), displaced the basic principle that rights in an invention belonged to the inventor and automatically vested title to federally funded inventions in federal contractors. The Court held that the Act did not automatically vest title to federally funded inventions in federal contractors or authorize contractors to unilaterally take title to such inventions and therefore, affirmed the judgment of the Court of Appeals for the Federal Circuit, which held that the research fellow's agreement with Cetus assigned his rights to Cetus, and subsequently to Roche; that the Act did not automatically void an inventor's rights in federally funded inventions; and thus, the Act did not extinguish Roche's ownership interest in the invention and Stanford was deprived of standing.

Petitioner Timothy Gognat appealed an appellate court's decision that awarded summary judgment to Respondent Chet Ellsworth, Steven Smith and MSD Energy, Inc. In his suit, Mr. Gognat alleged that Respondents misappropriated certain trade secrets he disclosed to them. In the late 1990s, Mr. Gognat developed information relating to "probable" oil and natural gas reserves in the Western Kentucky Area. This information included technical, geographical, geological and business maps, charts, plans, interpretations, calculations, summaries, and other documents. Mr. Gognat shared this information with Mr. Ellsworth, and the two created a joint venture, MSD Energy, to eventually develop the reserves. Mr. Gognat maintained that Respondents misappropriated the trade secrets in the documents by acquiring leases in Western Kentucky without adequately compensating him pursuant to the joint venture. The district court found that the statute of limitations barred Mr. Gognat's claim, and the appellate court affirmed that decision. On appeal to the Supreme Court, Mr. Gognat argued that his claim against Respondents was premised solely on activities dating from 2005. Upon careful consideration of the arguments and the applicable legal authority, the Supreme Court affirmed the appellate court's decision. The Court found that the undisputed facts demonstrated that all of the proprietary information alleged to have been misappropriated constituted a single trade secret and this was known to Mr. Gognat more than three years prior to filing his complaint. Therefore, Mr. Gognat's claim was barred by the applicable statute of limitations.

The owner of patents for computer modems and methods of identifying modems licensed the patents to Rockwell; a related agreement gave Rockwell sub-licensing rights. Rockwell reorganized and assigned its rights. The patent owner acknowledged the assignment. Defendants obtain modem chips from a "spin off" of the companies formed in the Rockwell reorganization. The patent owner sued for infringement. The district court held that the defendants are licensed and entered summary judgment that certain patents are invalid. The Federal Circuit reversed in part, first holding that the assignment was within Rockwell's sub-licensing rights without further consent. Two patent claims were invalid for indefiniteness, but there was a material issue of fact on whether two others were invalid for failure to disclose necessary algorithms.