Posted by Sequel on May 9, 2014
Topic: blogs, Trade Secrets
Filing of Patent Can Act as Constructive Notice of Possible Trade Secret Breach

If someone in possession of another’s trade secrets files a patent application including those secrets, the application may be considered a sufficient notice of possible breach for the purpose of statutes of limitations. That appears to be the result of a recent ruling by the U.S. District Court in the Northern District of California in the case of Wang v. Palo Alto Networks, Inc. (Case No. 12-05579).

In this case, Plaintiff sued Palo Alto Networks for patent infringement and for misappropriation of trade secrets. The court found that the fact that Defendants had filed a patent application more than four years before Plaintiff filed his action prevented him from pursuing on the trade secret portion of the case.

California has a three-year statute of limitations on the filing of a trade secrets violation case. The statute is tolled by the offended party’s actual discovery of the misappropriation or the occurrence of an event which should have resulted in Plaintiff’s discovery of the breach.

Focusing on the issue of whether the filing of a patent application constituted such an event, the court ruled that it did.

In granting summary judgment, the court held that “an inventor actively practicing in the field and prosecuting his own patent application must be deemed to be on constructive notice of published patent applications in the same field.”  Because the Plaintiff was prosecuting his own patent, the court concluded that he either knew, or should have known, of the existence of defendants’ patent in the same field.

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