Greetings and welcome to Skilled in the Art. I'm Law.com reporter Scott Graham. It took an analysis of 7 million lines of code, but StubHub Inc. has beaten a Defense of Trade Secrets Act claim. I'll explain below. My Law.com colleagues have some cool takes on the intersection of IP litigation with cannabis and with cryptocurrencies. Me? I've got more thoughts on the real party in interest controversy at the Patent Trial and Appeal Board. As always, you can email me your thoughts and feedback follow me on Twitter.

 

StubHub Gets a Ticket Out of DTSA Case

The 2015 wind-down of Santa Monica app maker Calaborate Inc. was not amicable. Co-founder and CEO Hunter Gray had tried to sell the company to online ticket marketplace StubHub Inc., but his investors nixed the deal. Gray then joined Stubhub and brought an engineer and developer along with him.

The investors sold the remaining Calaborate assets to an LLC called Calendar Research. That company has since been pursuing Gray, his colleagues and StubHub for allegedly building aspects of Calaborate's scheduling app Klutch into new StubHub apps.

“StubHub did, in fact, hire Calaborate employees with the intent of having those employees surreptitiously bring Calaborate's trade secrets with them,” Calendar Research alleged in a 2017 complaint.

On Tuesday, U.S. District Judge Stephen Wilson ruled that StubHub did not knowingly acquire, disclose or use Calaborate trade secrets as defined by the Defend Trade Secrets Act. Wilson's decision disposes of just one of several pending causes of action. But it hands a resounding win to StubHub and a Quinn Emanuel Urquhart & Sullivan team led by partner Dave Grable.

StubHub produced 7 million lines of code covering eight different apps. Only one app, called TonightOut, contained any code that matched the Klutch app. But all of that code had either been published previously on web sites such as GitHub.com or made available to developers by Apple, Wilson found.

Calendar Research, which is represented by Pierce Bainbridge Beck Price & Hecht, argued that the apps shared the same set of outward features—event suggestions on a map, finding friends, group chat—which were combined in a sufficiently novel way to merit trade secret protection. “But,” Wilson concluded, “outward-facing features that every user of an app can see and experience are not trade secrets.”

Calendar Research says it uncovered text messages that show the employees were scheming to to take Calaborate property with them. But that can only show what they might have been thinking while at Calaborate—not what they actually did at StubHub, Wilson wrote. In any event, the texts can't disprove “what the code review already shows: StubHub did not use any of the Klutch code in the actual application.”

Pot Patent Holder Goes to Court

Let's say you're a drugmaker. You've developed a formulation that is particularly efficacious. You patent that formula. And now someone is infringing it.

Sounds like a pretty common fact pattern in the pharmaceutical industry, right? Well, now it's part of the cannabis industry, too. My ALM colleague Cheryl Miller breaks down the challenges facing United Cannabis Corp. in its Colorado patent infringement suit against Pure Hemp Collective Inc.

At issue is U.S. Patent 9,730,911, which claims “liquid cannabinoid formulation, wherein at least 95 percent of the total cannabinoids is cannabidiol.” UCANN is represented by Cooley partner Orion Armon. Pure Hemp is repped by Hunsaker Emmi.

Miller notes that the suit could shake up the $1 billion cannabidiol industry—if the court will entertain it.

“The risk is quite high,” Duane Morris' Gretchen Temeles told Miller. “You could get to court and the court could say, 'This is Schedule 1, I'm going to dismiss this case.'”

But if it succeeds, says Goodwin Proctor's Brett Schuman, “I think this company will go around to everyone with their hat in their hand, saying 'Pay us.'”

UCANN is seeking treble damages for willful infringement. It's also asking the court to enjoin Pure Hemp, its officers, agents and employees from continuing to infringe. Good luck with that piece.

Skadden Mints a Win for Crypto Exchange

A few months ago I questioned Telegram's strategy of raising $1.7 billion for a cryptocurrency to be measured in “grams,” without first registering the gram mark. Once again, I've proven to be sadly mistaken.

My ALM colleague Ross Todd reports that U.S. District Judge Charles Breyer granted Telegram Messaging Inc. an injunction Wednesday blocking Lantah LLC from launching its own coin offering called the Gram.

Breyer found that by raising funds for an ICO, Telegram has used the mark in commerce, even if the offering doesn't formally launch till this fall. “Telegram certainly thought it had engaged in commerce when it recorded those sales with the SEC, and the purchasers certainly thought they had engaged in commerce when they sent Telegraph their money,” Breyer wrote.

It's a nice win for Skadden, Arps, Slate, Meagher & Flom's John Neukom and James Pak.

Real Parties Getting Real Confusing

Spare a moment for the lawyers who represent technology equipment providers. Especially providers who agree to indemnify customers if they get sued for patent infringement. It's pretty tough right now to figure out when the clock runs out for such companies to challenge patent validity at the PTAB. If they're in privity with their customers, then they're a real party in interest and have only one year from the filing of the first lawsuit against a customer. How much of a showing is needed for privity? The Federal Circuit has been sending mixed signals, and a recent PTAB decision seems to have set a surprisingly low bar.

The issue has been heating up since January, when the Federal Circuit ruled en bancthat it can review PTAB determinations on real parties. The first two decisions applying that rule backed PTAB findings of no privity. But in last month's RPX decision, the court instructed the PTAB to take a more searching look. In a concurring opinion, Judge Jimmie Reyna opined that an indemintor-indemintee relationship could be enough on its own to establish privity.

The PTAB seems to be trending in the same direction. On July 20 the board denied Arris International's petition to review two patents that NPE ChanBond LLC has asserted against Comcast, Cox Communications, Time Warner and 10 other cable companies in Delaware federal court.

Administrative Patent Judge Joni Chang noted that Arris has agreed to reimburse its customers for patent infringement, provided that the customer provides “reasonable assistance in and sole control of the defense.”

Though substantial portions of the opinion are redacted, Chang seems to be saying that that language is enough to find privity. “Neither absolute control, nor actual control, is required for finding of privity,” Chang wrote. Rather, the “opportunity to control” should be enough, as outlined in the PTAB's Trial Practice Guide.

Eliot Williams, the co-chair of Baker Botts' PTAB practice, said the RPX opinion in particular has “rekindled interest” in the real party issue. He said many companies are looking over the language in their indemnity agreements and reexamining best practices, including the timing of IPR petitions.

That's all from Skilled in the Art this week. I'll see you all again on Tuesday.