Can the Dimensions of a Patented Device be a Trade Secret?
The recent Court of Appeals for the Seventh Circuit (CA7C) decision Life Spine Inc v Aegis Spine Inc 21-1649 held that Life Spine’s patent for spinal implant technology did not undermine a District Court’s preliminary injunction that included a finding of trade secret misappropriation in relation to the spinal implant technology.
In March 2016 Life Spine obtained FDA approval to market its ProLift expandable spacer spinal implants and in October 2017 its patent application in relation to those spinal implant devices was granted. Around the time of grant Aegis Spine, a seller of medical devices to treat spinal conditions, enquired about being a distributor and, subject to confidentiality undertakings, obtained one of the ProLift devices. In January 2018 Aegis Spine entered into a formal distribution agreement which included undertakings to act in a fiduciary capacity and not to copy, reverse engineer or create derivatives of the ProLift or to share it without authorisation. However, evidence showed that Aegis Spine breached these terms when it shared the device and details about it with its majority owner, L&K, a South Korean company that manufactures spinal devices. L&K used that information to manufacture a competing device, which was launched by Aegis and L&K in September 2019 when FDA approval was given for L&K’s AccelFix‐XT device.
In the District Court Life Science’s expert witness testified that the ProLift and AccelFix‐XT devices share the same essential features and are so close that they are compatible, which was considered unprecedented. The speed of design for the AccelFix XT and omissions in the design history file led the expert witness to conclude that it was a derivative of the ProLift. The Judge allowed the preliminary injunction finding there to be a strong likelihood that Aegis Spine breached the contract and misappropriated three distinct trade secrets: (1) the combination, dimensions, and interconnectivity of the ProLift’s components and subcomponents; (2) static shear compression testing data; and (3) pricing information.
On appeal Aegis Spine argued that none of the asserted trade secrets qualified as such on account of information that Life Spine publicly disclosed through patents, displays, and sales. Despite the disclosures in its patent and the use of the devices by third parties (surgeons) Life Spine considers the precise dimensions and measurements of the ProLift components and subcomponents and their interconnectivity to be confidential trade secrets. On the face of it this would seem an implausible contention. It would be hard to find an example of a patent application with more drawings for a comparably sized device. Of the granted patent’s 89 pages, 66 pages are for drawings consisting of 123 figures. Life Spine, though, did not give any dimensions in the patent and asserts that some of the measurements are extremely precise — down to fractions of a millimetre. As such, third parties can only learn such information if they have unfettered access to the device and specialized measuring equipment, and Life Spine does not allow third parties such access unless they first sign confidentiality agreements. The evidence also showed that Life Spine takes many precautions to safeguard the device prior to surgery, including having them remain in sealed boxes until surgery and requiring distributors to be present in the operating theatre.
Aegis Spine sought to counter the confidentiality claims with the expert witnesses concession that some measurements of the ProLift are standard in the industry and that an engineer reading Life Spine’s patent would have a good starting point for ascertaining some of the other measurements. However, the CA7C considered that the patent would only be helpful for a company to produce a competing product and provided insufficient basis for disclosing the exact dimensions and measurements of every ProLift component.
However, while exact dimensions and measurements were not readily obtainable, can such things constitute trade secrets in the context of the wider disclosure? As with the District Court the CA7C considered that the statutory definition of trade secret had been satisfied. Under US federal law (18 USC § 1839(3)), information qualifies as a trade secret if (1) the owner thereof has taken reasonable measures to keep such information secret and (2) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information. A corollary of this definition is that a trade secret does not need to be at the level of an inventive step over the prior art.
Yet, while there was basis, particularly within the context of a preliminary injunction proceeding, to find that (1) and (2) are satisfied, I think the CA7C did not consider all the relevant ways in which patent law interacts with the ability to claim trade secrets. The CA7C noted the general principle that publication in a patent destroys a trade secret, but then referred to cases where it was held that a limited disclosure does not destroy all trade secret protection in a product. It was emphasised that trade secret law focuses on the “concrete secrets” and that a company can maintain trade secret protection in the undisclosed aspects of a product, even if it has publicly disclosed other aspects of the same product, meaning that on the facts of some cases trade secret and patent protection can overlap.
However, I think that enquiry needs to be subject to the quid pro quo that is the foundation of patent law, as specified in the requirements of 35 USC 112(a), which states:
The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.
If the preciseness of the measurements is what is needed to be known in order to make the invention work and if this cannot be reasonably inferred or obtained from the disclosure without undue effort or experimentation, then the disclosure is insufficient for failure to satisfy 35 USC 112(a). In its decision the CA7C noted that Life Spine’s expandable cages are intricate devices with many small component parts, requiring precise engineering and that the design and development took more than three years and involved an exhaustive trial‐and‐error process, sometimes adjusting component sizes by fractions of a millimeter. This provides strong support for Life Spine’s disclosure being insufficient as it appears to require undue effort or experimentation to make what is disclosed in the patent work.
If, on the other hand, the disclosure is sufficient for allowing the invention to be worked without needing to know the precise measurements that Life Spine uses, then Life Spine still fails to satisfy 35 USC 112(a) as they have not set forth the best mode known to them. Namely, if they claim that the measurement information satisfies the independent economic value criterion for being a trade secret and if that information was known to them before filing their patent application, then they have withheld ‘best mode’ information from their patent application.
If this analysis is correct, by claiming that the precise dimensions and measurements of the ProLift components and subcomponents and their interconnectivity are trade secrets, Life Spine undermines the validity of its patent. It may have been better to concede that the patent undermined the claim that component dimensions and measurements are trade secrets, and instead sought to obtain the preliminary injunction either solely on breach of contract or along with a claim that Aegis Spine was a joint tortfeasor in patent infringement. Given the unprecedented compatibility of the two devices it would appear that an arguable case of patent infringement could be made.
Author: Quinn Miller