Trade secrecy and patent rights traditionally have been considered mutually exclusive. Trade secret rights are premised on secrecy. Patent rights, on the other hand, require public disclosure. Absent a sufficiently detailed description of the invention, patents are invalid. However, with the passage of the Leahy-Smith America Invents Act (“AIA”) last fall, this once black-and-white distinction may melt into something a little more gray. Now, an inventor’s failure to disclose in her patent the preferred method for carrying out the invention — the so-called “best mode” — will no longer invalidate her patent rights or otherwise render them unenforceable.
In this brief Essay, we explain why it may become routine post-patent reform for patentees to attempt to assert both patent rights and trade secret rights for preferred embodiments of their invention in certain types of cases. We also consider potentially undesirable ramifications of this change and suggest one approach courts may use to limit claims of concurrent trade secret and patent protection when equity demands.

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I blogged on November 10, 2011, about the Supreme Court‘s grant of certiorari in Delia v. City of Rialto, 621 F. 3d 1069 (9th Cir. 2011), sub nom Filarsky v. Delia, No. 10-1018, where the Ninth Circuit held that a private attorney retained by the government was not entitled to qualified immunity, even though all of the government actors involved in the same challenged conduct were so protected because they did not violate clearly settled law.

The Question Presented was the following: “Whether a lawyer retained to work with government employees in conducting an internal affairs investigation is precluded from asserting qualified immunity solely because of his status as a ‘private’ lawyer rather than a government employee.”

In a unanimous decision handed down on April 17, 2012, and written by Chief Justice Roberts, the Court ruled that an individual hired by the government to work for it is indeed protected by qualified immunity, even though that individual does not work for the government on a permanent or full-time basis. Filarsky v. Delia, 132 S. Ct. — (2012).

As mentioned in the prior post, the major purpose of qualified immunity, with its emphasis on violations of clearly settled law, is to provide government officials and employees with a margin for error so that they are not unduly chilled in the exercise of their independent judgment. However, situations occasionally arise where private individuals are sued under section 1983 under the theory that they acted jointly, or conspired, with state or local government officials or employees. In such cases, they act under color of law and can be held liable in damages under section 1983. The question arose: are such private individuals entitled to the same qualified immunity as government officials and employees?
Before Filarsky, the answer was no.  In Wyatt v. Cole, 504 U.S. 158 (1992), the Court held that private individuals sued under section 1983 in connection with their use of allegedly unconstitutional state garnishment or prejudgment attachment statutes were not entitled to claim qualified immunity. And in Richardson v. McKnight, 521 U.S. 399 (1997), the Court held that prison guards employed by a private prison management firm were also not protected by qualified immunity. Among other factors, the Court observed that it had found no conclusive evidence of a tradition of immunity for private parties carrying out prison management functions. In addition, the purposes of qualified immunity did not support qualified immunity protection for private prison guards: there were private sector incentives for constitutional compliance. Significantly, the Court in Richardson emphasized that its holding did not necessarily apply to “a private individual briefly associated with a government body, serving as an adjunct to government in an essential governmental activity, or acting under close judicial supervision.”
In Filarsky, the defendant was a private attorney who had worked together with government employees in connection with an internal affairs investigation of a city firefighter under suspicion because of his lengthy absence from work. This investigation gave rise to the present Fourth Amendment-based section 1983 lawsuit.

Readily finding qualified immunity applicable, the Court noted that historically, in 1871 when section 1983 was enacted, state and local governments were quite small, with many relying on professionals and occasional workers to perform government functions, in addition to using public employees. And since section 1983 should be read “in harmony” with the common law of torts and immunities in 1871, immunity doctrines should not vary depending on whether an individual working for the government did so full-time or on some other basis. Furthermore, the policies underlying qualified immunity for full-time public officials and employees–avoiding undue chilling of independent decision-making and the need to attract capable persons to public employment–applied equally to those working part time for government.

Finally, the Court distinguished Wyatt as dealing with a private person acting in his own self-interest. Somewhat less persuasively, the Court explained Richardson as a “self-consciously” narrow decision that emphasized the particular circumstances there: “a private firm, systematically organized to assume a major administrative task (managing an institution) with limited direct supervision by the government, under[taking] that task for profit and potentially in competition with other firms.”

Justice Ginsburg concurred, saying that, on remand, the Ninth Circuit should pay closer attention to the question whether the defendant violated clearly settled law.

Justice Sotomayor also concurred, but she observed that it did not necessarily follow from Filarsky “that every private individual who works for the government in some capacity necessarily may claim qualified immunity when sued under [section 1983].” After all, Filarsky itself involved a private attorney who worked alongside public public employees, and such a person was entitled to qualified immunity because of the 1871 common law. In short, such cases should be decided “as they arise, as is our longstanding practice in the field of immunity law.”

Comments

1. The Court’s opinion is written quite broadly in favor of qualified immunity for private individuals performing government functions on a temporary or part-time basis. It is likely that the circuits will read it the same way, despite Justice Sotomayor’s concurring opinion.

2 Richardson has rather clearly been limited to its particular facts; it may well become an “outlier.”

3. I have long thought, and argued in Chapter 8 in earlier editions of my treatise, CIVIL RIGHTS AND CIVIL LIBERTIES LITIGATION: THE LAW OF SECTION 1983 (4th ed. 2011), that Richardson (but not Wyatt) was in tension with the Court’s functional approach to individual immunities. From this perspective, Filarsky brings private party immunity doctrine in line with this functional approach because immunity doctrine focuses not on the status of the individual acting but rather on the function that he or she performs.

And here is the abstract:

In recent years we have increasingly heard the claim that government should have a bigger role in directing philanthropies and their assets because the money held by charities is “public money.” This monograph presents a comprehensive analysis of the public money claim and concludes, on the basis of the numerous applicable legal precedents, that the public money assertion is largely myth. This second edition considers the implications of an important decision from the United States Supreme Court rendered since the first edition and of a growing volume of activity at the state level that increasingly seem to be encroaching on philanthropic autonomy and independence. 

Highlights include:

William Birdthistle has been invited to participate in the UCLA Junior Business Law Faculty Forum on November 9 and 10, 2012.  His paper on the Supreme Court decision in Janus Capital Group, Inc. v. First Derivative Traders has beem accepted for presentation at the National Business Law Scholars Conference being held June 27 and 28, 2012 at University of Cincinnati College of Law.

Christopher Schmidt’s article, Divided by Law: The Sit-Ins, Legal Uncertainty, and the Role of the Courts in the Civil Rights Movement, has been selected for presentation at the 2012 Junior Faculty Forum (successor to the Stanford/Yale Junior Faculty Forum) at Harvard Law School in June.

David Schwartz presented his article The Rise of Contingent Fee Representation in Patent Litigation at Northwestern University Law School’s Law & Economics Colloquium in February 2012; at the Drake University Intellectual Property Law Center’s 5th Anniversary Gala, also in February; and at the Wisconsin Intellectual Property Law Association in April 2012.

Kimberly Bailey‘s article, It’s Complicated: Privacy and Domestic Violence, will be published in Georgetown’s American Criminal Law Review this fall. 

Christopher Buccafusco‘s article, Making Sense of Intellectual Property, was recently published in Cornell Law Review.  His forthcoming article, Well-Being Analysis vs. Cost-Benefit Analysis, written with John Bronsteen and Jonathan Masur, has been accepted for publication in Duke Law Journal. The article will be the basis for the journal’s annual Administrative Law Symposium next year.

Nancy Marder’s book chapter, entitled Instructing the Jury, was published in The Oxford Handbook of Language and Law (Peter M. Tiersma & Lawrence M. Solan, eds. 2012).  

Joan Steinman's article Appellate Courts as First Responders: The Constitutionality and Propriety of Appellate Courts’ Resolving Issues in the First Instance is about to be published in Volume 87 of Notre Dame Law Review.