by Dennis Crouch
Masimo Corp. v. True Wearables, Inc. (Fed. Cir. 2022) (nonprecedential)
This trade-secrecy decision includes a few interesting holdings:
- Published and Widely Distributed, but Still a Trade Secret: The fact that information was found in a prior publication “that has been cited over 1,200 times . . . does not necessarily compel a finding that the information cannot maintain its status as a trade secret for a party in an entirely different field.”
- Serious Questions: A preliminary injunction in trade secrecy cases require only a “fair chance of success on the merits or questions serious enough to require litigation.” Here, the plaintiff raised “a serious question” and that was enough.
- Order to Keep the Patent Filings Secret: The defendant has several patent applications pending at the USPTO which apparently include the trade secret algorithm within its specification. The district court ordered the defendant to “take all necessary steps to prevent publication” of those applications or resulting patents. On appeal, the Federal Circuit affirmed that preliminary injunction as warranted based upon California state trade secrecy law.
The companies here compete in the market for creating specialized finger-LED equipment and accompanying data analysis services. This case focuses on calculating total hemoglobin (“SpHb”) based upon light absorption readings from the finger-LED.
How does it work: The LED emitter sends out a pulse of light through the fingertip; a sensor on the other side then measures how much light passed through at various wavelengths. Hemoglobin has a particular light adsorption pattern, and so those results can be used to calculate a relative amount of Hemoglobin. They do this with a simple linear aggregation: “SpHb = Ax + By + Cz . . .,” where x, y, and
z are various absorption measurements from the monitoring device (such as different wavelength readouts) and A, B, and C are coefficients that reflect the relative importance of the different measurements.
Each product line will have a different equation because it will likely have a different LED configuration; have different sensors; and have a different physical form. So, a product developer needs to run a clinical trial of its product in order to estimate the most accurate coefficients. For each person in the trial, you do a blood test for SpHB level (the gold standard) and then also take measurements with the finger LED.
What is the Trade Secret: The trade secret at issue here is the optimization algorithm for determining all the equation coefficients. How do you take data from the clinical trials and turn that into an operational equation for measuring SpHB?
Answer, if you have studied linear algebra this is all straightforward and largely developed in the 1960s. Math and engineering students across the country take classes on linear programming and linear optimization and have done so for decades. These same models are a basis for most of the system we call “AI.”
The defendants pointed to a particular 2008 IEEE article that spells out the particular approach claimed to be a trade secret here — – the parties refer to this algorithm as “TSS.” We don’t know the title of this article (it is redacted), but we do know that this is a very well known article with 1,200+ citations. The description below comes from the appellate briefing:
The footnote explains: “[T]he complete citation for this publication is not reproduced in this brief as Masimo has asserted that the identity of the publication is confidential.”
Under California law, information that is “generally known” cannot be a trade secret. Here, however, the Federal Circuit affirmed the lower court ruling that the publication did not render the information “generally known” to folks in the particular field in question.
Under some circumstances, the publication of an alleged trade secret will clearly be sufficient to indicate that the information is generally known. However, the fact that the trade secret has been revealed in some publication somewhere [even if highly cited] does not necessarily compel a finding that the information cannot maintain its status as a trade secret for a party in an entirely different field from the one to which the publication was addressed.
Slip Op. The Federal Circuit previously wrote that disclosure in a patent renders information “generally known” for trade secrecy purposes, but endeavored to distinguish that conclusion here. Ultimax Cement Manufacturing Corp. v. CTS Cement Manufacturing Corp., 587 F.3d 1339, 1355–56 (Fed. Cir. 2009).
I’ll note here that there are some other factors at play – namely, the founder of True Wearables (Dr. Lamego) is a former Masimo employee. He is the one that mathematically derived implemented the TSS algorithm at Masimo. And, while there, labeled it a “trade secret.” These actions of the parties tend to make it look like a trade secret.
I have a Serious Question: On appeal, the Federal Circuit did conclude that the trade secret issue was questionable, but still found that the plaintiff had raised a “serious question as to the validity of the trade secret” which is apparently sufficient for a preliminary injunction. That appears to be a lower standard than the more traditional “likelihood of success.”
The Preliminary Injunction: Lamego has several patent applications pending, and the preliminary injunction orders Lamego to make sure that those applications do not become public. Here, the court found the remedy appropriate since “Once the information is in the public domain and the element of secrecy is gone, the trade secret is extinguished.” (Quoting Ultimax). In this portion of the opinion the court did not contend with its statement a few paragraphs before that publication does not necessarily extinguish a trade secret.
Just a technical note – AI is based on non-linear math – in contrast to linear math. And that is why – AI cannot ‘explain’ its decisions. It might even be an issue in this case, since you are taking clinical data and need to be putting that into an algorithm? Kinda doubt it.
+1
$$$
LOL – another double bonus for me (not quite a triple, as this is a more ‘fresh’ thread).
Your attempted co-opting of my own memes and using them inappropriately was stated to you as an inanity that I am enterprising on.
But we got yet another admission, Snowflake.
Who is this “we?” What is this “another” and what is this “admission” that you speak of?
You use those words as if you knew what they meant, when it is clear from the black and white here that you do not, and ALL that you are doing is your cyber sta1 king thing.
Not a good look for you.
We’ve explained who “we” are before, Snowflake. You feel ok?
If you ever appeared in a court of competent jurisdiction (or actually graduated from a law school) you might know what an “admission” is.
I feel wornderful, given that any past attempt to explain your insistence on referring to yourself in the plural was entirely hogwash.
I was hoping that maybe you came up with a better story since then.
That you now attempt to pass the “admission” item as some type of “I am using the term in the legal context” only supports my post that you are not using the term correctly. It’s a lost like 6 trying to state that the patent system is a welfare system. Point blank is that the term does not apply to how you are attempting to use it, and your reliance on some sort of negative connotation just won’t fly.
the rulling does not match the audio.
link to oralarguments.cafc.uscourts.gov
listen to audio, especilly from minute 20 to 25 . It seems the plantiff´s atorney is lying. Am I right ?
In response to the “Serious Question”: PP. 4-5 of the opinion says this: In the Ninth Circuit, a court may enter a preliminary injunction “if the moving party demonstrates either a combination of probable success on the merits and the possibility of irreparable injury or that serious questions are raised and the balance of hardships tips sharply in his favor.” Johnson v. California State Bd. of Acct., 72 F.3d 1427, 1430 (9th Cir. 1995) (internal quotations, citation, and emphasis omitted).
The Ninth Circuit has said that its “serious questions” test is still valid after Winter v. NRDC. See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-1135 (9th Cir. 2011) link to scholar.google.com
Right, but a questionable ruling post-winter.
The Wild Rockies case, and Judge Lucero’s concurring opinion in Dine Citizens Against Ruining Our Environment v. Jewell, both have pretty good defenses of the “sliding scale”/”serious questions” standard post-Winter. link to scholar.google.com
But I agree it’s at least questionable whether such tests are consistent with Winter.
The Federal Circuit’s current redaction rules are not fun. You can only redact 25 unique words. If you want to do more, you have to file a motion and justify it.
“not fun” for the person who wants to hide facts.
Dennis, the parties’ protective order requires that you do not publicize another party’s confidential information. There is no “wanting” to hide something usually. Quite to the contrary, you normally cite things that help your case, but are required to redact them when the other side designates them as confidential. So, if anything, it is the counter-party that wants to hide things, not the person writing the briefs.
It’s bizarre that a 14-yr-old, widely-cited IEEE article can be redacted. I don’t understand this.
The Federal Circuit’s redaction rules are indeed not fun. It’s fine to enforce the presumption that that court proceedings are public, but the Federal Circuit seems to have grown impatient with parties who abuse redactions and to have made it gratuitously inconvenient to redact anything. It’s not just the 15-unique-word limit (it’s 15 words, not 25). It’s about 5 other hoops one has to jump through. As Litig8or points out, when one party wants to “hide facts,” the other side generally has to do the same “hiding” under the lower court’s protective order. The not-fun qualities affect both parties about equally.
The rules work somewhat well for weeding out abuse. If someone needs to redact a lot more than 15 words, the required motion practice will often force an excessively-redacting party to explain why the redactions should be allowed. But the rules also unnecessarily punish parties in cases where much of the record is legitimately under seal.
FRCP 26 says “the court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” The Federal Circuit seems to have a narrower standard in mind for redactions on appeal.
OK – I see I was a bit snarky there.
It will be interesting to see how the defendents will manage to comply with the court’s order to “take all necessary steps to prevent publication” of those applications or resulting patents containing the so-called trade secret algorithm.
Non-publication requests must be submitted at the time of filing and the order does not enjoin the USPTO from publishing at the 18-month date. There is no mention whether there are also any pending applications filed internationally, which would disqualify non-publication of the US applications. Patents are automatically published upon grant.
I suppose they could try to slow prosecution of the applications to a crawl to delay their grant as much as possible, but that wouldn’t stop the 18-month publication of the pending applications. It would seem “necessary” to abandon the patent applications to prevent publication, unless someone can think of another way. Could they file continuations with non-publication requests and then abandon the parent cases before the 18 month date is reached? Would that work?
I think that would work, so long as they haven’t filed PCT etc. (as you already mentioned).
It looks like in this case there was already a notice of allowance and issue fee due for the application in question. I suppose they’d have had to petition to withdraw from issue and give the court order as the good and sufficient reason for the withdrawal. If that failed, they’d have to not pay the issue fee, and then later petition to revive on the basis of unavoidable abandonment.
At that time, it seems there was already a granted US patent to the defendent on similar technology (US 10,646,144), and corresponding international publications in the same patent family, but it is unclear whether the particular trade secret info is contained within that earlier patent. I would guess probably not, since “it’s too late” would have been part of the legal arguments on that point. See also US 11,109,783, which issued to the defendent after the court order.
See US20210022676A1 and the 1/27/21 IDS for a head start on the 2008 IEEE papers. Absolutlay crazy that a federal court would censor the name of a technical paper published 15 years ago from public records.
I agree – a reference to an item in the public domain is ONLY to an item in the public domain. It is STILL in the public domain.
So. You are now saying that you are not paid to post. Unless I post? ???
LOL – Your 0bsess10n provides me a double bonus here:
You are completely off-topic with your insertion.
You are completely wrong with your insertion – I have been more than clear that I am NOT paid to post (so BOTH your “now” as there is no change AND your “unless” quite miss the mark), and that my enterprising directly comes from YOUR choices in YOUR posts.
So how much were you paid for this particular post?
Did you bother to read what I wrote?
At all?
Of course you did – you are 0bsessed with me.
You are just playing your usual games.
So thank$ for that.
Simple question, Snowflake.
Simple question (repeat) with an equally direct and simple answer many times provided.
I am not paid for MY posts.
The coin I make has ALSO been provided to you.
Maybe do some of your own checking, eh?
“The coin I make has ALSO been provided to you.”
I have not seen any of that money. Do we have to ask your employer for an audit?
lol – you have difficulty understanding a short-hand exchange?
Clearly, “the coin” having been provided to you was not any actual coin, but instead the settings by which actual coin amounts have been determined.
Try not to be so thick, eh?
So you are saying we should talk to not your employer but your union about the missing funds?
Seriously, we never saw any of that money.
So the “coin” you say you make make is not actual coin. Thanks for the admission, Snowflake.
More false projections from you, attempting to misconstrue the well-understood system of my enterprising from YOUR posting decisions.
You do realize that this is one of the inanities that make me coin, eh?
We (and note the proper plural usage) can do this all day every day, as YOUR decisions on how you post continue to MY benefit.
Thank$ again!
Could you call the examiner and the petitions branch – and then file the order of the court via an ’emergency’ petition – and request that the patent be withheld from publication until the injunction is resolved?
There’s not that many 2008 IEEE publications with 1200+ citations that could relate to the problem here. Seems like they should have redacted a bit more.
Correct. It looks like there are 8 which include the word algorithm and which have 1200 or more citations. I’m pretty sure I know which one it is, but doubt DC wants it named here.
I’m a ChE, not an EE guy, and Ben based on your suggestion I found it in about 1 minute. If I did indeed find it, I mean.
Note the finding that “Here, the evidence shows that TSS was known in the field of statistics, without evidence that the
statistical principle had particular application to the plaintiff’s field or a related field..” [I.e., the particular new application of known math is arguably unobvious.] [Does that remind you of a Sup. Ct. case on using another known mathematical formula for determining how long to cook tires in a tire mold?]
Also note that this is a temporary TS injunction against just the defendant, not an order by the court to the PTO to not to issue the defendant’s granted patent. But I do wonder if the PTO has not already published the subject application by now, given its normal 18 month publication date running from its provisional application filing date and the likely PTO delay in responding to such an unusual request not to publish a granted application? Or, if there was a published foreign equivalent by now?
BTW, wasn’t this trade secret already dead by the first judicial reporter publication of these TS details, leaving the plaintiff to recover its TS damages for the prior time period of the defendants activities? Plus, the plaintiff still has whatever recovery it can obtain from its indicated and presumably still pending patent suit, where assignor estoppel might also be available here?
P.S. Little finger-gripper blood oxygen level sensors have apparently been selling like hotcakes on the internet to many Covid worriers.
I chuckled at an implied (well ok, inferred) “direction to:”
math
applied math
Math(S)
Well it’s not a patent we are talking about. An “Obvious” or not-novel solution once you know (copy) the trade secret is not the standard for establishing and maintaining a trade secret is it?
BTW, IMHO there must be something more going on in this case, such as assess and smoking gun theft of the trade secret.
I tend to agree that there must be something more…
Well, I read through the case and the appeal level appears to be rather straight forward (a couple of positions simply brought up too late). The facts of the case — as laid out at the appeal level — certainly do not paint TW as in any type of favorable light (using items from prior employ that were marked as TS, marking the same as TS in his own new company, etc.)
Having done its best to screw up copyright law, the Federal Circuit now proceeds to screw up trade secret law.
Off topic, but this morning’s “Apple v. MPH” opinion was the first that I have seen so far with Judge Cunningham on the panel. Has anyone else spotted an earlier opinion in which she has joined? Has she authored any published opinions yet?
She has been on several decisions, but has not authored an opinion yet. Only two precedential: Kyocera Senco Indus. Tools Inc. v. Intl. Trade Commn., 2020-1046, 2022 WL 189822 (Fed. Cir. Jan. 21, 2022); Lynch v. McDonough, 21 F.4th 776 (Fed. Cir. 2021) (en banc).
Thanks, and p.s. Lynch v. McDonough, 21 F.4th 776 (Fed. Cir. 2021) (en banc) was a [non-patent] Veterans case.
Goodness. How did I miss that she was on Kyocera? Thanks for those.
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