Patent and Trade Secret Law Final

Spring 1995


1. This is an open book examination. You may bring and use whatever written materials you would like. You may even use a computer, without a modem connected to a phone line, if you desist from tapping on keys to the distraction of your cohorts.
2. You have three hours to finish this examination.

3. Answers that are well written and well organized are rewarded: leading to the logical conclusion that answers that are substantively equivalent, but not as well organized or written are not rewarded in the same proportion.

4. 1 prefer substance over theory. I am suspect of the use of chosen particular to legitimize the general. Act according to my admitted bias.

Part 1. Please read and answer the following questions as directed.

Dale Amato invents a coronary bypass catheter while working for the Cornell Medical School. Dale was inspired to invent this catheter when an United States Senator entered the cardiac unit where Dale was completing his residency on June 1, 1991. The Senator was particularly troublesome as a patient and Dale was inspired to use the largest diameter catheter available to remove the plaque from the Senator's arteries. This initial foray led Dale to explore using diameters that were not considered to be within the accepted used in this field of medicine. Dale started experimenting with animal models (using soft, cuddly-beagles) starting November 3, 1991 and continuing till the twelve month experiment was done in November of 1992.

Marianne Song meanwhile developed the same technology while employed at Havad Medical in our fair city. Marianne first conceived of the invention in January of 1992 while at Havad and had it used in the in the emergency cardiac surgical unit in June of the same year under conditions of confidentiality and with the sole intent of seeing if the catheters operated as predicted.

1. If Dale files for a patent application January 1,
1994, Marianne's activity may be prior art under:
a) 103
b) 102(b)
C) 102(g)
d) other, please specify

2. Briefly Explain why your choice is the best answer.

3. If Dale files a patent application with a description of the animal testing and no reference to ongoing human clinical being conducted in Uruguay which were not yet completed Dale may encounter legal defenses premised on:

a) 35 USC section 112, 2d paragraph
b) 35 USC section 104
C) 35 USC section 112, first paragraph
d) 35 USC section 101

4. Please briefly explain why your choice is the best answer.

Marianne in conjunction with Jim'0 0brien set up a business to exploit the catheter design. Through a startup business set up as s corporation financed by the sale of shares throgh a limited private offering Marianne and Jim set n FDA approval and to
up further clinical studies to obtain develop a fuller understanding erstanding of how to market medical devices. These clinical ical studies began in 1992 and are scheduled to be complete lete in the middle of 1995. The clinical studies involve fin ing qualified cardiologists, training them to use the new cath ter technology and learn what features of the device the clin cal surgeons most appreciated. The Surgeons were requi ed to sign confidentiality agreements as were the rest of the surgical staff.

Marianne and Jim decided to wait until the clinicals were complete in order t file for a patent. In the interim Dr. Westheimer one of t e clinicians has come to believe the catheter design can be improved, does so, and approaches Costello Laboratories, a major manufacturer in the medical device field, with her design (while not disclosing Marianne's particular design).

5. Marianne may have a cause of action:

a. Against Costello Laboratories pursuant to UTSA 2(I)
b. Against Dr. Westheimer pursuant to UTSA 2 (b) II
c. Against Dr. Westheimer pursuant to UTSA 2 (b) III
d. Against Dr. Westheimer pursuant to 35 USC 271 (b)

6. Marianne and Jim's business activity in regards the clinical is prior art as against Dale pursuant to:

a. 35 USC 102 (a)
b. 35 USC 102 (b)
c. 35 USC 102 (c)
d. 35 USC 102 (g)
Please briefly explain.

7. The MPEP is legal authority under the following statutory provisions:

a. 35 USC 6
b. 35 USC 101
c. 35 USC 102
d. 35 USC 271

8. A reissue application was filed on January 5, 1995. The reissue would not be appropriate in which of the following circumstances?

a) Broadening claims of an original U.S. Patent issued January 12, 1993.
b) Narrowing claims of an original U.S. Patent issued January 4, 1992.
c) Correct failure to adequately claim priority in an earlier filed copending U.S. Patent application.
d) Correcting a defective specification, the errors made without deceptive intent, that renders the original patent partially invalid.
e) Failure to claim foreign priority in the original application.

9. Able asks you to prepare a patent application on an invention that Able reduced to practice nine years ago. Able
disclosed the invention to no one. Able had not disclosed because until recently there was no commercial possibility for
the invention. You should:

a) orally advise Able that the patent is abandoned and patent protection is no longer available.
b) Prepare an application and advise Able the date of reduction to practice is irrelevant.
C) Prepare the application and withhold the reduction to practice date from the examiner.
d) Provide a written opinion as to abandonment based upon controlling case law.
e) File an application and papers required by the rules of practice.

10. Intent of the alleged infringer is relevant under:

a) 35 USC 271 (b)
b) 35 USC 271 (g)
C) 35 USC 284
d). 35 USC 287 (a),
e) (a) and (c) only
f) other

11. Patent claims may be reviewed for patentability in a reexamination proceeding on the basis of:

a) Prior use by others in this country.
b) Prior knowledge by others in this country.
C) Prior sale, by the inventor, or others in this
d) Patents or printed publications.
e) All of the above.

12. Which of the following statements are false:

a) Inventions of compositions that are novel, useful, unobvious and enabled shall issue as U.S. Letters Patent if applied for by their inventor(s).
b) If infringement is found, in no event shall less than a reasonable royalty be awarded.
c) Patentees may never be awarded the profits of infringers of their patents.
d) Constructive reduction to practice is achieved upon filing a U.S. Patent application.

Part II. Please read the following factual situation, analyze and succinctly answer as directed.

On June 30, 1993, Remedy Pharmaceuticals, hereinafter "applicants" filed patent application Serial No. 213,713 (the 1713 application) directed to 3-nitrobenzodeisoquinoline1,4-dione compounds, for use as antitumor substances. These claimed compounds differ from several prior art benzodeisoquinoline-1,4-dione compounds due to the presence of a nitro group (02N) at the 3-position and an amino or other amino group (NR3R4) at the 8-position of the isoquinoline ring.

The specification states that these non-symmetrical substitutions produce compounds with "a better action and a better action spectrum as antitumor substances" than known benzodeisoquinolines, namely those in K.D. Peterr et al., Computer Assisted StructureActivity Correlations, Drug Research, 34(11), 1243-46 (1984) (Peterr).

Peterr describes a computer-assisted evaluation of benzodeisoquinoline-1,3-diones and related compounds which have been screened for antitumor activity by testing their efficacy in vivo against two specific implanted murine (i.e., utilizing mice as test subjects) lymphocytic leukemias, P388 and L1210. These two in vivo tests are widely used by the National Cancer Institute (NCI) to measure the antitumor properties of a compound.

Peterr noted that one compound in particular, (hereinafter OINSC 3047291"), was found to show excellent activity against these two specific tumor models. Based on their analysis, compound NSC 3047291 was selected for further studies by the NCI. In addition to comparing the effectiveness of the claimed compounds with structurally similar compounds in Peterr, applicants' patent specification illustrates the cytotoxicity of the claimed compounds against human tumor cells, in vitro, and concludes that these tests "had a good action."

Caveat: In vivo means "in the living body, referring to a process occurring therein." Steadman's Medical Dictionary 798 (25th ed. 1990). In vitro means "in an artificial environment, referring to a process or reaction occurring therein, as in a test tube or culture media." Id.

-Peterr's analysis consisted of grouping the previouslytested compounds into groups based on common structural features, cross-referencing the various groups, in light of the success rates of the group as a whole, and determining specific compounds that may be effective in treating tumors.

The applicants' specification does not state the specific type of human tumor cells used in this test.

The examiner initially rejected applicants' claims in the 1713 application as obvious under 35 U.S.C. 103 in light of U.S. Patent No. 5,123,467, issued to and referred to hereafter as Zee-Cheng et al. Zee-Cheng et al. on July 3, 1994 based on an application filed June 29, 1992, discloses and claims a benzodeisoquinoline compound for use as an antitumor agent with symmetrical substitutions on the 4-position and 8position of the quinoline ring; in both positions the substitution was either an amino or nitro group. Although not identical to the applicants' claimed compounds, the examiner noted the similar substitution pattern (i.e., at the same positions on the isoquinoline ring) and concluded that a mixed substitution of the invention therefore would have been obvious in view of Zee-Cheng et al.

In a response dated July 14, 1989, the applicants rebutted the 35 USC 103 rejection. Applicants asserted that their mixed disubstituted compounds had unexpectedly better antitumor properties than the symmetrically substituted compounds in Zee-Cheng et al. In support of this assertion applicants attached the declaration of Dr. Gerhard Keelhauler. In his declaration Dr. Keelhauler reported that his tests indicated that applicants' claimed compounds were far more effective as antitumor agents than the compounds disclosed in Zee-Cheng et al. when tested, in vitro, against two specific types of human tumor cells, HEp and HCT-29. Applicants further noted that, although the differences between the compounds in Zee-Cheng et al. and applicants' claimed compounds were slight, there was no suggestion in the art that these improved results (over Zee-Cheng et al.) would have been expected.

The examiner was persuaded by this argument, but nevertheless, substituted a final rejection, on different grounds, on September 5, 1989 based on 35 U.S.C. @ 112 first paragraph. The examiner asserted that the specification failed to describe any specific disease against which the claimed compounds were active. Furthermore, the examiner concluded that the prior art tests performed in Peterr and the tests disclosed in the specification were not sufficient to establish a reasonable expectation that the claimed compounds had a practical utility (i.e. antitumor activity in humans).

Specifically explain why the examiner is wrong in rejecting the claims on the cited basis. Carefully construe the statutory provision in light of the patent code providing a colorable basis to argue legal error.

Provide an argument, based upon case law and statute that will impeach or corroborate an affidavit, or other testimony by Dr. Keelhauler concerning the practical utility of the claimed invention.

Part III. Please identify the cause(s) of action that might accrue in the following scenario and as the legal representative of Merril identify specifically a list of three additional facts, factual considerations, or witnesses you would like to discover to strengthen your client's case.

Louis Merril , Gayle Reese, and RHR, Inc (collectively, "Merrill") Merrill are considering bringing an action under the Uniform Trade Secrets in the District Court for the District of New Hampshire pursuant to the court's diversity jurisdiction. 28 USC 1332(a)(1). It is expected that soon after filing a summary judgment for KFC will be requested based upon the theory that material that Merrill disclosed to KFC in confidence did not constitute a predictable trade secret.

Merril developed an allegedly proprietary process for making skinless fried chicken. When KFC was considering purchasing the process from Merril (through a purchase of Merril's business). Merril disclosed information about the process to KFC's agents, subject to a written confidentiality agreements. These confidentiality agreements were directed to and limited to information provided by Merril to KFC in writing. KFC declined to purchase the process. Later KFC began to market a skinless fried chicken product.

KFC is likely to file a summary judgment motion based upon the motion that Merril's process was generally known or readily ascertainable and therefore could not constitute a trade secret.

KFC contends that Merril's allegedly secret process consists of nothing more than "the general process of cutting, skinning, marinating, dipping, and breading, and frying the chicken." Merril contends that certain aspects of the process constitute trade secrets (e.g. the recipes for the batter, flour mixtures, and marinade; the cooking temperatures; and the contents of the cooking oils ls). KFC contends that Merril .had not alleged that KFC has misappropriated those' aspects.

Skinless fried chicken had been on public sale by Pudgie's Famous Chicken, a chain of quick service restaurants..

Merril has not produced evidence that its general process is different from either that generally in use, or from the process KFC has been using for years. He has also been unable to show that the exact combination of steps would not suggest itself to anyone seeking to achieve the same end product.

Two individual steps used by Merril to his business, deskinning and tumbling marination. that Merril claims, were not generally known. Merril concedes that none of the following steps were individually proprietary to him: cutting the chicken into nine pieces; dipping the chicken in batter; running the dipped chicken through a flour mix to bread it; or preparing chicken in a pressure cooker. KFC does not even use a pressure cooker to cook its skinless crispy chicken.

Merril's deskinning process is "the technique for doing it manually, so that you didn't need to use machinery, which could still be done at a rate of at least two chickens per .minute." The technique consists of slipping a hand under the skin of the chicken and pulling the skin off., allegedly in a .manner that is faster than other methods. KFC learned of this method upon witnessing Merril's son deskinning a chicken while on a trip during their consideration of whether to buy Merril's business. At the same time KFC learned of Merril's use of tumble marinating, a method KFC was unaware of in its own operation, but which had been used by others (such as Pudgiels).

KFC will argue that all individual aspects of Merril's process were known or easily ascertainable by the public and therefore, there was no trade secret, and KFC's use of information it obtained from Merril was not actionable under the UTSA.

Merril had filed for a patent on the composition used in the marinade in January of 1991, which issued June 13, 1993. The patent describes but does not claim the marinade composition that KFC is presently using.

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1. Definitions.
2. Injunctive Relief.
3. Damages.
4. Attorney's Fees.
5. Preservation of Secrecy.
6. Statute of Limitations.
7. Effect on Other Law.
8. Uniformity of Application and Construction.
9. Short Title.
10. Severability.
11. Time of Taking Effect.
12, Repeal.

1. Definitions

As used in this (Actj unless the context requires otherwise:

(1) "Improper means" includes theft bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy. or espionage through electronic or other means;

(2) "Misappropriation" means:

(i) acquisition of a trade secret of another by. a person who Knows or has reason to know that the trade secret was acquired by improper mean ; or
(ii) disclosure or use of a trade secret of another without express or implied consent by a person who
(A) used improper means to acquire knowledge of the trade secret; or
(B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was
(I) derived from or through a person who had utilized improper means to acquire it,
(II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
(III) derived from or through a person who owed a duty to the person 'seeking relief to maintain its secrecy or limit its use; or
(C) before a material change of his for her] position, knew or had reason to know that. It was a trade secret and that knowledge of it had been acquired by accident or mistake.
(3) "Person" means a natural person, corporation, business trust, estate, trust, partnership, association, joint venture government, governmental subdivision or agency, or any other legal or commercial entity.

(4) "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(i)-derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
2. Injunctive Relief

(a) Actual or threatened misappropriation may be enjoined. Upon application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.

(b) In exceptional circumstances, an injunction may condition future use upon payment of a reasonable royalty for. no longer than the period of time for which use could have been prohibited. Exceptional circumstances include, but are not limited to, a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation that renders a prohibitive injunction inequitable.

(c) In appropriate circumstances, affirmative acts to protect a trade secret may be compelled by court order.

3. Damages

(a) Except to the extent that a material and prejudicial change of position prior to acquiring knowledge or reason to know of mispppropriation renders a monetary recovery inequitable, a complainant is entitled to recover damages for misappropriation. Damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret.

(b) if willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subsection (a).

4. Attorney's Fees

If (i) a claim of misappropriation is made in bad faith, (ii) a motion to terminate an injunction is made or resisted in bad faith, or (iii) willful and malicious misappropriation exists, the court may award reasonable attorney's fees to the prevailing party.

5. Preservation of Secrecy

In an action under this [Actl a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings, holding in-camera hearings, sealing the records of the action, and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval.

6. Statute of Limitations

An action for misappropriation must be brought within 3 years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. For the purposes of this section, a continuing misappropriation constitutes a single claim.

7. Effect on Other Law

(a) Except as provided in subsection (b), this [Act] displaces conflicting tort, restitutionary, and other law of this State providing civil remedies for misappropriation of a trade -secret.

(b) This [Act) does not affect:

(1) contractual remedies, whether or not based upon misappropriation of a trade secret;

(2) other civil remedies that are not based upon misappropriation of a trade secret; or

(3) criminal remedies, whether or not based upon misappropriation of a trade secret.

8. Uniformity of Application and Construction

This [Act] shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this (Act) among states enacting it.

9. Short Title

This [Act] may be cited as the Uniform Trade Secrets Act.

10. Severability

If any provision of this [Act] or its application to any person CUTUM or instances is held invalid, the invalidity does not affect other provisions or applications of the [Act] which can be given effect without the invalid provision or application, and to this end the provision or application, and to this end the provisions of this [Act] are severable.

11. Time of Taking Effect

This [Act] takes effect on ---, and don not apply to misappropriation occurring prior to the effective date. With respect to a continuing misappropriation that began prior to the effective date, the [Act] also does not apply to the continuing misappropriation that occurs after the effective date.

12. Repeal

The following Acts and parts of Acts are repealed:

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