Federal Circuit Summary

Before Dyk, Bryson, and Taranto. Appeal from the United States District Court for the Eastern District of Texas.

Summary: A plaintiff has no 7th Amendment right to a jury trial for a claim for disgorgement of profits for trade secret misappropriation.

TAO and Intersil are competitors that develop and sell ambient light sensors for use in electronic devices (e.g., smartphones). Merger discussions began so that Intersil could use one of TAO’s patented sensors. The companies did not merge, and Intersil released a product very similar to TAO’s sensor shortly thereafter. TAO sued, and the district court awarded TAO damages for patent infringement, trade secret misappropriation, and breach of contract or tortious interference.

On appeal, the Federal Circuit upheld only one of TAO’s three trade secret misappropriation claims, but because there would still be liability based on the surviving claim, the error was harmless and thus the Federal Circuit upheld the verdict. However, the monetary reward was vacated and remanded in order to align the monetary award with the remaining claim and to determine the appropriate time period for monetary relief, including any “head-start period” after the trade secret was uncovered. Further, the Federal Circuit held that TAO has no 7th Amendment right to a jury decision on its request for disgorgement of profits as a remedy for trade secret misappropriation based on analogy to related precedent in patent, copyright, and trademark law. Finally, the Federal Circuit also affirmed the patent infringement verdict, but because double recovery for the same injury is inappropriate, held that the patent infringement damages were duplicative of a portion of the disgorgement award for trade secret misappropriation.

With respect to TAO’s cross-appeal, the Federal Circuit affirmed a summary judgment ruling that only a very small portion of the accused products sold were sold “within the United States” because the evidence cited by TAO did not show the required domestic activity for the remaining portion of accused products. The Federal Circuit also vacated a denial of a permanent injunction against Intersil and remanded for additional analysis related to the irreparable harm and inadequacy of compensation elements of the eBay test for an injunction. Lastly, damages for willful infringement, breach of contract, and tortious interference were also vacated so that the district court, on remand, can resolve all issues together.

This case is: TEXAS ADVANCED OPTOELECTRONIC (“TAO”) v. RENESAS ELECTRONICS AMERICA (“Intersil”)

Written by: Benjamin Anger and David M. Cohen

Edited by: Paul Stewart