Trade Secret or Patent, Not Both

Delineating patent protection from trade secret protection with reference to the same accused product, the U.S. Court of Appeals for the Federal Circuit upheld a finding of lack of written description support while also finding misappropriation of valid trade secret. Atlantic Research Marketing Sys. v. Troy, Case Nos. 11-1002, -1003 (Fed. Cir., Oct. 6, 2011) (Prost, J.).

Atlantic Research, founded by Richard Swan, owns the patent-in-suit directed to free-floating handguards for rifles.A free-floating handguard solves the problem of attaching an ancillary device to a rifle without touching the rifle barrel.In 2002, Swan met Stephen Troy, who soon became Swan’s employee and “right-hand man.”Troy signed a nondisclosure agreement as part of his employment.In 2003, however, Swan’s and Troy’s relationship went sour, and Troy began a new company, Troy Industries, which competes with Atlantic Research.

Atlantic Research brought suit for patent infringement and trade secret misappropriation. Regarding the former, the district court invalidated the asserted claims of the ’245 patent on summary judgment for lacking written description  support for the claimed subject matter. The trade secret claim, however, went to the jury.  The jury found a valid trade secret and misappropriation. The jury agreed that Swan developed a prototype for a free-floating handguard having a single rifle support point, which Swan showed to Troy. The jury disbelieved Troy’s testimony that Troy came up with the design of the accused products while vacationing in Turkey.Atlantic Research appealed.

On appeal, the Federal Circuit upheld the invalidity holding of the district court.The Court agreed that, although the plain meaning of the asserted claim required only one support point (like Troy’s handguard), the only disclosed designs in the written description required two support points.Atlantic Research argued that he district court erred on its claim construction arguing that, although the “barrel nut” support was expressly recited in the independent claim, it did not mean the claim did not also include a two-support handguard system.The Federal Circuit noted the absence of any disclosure of a single-point handguard support system and that the originally issued claims were directed to such a two-support system.In fact the claims in suit were added by reissue to eliminate the second handguard support from the claim.The Federal Circuit also noted that Atlantic Research, during Markman, argued for a construction that did not require a second support.The Federal Circuit concluded that the district court correctly found that the claim was directed to an undisclosed single point support system that was invalid for failure to satisfy the written description requirement.

The Court commented on the mutual exclusivity of protecting an idea through trade secret law and protecting an invention through patent law. Upholding the jury’s trade secret misappropriation finding, the Federal Circuit noted the inherent tension Atlantic Research created by arguing that its patent has proper support for a singly supported handguard and that a singly supported handguard is an Atlantic Research trade secret.The Court even found additional support for its invalidity decision in the fact that Atlantic Research asserted the design to be a trade secret.

The case was remanded, however, because the Court reversed the district court’s denial of Troy’s motion for a mistrial.The motion was based on the one juror’s bringing from home and showing other jurors a plumbing clamp to assist in deliberations.

Practice Note:A patentee-plaintiff must be careful when concurrently asserting a trade-secret claim because in some regards the two bodies of law offer mutually exclusive protections.