Archive for April, 2015

Trade Secrets Lit Updates: Sinovel Challenges Summons Service and Philips Computer Fraud Claim Fails

April 29th, 2015

There are updates on a couple of green tech trade secrets cases, each involving allegations of misappropriation by Chinese companies and their employees.

First, as discussed in a previous post, the ongoing litigation between American Superconductor (AMSC) and Sinovel includes a criminal indictment against the Chinese wind turbine maker, two of its employees, and a former AMSC employee.

The defendants are charged with conspiracy to commit trade secret theft and criminal copyright infringement.  The technology involved is AMSC’s source code, software, equipment designs and technical drawings that relate to regulating the flow of electricity from wind turbines to the electricity grid

In a recent oral argument, Sinovel asked the U.S. Court of Appeals for the Seventh Circuit to reverse a lower court ruling and quash a summons, arguing it was improperly served on its U.S. subsidiary.  An article about the oral argument can be found here.

The second is a lawsuit brought by Koninklijke Philips and Philips Lumileds against Chinese competitor Elec-Tech International (ETI), several ETI subsidiaries, two corporate directors, and a former Lumileds employee named Dr. Gangyi Chen.  Philips alleged theft of trade secrets relating to high-energy LED lighting technology.

Elec-Tech moved to dismiss the complaint for a number of reasons, including an inadequately pleaded claim under the Computer Fraud and Abuse Act (CFAA), the only federal cause of action in the case.

In a recent decision, a federal court in San Jose, California dismissed Philips’ case, holding that the federal law claim under the CFAA could not be sustained.

The CFAA prohibits various computer crimes related to accessing computers without authorization in order to obtain information or data.  The problem for Philips was that Dr. Chen, who was alleged to have stolen the trade secret information, was authorized to access the Philips Lumileds network and did not exceed his authorized access while downloading the information prior to his resignation.

Specifically, the complaint was deficient because it lacked any allegation that someone without authorization accessed the confidential information:

By the Complaint’s own allegations, none of the CFAA Defendants accessed Lumileds’ information – Dr. Chen did, at a time when he was authorized to download this information.

While Dr. Chen may have misappropriated the information (a state law claim) and given it to the CFAA Defendants, the court held there is no “claim against those Defendants under the CFAA because they themselves did not hack Lumileds’ system.”

The court rejected Philips’ argument that Dr. Chen was an “agent” of the CFAA Defendants and they should be held liable based on their indirect, unauthorized access through Dr. Chen’s access, holding that the CFAA Defendants lack of access was fatal to the claim:

None of the CFAA Defendants entered or used Lumileds’ network.  At most, they encouraged Dr. Chen to do so, and stood to benefit from alleged misappropriation.  This action may give rise to a number of claims, but it does not support a theory of liability under the CFAA.

Expect this case to start up again in state court.

CleanTech PatentEdge Annual Report Shows Green Patenting Grew in 2014

April 21st, 2015

Berkeley-based IP Checkups recently published its 2014 Annual Report on cleantech patenting trends.  Based on the firm’s proprietary green patent database –  Cleantech PatentEdge™ – the report contains much interesting analysis driven by this powerful data analytics tool.

The major finding of the report is that, after a year of decline in 2013, worldwide patent activity grew last year, rising consistently in each quarter of 2014.  This is measured by the number of cleantech patent documents published, which typically means a lag time of 18 months from application filing date.

In the United States, the number of published cleantech patent applications grew by 8% from 2013 to 2014, and the number of U.S. patent publications and grants reached a five-year high.

Looking across all cleantech sectors, the report found that U.S. patent activity increased by an average of 13% in 2014, with renewable energy generation being the leading sector.  Within that sector, solar and biofuels showed the most growth.

The report lists the top twenty worldwide cleantech patent assignees.  Samsung, Toyota, and Panasonic topped the list, with General Electric and Mitsubishi rounding out the top five.

The patent assignees are broken out by industry sector, and the report provides other useful information, such as an in-depth look at patenting trends in transportation and analysis of cleantech venture capital funding trends.  Significantly, cleantech VC funding saw a 28% YOY increase from 2013 to 2014.

For more information, visit the Cleantech PatentEdge web site here.

BASF Brings Battery Battle to the Border

April 14th, 2015

A previous post reported that chemical giant BASF and UChicago Argonne LLC (Argonne) sued Belgium-based Umicore and Japan-based Makita Corporation for infringement of two patents relating to cathode materials for lithium-ion batteries.  That lawsuit was filed February 20, 2015 in the U.S. District Court for the District of Delaware.

The same day BASF and Argonne filed a complaint in the U.S. International Trade Commisson (ITC) asking the ITC to investigate whether Umicore, Makita and their U.S. subsidiaries have imported and sold in the United States lithium ion cathode materials and batteries that infringe the same patents.

The ITC is a federal agency that investigates trade and importation issues, including conducting quasi-judicial proceedings involving alleged infringement of intellectual property rights by importation of accused products pursuant to 19 U.S.C. § 1337.  It is a popular forum for patentees (though only injunctive relief is available, not monetary damages) because the proceedings progress much faster than those in the federal courts.

The patents-in-suit are U.S. Patent Nos. 6,677,082 (’082 Patent) and 6,680,143 (’143 Patent), both entitled “Lithium metal oxide electrodes for lithium cells and batteries” and directed to a lithium metal oxide positive electrode for a non-aqueous lithium cell.

The cell is prepared in its initial discharged state and has a general formula xLiMO2.(1−x)Li2M′Oin which 0<x<1, and where M is one or more ion with an average trivalent oxidation state and with at least one ion being Mn or Ni, and where M′ is one or more ion with an average tetravalent oxidation state.

According to the ITC complaint, Argonne is the owner of the ‘082 and ‘143 patents and BASF produces lithium ion cathode materials under an exclusive license to the patents.

Recently, the ITC issued a Notice announcing that it would investigate BASF’s and Argonne’s claims of infringement.

BASF and Argonne have requested a limited exclusion order that would prevent Umicore and Makita from importing Umicore’s cathode materials, allegedly marketed and sold under the Cellcore product group, and certain Makita power tools using lithium ion batteries.

Although Umicore and Makita are now squeezed in both the ITC and federal court, they may ask the court to stay the parallel court action in view of the ITC investigation.

Big Win for Butamax as PTAB Knocks Out All Claims of Gevo Patent

April 6th, 2015

Previous posts (e.g., here and here) discussed various threads of the major biofuels patent litigation between BP-DuPont joint venture Butamax and the advanced biofuels company Gevo.

A relatively new mechanism for challenging the validity of a U.S. patent is inter partes review (IPR), an administrative trial proceeding before the U.S. Patent and Trademark Office’s (USPTO) Patent Trial and Appeal Board (PTAB) in which a third party can challenge the validity of a patent based on printed prior art publications.

Last year Butamax filed a petition with the PTAB for IPR of Gevo’s U.S. Patent No. 8,546,627 (‘627 Patent).  The ‘627 Patent is entitled “Renewable compositions” and directed to processes for preparing a renewable jet fuel.

The claimed processes comprise fermenting biomass with a microorganism, dehydrating the resulting alcohol to form biofuel precursors, and then subjecting the biofuel precursors to processes such as oligomerization, hydrogenation, and aromatization to form the fuel.

In a recent decision, the PTAB ruled that all 21 claims of the ‘627 Patent are invalid in view of several prior art references cited by Butamax.

More particularly, the PTAB held that U.S. Patent Application Publication No. 2008/0132741 to D’Amore discloses five of the seven steps of independent claim 1 of the ‘627 Patent.  Because the sixth and seventh steps of claim 1 are recited as optional, D’Amore was found to anticipate the claims.  D’Amore was also held to anticipate dependent claims 7, 11 and 14 of the ‘627 Patent.

As the primary prior art reference, the PTAB applied D’Amore in combination with several other printed publications in holding all of the claims invalid.  The PTAB also considered ASTM D1655 jet fuel standards as an important secondary reference and found that D’Amore in combination with the standards rendered claims 2-7, 11, 14 and 18-21 obvious.

The PTAB found an additional ground for invalidity of independent claim 18 in International, or PCT, Patent Publication No. WO 2007/061903 to Bradin.  Bradin is entitled “Alternative fuel and fuel additive compositions” and directed to alternative gasoline, diesel fuel, marine diesel fuel, jet fuel, and flexible fuel compositions including an alcohol and/or a glycerol ether or mixture of glycerol ethers, which can be derived from renewable resources.