Patently-O

The Unjust Enrichment Option: A Trade Secret Plaintiff’s Choice of Remedy

Dennis Crouch — Fri, 22 May 2026 18:20:54 +0000

by Dennis Crouch

A trade secret plaintiff's willingness to license its secret does not limit future recovery to a reasonable-royalty measure. In Versata Software, LLC v. Ford Motor Co., Nos. 2024-1140 (Fed. Cir. May 22, 2026), the court found that the plaintiff may still recover under alternative damages theories, such as the defendant's unjust enrichment.

Our various trade secrecy statutes provide for both actual-loss damages and also for unjust state and federal trade secret statutes provide several alternative damages calculation approaches. The DTSA, for example allows for both:

(I) damages for actual loss caused by the misappropriation of the trade secret; and

(II) damages for any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for actual loss.

The statute goes on to state that one alternative form of damages may be "imposition of liability for a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret." 18 U.S.C. § 1836(b)(3)(B).

Versata was litigated under the Michigan Uniform Trade Secrets Act, which provides parallel remedy language. Notably, both statutes authorize unjust enrichment recovery as a matter of statutory right. On appeal, the Federal Circuit found the lower court erred by preventing the unjust enrichment recovery. The court also reversed the district court's reduction of an $82.26 million breach-of-contract award down to $3 and reinstated the jury's number.

Ford hired Versata (then Trilogy) to develop vehicle-configuration software, licensed two products under a 2004 Master Subscription and Services Agreement (MSSA), and then, when renewal talks broke down in 2014, released its own configuration software that Ford had developed while still licensing Versata's product. As things came to a head, Ford sued first, seeking a declaratory judgment that it had neither infringed Versata's patents nor misappropriated its trade secrets. Versata answered with counterclaims for misappropriation under the DTSA and MUTSA, asserting three interdependent "combination" trade secrets along with a breach-of-contract claim under the MSSA.

The doctrinally interesting work, though, is on remedies, and it turns almost entirely on the structure of the statutory damages provisions.

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Borrowing from the Board: District Court Obviousness in the Post-IPR Era

Dennis Crouch — Thu, 21 May 2026 22:06:18 +0000

In Otsuka Pharmaceutical Co. v. Lupin Ltd., No. 24-2297 (Fed. Cir. May 21, 2026) (nonprecedential), a Federal Circuit panel affirmed Judge Andrews’s bench-trial judgment that Lupin’s tolvaptan ANDA process does not infringe Otsuka’s U.S. Patent Nos. 8,273,735 and 8,501,730, and that the asserted method claims are invalid as obvious over Kondo’s 1999 small-scale synthesis paper.

I want to use this fact-bound affirmance as a vehicle for a broader doctrinal point. With Director Squires having effectively shut down inter partes review for most filers, district courts are now being asked to step up and do the §103 obviousness invalidation work. The PTAB has spent more than a decade building out the operational process of obviousness adjudication, with thousands of final written decisions parsing motivation to combine, motivation to modify, reasonable expectation of success, lead compound and lead reference selection, and the weighing of secondary considerations. That body of decisional law is the most extensive working corpus of patent obviousness doctrine in the United States. For bench trials, where the judge wears the factfinder hat, that corpus should be treated as persuasive authority and cited directly. For jury trials, the same corpus is much harder to deploy because the PTAB did the bulk of its work as a factfinder, and that role belongs to the jury, not the court.

Pre-AIA, defense counsel often steered away from §103 invalidity in district court and were especially wary of putting obviousness to a jury. The presumption of validity and clear-and-convincing burden, and the natural complexity of almost every patent made an obviousness finding seem like a long shot. But, I believe we are at a different place now. The PTAB has cancelled thousands of claims on obviousness grounds over the past dozen years, demonstrating that many issued patents have §103 vulnerabilities that may also be exploited in district court litigation.

The patents here cover highly pure tolvaptan (approved for Autosomal Dominant Polycystic Kidney Disease) and also methods of producing the compound. They teach reducing the amount of sodium borohydride hydrogenating agent to 0.25–1 molar equivalents per mole of benzazepine precursor as a way to reduce impurities. Lupin’s process uses at least 1.2 molar equivalents and the district court found no infringement (after some claim construction wrangling).

But, I want to focus more on the obviousness analysis for this post. Judge Andrews found that a skilled artisan would be motivated to select Kondo’s 1999 article (which discloses small-scale tolvaptan synthesis using 1.5 molar equivalents of sodium borohydride) as a starting reference. Second, the artisan would be motivated to select the reduction step within Kondo for modification. Third, the artisan would be motivated to reduce the amount of sodium borohydride in that step. Fourth, there was a reasonable expectation of success. Fifth, secondary considerations did not overcome the prima facie case. Each of these moves has been litigated hundreds of times at the PTAB.

Before the current administration, the implicit division of labor was that PTAB resolved most validity challenges based on patents and printed publications, while district courts retained the cases involving on-sale bar, public-use, inventorship, written description, and enablement disputes that the Board cannot address under 35 U.S.C. § 311(b). Hatch-Waxman ANDA cases ran on both tracks, with parallel IPRs frequently mooting district-court invalidity issues. Director Squires has now upended that division. Institution numbers have collapsed. Patent challengers who would have filed IPRs are now filing affirmative defenses in district court.

I expect this means district-court obviousness law is going to develop faster than it has in a decade. But, we’re at a new place with obviousness jurisprudence alone because of all those Board opinions. I would strongly recommend bench judges in patent cases to review and consider this body of work as persuasive authority.

Two caveats need to be in the foreground. First, the burdens of proof differ. The PTAB applies preponderance of the evidence; district courts apply the higher standard of clear and convincing evidence. A PTAB conclusion that the prior art “would have motivated” a skilled artisan is reached on a lower evidentiary footing, so a bench judge cannot simply transplant the conclusion. The methodology travels; the conclusion does not. Second, the standards of review differ. The Federal Circuit reviews PTAB fact-findings for substantial evidence and district court fact-findings for clear error. Both are deferential, but they are not identical, and a panel that defers to a PTAB motivation finding may not have endorsed the underlying reasoning as a matter of law.

The proposal works for bench trials. It works much less well for jury trials because of the structural differences. Under Graham v. John Deere Co., 383 U.S. 1 (1966), obviousness is a question of law based on four subsidiary factual findings: scope and content of the prior art, differences between the prior art and the claims, level of ordinary skill, and secondary considerations. The Federal Circuit has long treated those subsidiary findings as jury questions in jury trials. And the jury does not read PTAB opinions and generally should not be instructed at that level of detail.

The accumulated body of PTAB obviousness reasoning is largely unavailable to the jury fact-finder in the way it would be available to a bench judge sitting as fact-finder. Pattern jury instructions necessarily generalize the legal framework rather than communicate factual pattern-recognition that a judge might find in PTAB panels. The judge presiding over a jury trial can use PTAB precedent at the margins, but cannot substitute the Board’s reasoning for the jury’s verdict.

The practical consequence is that district court obviousness law will develop on two parallel tracks. Bench trials, concentrated in ANDA litigation in Delaware and New Jersey, will increasingly look like extended PTAB proceedings, with the same lead-reference framework, the same motivation analysis, the same secondary considerations weighting, and the same skepticism of unexpected-results showings that lack a proper comparator. Jury trials, concentrated in the Eastern and Western Districts of Texas and to a lesser degree the Northern District of California, will continue to operate at a higher level of generality, with verdicts driven by jury instructions, expert credibility, and the rhetorical framing of motivation to combine.

Otsuka v. Lupin is on the bench-trial side of that divide, and Judge Andrews’s opinion is in many respects indistinguishable from a careful PTAB final written decision. The Federal Circuit’s modest affirmance here validates the bench-trial pathway as the new center of gravity for §103 invalidation.

Categorical Rules Cut Both Ways: Originalist Equity, NPE Status, and the Symmetry of eBay’s Four-Factor Test

Dennis Crouch — Wed, 20 May 2026 11:34:39 +0000

by Dennis Crouch

Collision Communications, Inc. v. Samsung Electronics Co., No. 2:23-cv-00587-JRG (E.D. Tex. May 17, 2026)

I previously wrote about this case when the permanent injunction was pending. Judge Gilstrap has now denied the motion, but the opinion also indicates some instances when non-practicing entities (NPEs) could block ongoing infringement.

Judge Gilstrap's opinion takes a middle ground.

It rejects the categorical rule Collision sought, that ongoing patent infringement presumptively constitutes irreparable harm as a matter of law under 18th-century Chancery practice (as reinterpreted through Trump v. CASA, 606 U.S. 831 (2025)).
And it also rejects Samsung's opposite position, that a non-practicing patent owner cannot establish the harms required under eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).

The first two eBay factors are typically the most important: irreparable harm and inadequacy of monetary relief. Here, the court found that Collision proved both of those, but failed on the trailing two: balance of hardships and public interest. With the result of the injunction being denied.

Although not a party, the USPTO/DOJ filed briefing (a statement of interest) in the case arguing that non-practicing patent owners should not be categorically barred from injunctive relief, and that the inherent difficulty of valuing patents and calculating damages can itself support a finding of irreparable harm under certain circumstances. The government at the same time declined to endorse Collision's more aggressive theory that ongoing infringement constitutes irreparable harm as a matter of law under 1789 equity principles. Ultimately, Judge Gilstrap appears to have adopted the government suggestions.

Despite denying injunctive relief, the key passage from the decision is the court's flat rejection of any NPE carve-out: "this Court rejects the position that a non-practicing entity can never establish irreparable harm. . . . The USPTO does not issue patents with a gold seal if the holder practices the patents, but issues patents with only a silver seal when they do not." A non-practicing patentee can satisfy the eBay factors, the court held, even if it usually will not.

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Williamson Found Its Mark: New Data on Functional Claim Language, 1976-2026

Dennis Crouch — Tue, 19 May 2026 23:14:05 +0000

by Dennis Crouch

Twelve years ago I posted a chart on Patently-O tracking three patterns of functional claim language across U.S. utility patents from 1976 through 2013. The chart showed the steep post-1994 collapse of traditional means-plus-function claims and the simultaneous rise of "configured to/for" as the patent attorney functional replacement of choice. See Dennis Crouch, Functional Claim Language in Issued Patents, Patently-O (Jan. 23, 2014). [Read this post via PDF]

That data was collected and published the year before the en banc decision in Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015). This post extends the dataset up to May 2026 and adds a fourth time series capturing the construction Williamson brought within the reach of 35 U.S.C. § 112(f): a generic "nonce" noun coupled with a functional linker phrase (e.g., "module for"). The full dataset now covers approximately 8.3 million utility patents issued from January 1976 through mid-May 2026.

The headline updates from 2014 are dramatic but unsurprising. "Configured to/for" now appears in almost 50% of utility patents issued. It overtook "means for" around 2008-2009 and surpassed the "for [Verb]ing" construction in 2014. Traditional means-plus-function language has fallen to less than 3% of utility patents, a huge decline from its 1980s modern peak.

The new finding, and the one I focus on more in this post is a new fourth line. The Williamson-targeted "nonce" words rose from roughly 11% of utility patents in 1976 to a peak of 20% in 2010-2014, then turned downward through the post-Williamson decade and now sits at about 16%. A companion per-word chart below shows the decline concentrated in exactly the nonce terms the Federal Circuit has flagged: "unit" and "module" both peak at 2014 and decline thereafter, while potentially structurally loaded terms like "device" continue rising. Williamson appears to have done meaningful work, at least to shift language.

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The Survivors: Post-IPR Claims, the Presumption of Validity, and the Limits of § 285

Dennis Crouch — Tue, 19 May 2026 18:05:52 +0000

by Dennis Crouch

The Federal Circuit's May 15, 2026 decision in mCom IP, LLC v. City National Bank of Florida, No. 24-2089 (Fed. Cir. 2026), splits cleanly down the middle. Judge Taranto, writing for the panel, affirmed the district court's Rule 12(b)(6) dismissal of mCom's infringement complaint with prejudice. But the same panel reversed both the $33,986 attorney-fee award entered against mCom under 35 U.S.C. § 285 and the $50,619 sanction entered against mCom's local counsel Victoria Brieant under 28 U.S.C. § 1927. The Federal Circuit declined to remand for further proceedings on either fee determination.

Several claims of U.S. Patent No. 8,862,508 had been cancelled during IPR proceedings. But in this litigation, mCom asserted the four non-challenged claims. City National argued those claims were "not patentably distinct" from the already cancelled claims, and the district court agreed. On appeal, mCom argued only patent eligibility under § 101, a doctrine that was not responsive to the obviousness ruling. So, the dismissal was an easy affirm.

The reversal of the fee award is the more doctrinally interesting. I see the panel's reasoning as a defense of the statutory presumption of validity even when invoked by a patent owner whose counsel has accumulated a substantial record of judicial sanctions in other proceedings.

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Justice Up Close: The Federal Circuit Opens Its Doors for America 250

Dennis Crouch — Mon, 18 May 2026 19:29:34 +0000

by Dennis Crouch

I was out in the woods this past weekend staffing an MKP retreat and so missed the Federal Circuit’s annual Judiciary Conference. But, the highlight was almost certainly the debut of the Federal Circuit’s first (and so far only) theme song, a Schoolhouse Rock-style cartoon explainer of the court.

See Dani Kass, Fed. Circ. Drops A Theme Song, Talks Guest Judges, Law360 (May 15, 2026).

The Federal Circuit has also expanded its Center for Innovation & Law and is opening the doors to a new exhibit: “Justice Up Close, History All Around,” a free America 250 program offering timed-entry tours, mock trials in a working courtroom, Dolley Madison’s restored parlor, NASA artifacts, and direct conversations with federal judges.

May 19: If you want free tickets, the first wave is available May 19 at 11:30 a.m. Eastern, at innovationcenter.cafc.uscourts.gov.

The U.S. Court of Appeals for the Federal Circuit is the only federal court of appeals defined by subject matter rather than geography. Congress created it through the Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25, by merging the old Court of Customs and Patent Appeals with the appellate jurisdiction of the Court of Claims. Its docket runs across patent cases under 28 U.S.C. § 1295(a)(1), Court of Federal Claims and Tucker Act cases, Court of International Trade cases, Merit Systems Protection Board appeals, veterans benefits appeals from the Veterans Court, and trademark cases from the TTAB.

The buildings themselves are super interesting, including the Cutts-Madison House, where Dolley Madison lived after James Madison’s death in 1836. The neighboring property housed the National Woman’s Party during the suffrage movement, and NASA used the complex as its first Washington headquarters during the Mercury and Apollo programs.

Drafting Fixable vs. Amendment Created: A Tale of Two §112 Rejections

Dennis Crouch — Sat, 16 May 2026 17:37:19 +0000

I’ve been reading through a lot of office actions lately. I think these two charts are interesting that show opposite workflow patterns for the two main §112 rejection grounds. For indefiniteness under §112(b), examiners make these more-often-than-not in the first non-final office action. For written description and enablement under §112(a), the pattern flips: final rejection rates exceed first non-final rates.

The §112(b) gap is consistent with the standard prosecution workflow. Examiners flag indefiniteness problems on the first office action. Applicants then amend claims to tighten-up the scope, and many of those problems are resolved before the application reaches a final rejection. Indefiniteness is, in this sense, often a “drafting fixable” defect. This is not absolutely true since applicants might add new problems through amendment, or examiners might notice the problem later in time.

The §112(a) inversion reflects a different dynamic. Written description and enablement problems often surface after the applicant amends, particularly when amendments push claim language beyond what the original specification actually supports. So even though the disclosure is fixed at filing, the rejections accumulate as prosecution narrows or shifts the claims. Many of the initial rejections for 112(a) involve continuation cases or PCT cases with preliminary amendments.

Amazon as Prior Art: The Rise in Design Patent §102 Rejections

Dennis Crouch — Sat, 16 May 2026 15:33:21 +0000

by Dennis Crouch

Design patent prosecution has changed substantially over the past decade. One place we see that is in the anticipation rejection rate. Among US-domestic design patents that actually issued, the share that received at least one §102 rejection during prosecution climbed from roughly 0.1% in 2008 to above 7% in early 2025. The rate has pulled back slightly under Director Squires to around 5-6%, but even at that level it sits at the highest sustained figure ever recorded. For practitioners who learned design prosecution in an era when prior art rejections were a relative rarity, that shift represents a fundamentally different examination environment.

The chart here shows the percentage of granted U.S. design patents that received at least one §102 or §103 rejection during prosecution, grouped by grant date. Granted patents only; abandoned applications are not reflected because the bulk of design patents (the U.S. originated ones) are kept secret and never published.

In a prior post, I looked at U.S. design patent applications that came through the Hague System (series-35); and the data here for series-29 applications is roughly the same for obviousness rejections - showing no post-LKQ rise. Dennis Crouch, Prior Art Rejection Rates in Design Patent Prosecution, Patently-O (May 2026). But, the domestic cases show a much higher rate of §102 anticipation rejections than what I found in Hague cases. I don't have a definitive explanation for it, but the most plausible hypothesis tracks the Amazon story that I dig into below. Most of the rise in anticipation rejections has come from searches of US-facing marketplace platforms - Amazon.com in particular. Those searches return results that reflect products already in the US consumer market. Domestic applicants are more likely to have their products listed on Amazon before or around the time of filing. Hague applicants skew heavily foreign, and foreign-originated goods may not yet have a US market presence at the time of examination, or may distribute through platforms like Alibaba that examiners are not searching. Ultimately this means that U.S. originated cases may be receiving a more rigorous examination than their foreign counterparts.

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Polar Electro’s New § 101 Cert Petition: When Courts Do the Challenger’s Job

Dennis Crouch — Fri, 15 May 2026 17:57:35 +0000

by Dennis Crouch

Two Finnish sports-tech companies have been litigating U.S. Patent No. 6,537,227 in a Utah federal court since 2017. Polar Electro Oy — the heart rate monitor maker — owns the patent, which claims a process for estimating energy expenditure during exercise by combining a measured heart rate with a personalized physiological reference value tied to VO2max. Firstbeat Technologies Oy, a physiological analytics company acquired by Garmin in 2020, moved for summary judgment of patent ineligibility under 35 U.S.C. § 101 but, according to the record, supplied no prior art, no expert testimony, and no developed conventionality theory. The district court granted the motion anyway, assembling its own analysis from the prosecution history. The Federal Circuit affirmed without opinion (Rule 36). Polar is now asking the Supreme Court to take up three big questions. Polar Electro Oy v. Firstbeat Technologies Oy, No. 25-1268 (U.S. petition filed May 2026).

Questions:

Whether a court may construct its own invalidity argument — independently identifying evidence and assembling rationales — when the challenger raised the defense but failed to support it, especially given § 282's presumption of validity and the clear-and-convincing standard.
Whether a process that takes a real-world physiological input and uses it within an improved procedure to produce a more accurate technological result remains eligible under Diamond v. Diehr, 450 U.S. 175 (1981).
Whether the judicially created exceptions for abstract ideas, laws of nature, and natural phenomena are impermissible judicial legislation the Court should overrule in favor of the statutory text.

The first question is the most legally ripe; the last is the most ambitious; the middle is the one the Court has repeatedly declined to resolve.

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After LKQ: The Boilerplate Changed; The Rejection Rate Did Not

Dennis Crouch — Thu, 14 May 2026 16:57:05 +0000

by Dennis Crouch

In a recent post, I shared a chart showing that the §103 rejection rate for design patent applications has stayed flat in the two years since LKQ Corp. v. GM Global Technology Operations LLC, 102 F.4th 1280 (Fed. Cir. 2024) (en banc). Through Hague System disposals, only about 1% of design applications receive an obviousness rejection. That is roughly where the rate sat a decade ago, and a long way from what one might expect given the Federal Circuit's decision enabling more rigorous obviousness analysis. I wanted to dig into a handful of cases to see any difference from pre- and post-LKQ obviousness rejections. Examiners have adapted their language and are also using prior art that would not have worked with the old Rosen framework, just not on a very aggressive basis. It may be, as readers suggested, that examiners would do more if given more time to search.

For this study, I compared the text of about 150 pre-LKQ obviousness rejections (2023) against about 150 post-LKQ obviousness rejections (January 2025 through April 2026). As you might expect, examiners are no longer citing Rosen or other pre-LKQ decisions. 80% of pre-LKQ case cited to Rosen or an equivalent case, with 0% of post-LKQ rejections. "Basically the same," the verbal marker of the Rosen primary-reference test and the Durling-era phrase "so related" both almost entirely fell off from the rejection text.

What replaced the old framework were a set of post-LKQ phrases: "visually similar" (0% → 90%) and "overall appearance" (40% → 75%) now dominate. Oddly, LKQ itself rarely cited (only 4% of rejections) and KSR is at 0%. Almost 90% of post-LKQ §103 rejections cite no obviousness precedent at all.

I worked through several rejections in detail to see whether examiners are pushing into prior art that the old framework would have blocked. Some are. Aristocrat's slot-machine GUI was rejected over a structurally different primary, and TOPPAN's curved-glass panel was rejected over a utility patent combined with four NPL web URLs. But, the most aggressive single-reference stretch that I saw in the dataset is actually pre-LKQ: Apple's over-ear headphone rejected under Rosen-Durling over a Monster Cable in-ear earbud.

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