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December 18, 2018

Lit Alerts—December 2018

A Publication of the Litigation Practice Group

Trade Secrets: Texas Court of Appeals Rules Plaintiffs May Not Obtain Access in Discovery to Defendants' Trade Secret Software to Permit Analysis by Plaintiffs' Expert Witness

In a fatal motorcycle accident case, the Texas Court of Appeals, Ninth District, last month denied plaintiffs access to and the use of the defendants' proprietary software program to analyze the allegedly defective power steering system in the defendants' motorcycle, on the ground that the software was a trade secret.

In In re Kongsberg Inc., the plaintiffs claimed the power steering system of the motorcycle manufactured by one of the defendants had malfunctioned, causing the fatal accident. During discovery one of the defendants used its trade secret software to analyze the electronic activity in the power steering system during the accident. After doing so, the defendant provided a readout of the error codes and steering inputs to the plaintiffs. The plaintiffs' expert reviewed this software analysis of the steering system and then claimed he needed personal access to the underlying software to conduct his own independent analysis of the accident data. The trial court agreed and ordered the defendant to produce its trade secret software to the plaintiffs.

The Ninth District Court of Appeals reversed the discovery order because the plaintiffs could not show that accessing the trade secret software program was "necessary for a fair adjudication" of the case. The court reasoned that because the plaintiffs' expert had already determined that the power steering system was at fault, the expert did not need any additional information that could be generated by analyzing the defendants' trade secret software.

Discovery: Southern District of Alabama Determines That Videotaped Depositions of European Union Citizens Do Not Necessarily Violate GDPR

In d'Amico Dry d.a.c. v. Nikka Finance, Inc., No. CA 18-0284-KD-MU (Adm. S.D. Ala. Oct. 19, 2018), the US District Court for the Southern District of Alabama determined that the privacy rights of European Union citizens and the General Data Protection Regulation (GDPR) do not necessarily trump a US litigant's right to discovery.

The defendant, Nikka Finance, Inc., moved for a protective order to protect its 30(b)(6) witness from a videotaped deposition to take place in London, England. Among other arguments, Nikka asserted that the witness did not consent to, nor would he sign a release allowing, the videotaping of his deposition because a videotaped deposition would violate his rights to privacy under GDPR and the Data Protection Act (the UK's implementation of GDPR) and the European Convention on Human Rights and the Human Rights Act. The court rejected Nikka's motion because it found that the foreign privacy laws on which Nikka relied are directed to the use of videotaped images of people who are unaware they are being videotaped. However, the court did order that the video recording of the deposition not be publicly disclosed or utilized in any other investigation or litigation.

Patents: Federal Circuit Rules "Assignor Estoppel" Does Not Apply in Inter Partes Review Proceedings

Last month, the Federal Circuit heard an appeal from an inter partes review proceeding concerning the validity of U.S. Patent No. 7,340,597 (the '597 Patent), which describes network security technology. The named inventor of the '597 Patent is Dr. David Cheriton, who was an employee of Cisco Systems, Inc. (Cisco) at the time of invention, and assigned his rights in the patent to Cisco. He later left Cisco to found Arista Networks, Inc. (Arista), and it was his new company, Arista, that challenged the validity of the patent he had assigned to Cisco.

Cisco argued that the Patent Trial and Appeal Board should not have permitted Arista to challenge the validity of the '597 patent under the common-law doctrine of "assignor estoppel," which holds that a party who assigns a patent to another, as well as his or her privies (such as the inventor's new employer), may not later challenge the validity of the assigned patent. Conversely, Arista argued that the statutory language governing inter partes review precluded application of the assignor estoppel doctrine.

The Federal Circuit agreed with Arista, relying on 35 U.S.C. § 311. Section 311(a) provides that "a person who is not the owner of a patent may file . . . a petition to institute an inter partes review." The Federal Circuit explained that the "plain language of this statutory provision is unambiguous" and precludes application of assignor estoppel in the inter partes review context. The court further reasoned that, in related contexts, Congress has expressly preserved equitable common law doctrines and did not do so here.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This newsletter 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.