Proceed with Caution: Navigating the Intersection Between Trade Secret and Patent Law - Foster v. Pitney Bowes Corp.

by McDermott Will & Emery
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In a case illustrating the impact of permitting a patent application to be published, the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s order granting defendant’s motion for judgment on the pleadings regarding claims for trade secret misappropriation, misrepresentation, conversion and unjust enrichment, finding that any information used by defendant was part of the public domain as a result of plaintiff’s published, and abandoned, patent application.  Foster v. Pitney Bowes Corp., Case No. 13-1374, -1444 (Fed. Cir., Dec. 11, 2013) (per curiam) (nonprecedential).

Pro se appellant Frederick Foster filed a U.S. non-provisional patent application relating to a virtual mailbox system.  As set forth in 35 U.S.C. 122(b), the application was published 18 months after its earliest priority date because Mr. Foster did not file a non-publication request.

After publication of the application, Mr. Foster contacted Pitney Bowes to explain his idea and pursue a partnership with Pitney Bowes.  No relationship was formed, and no further communication took place.  However, in 2011, Pitney Bowes launched a new website that, according to Mr. Foster, copied ideas from Mr. Foster’s application.  Mr. Foster sued Pitney Bowes for, among other things, trade secret misappropriation, misrepresentation, conversion and unjust enrichment.

The district court granted judgment on the pleadings to Pitney Bowes, holding that the publication of the application undermined Mr. Foster’s claims.  Mr. Foster appealed.

Regarding the trade secret claim, the Federal Circuit restated the requirements for a prima facie showing of misappropriation of trade secrets: “(1) the existence of a trade secret; (2) communication of a trade secret pursuant to a confidential relationship; (3) use of the trade secret, in violation of that confidence; and (4) harm to the plaintiff.”  Additionally, a trade secret exists under Pennsylvania law only where “reasonable efforts [are made] to maintain secrecy” of the secret.  Here, the Federal Circuit affirmed that no trade secret existed because Mr. Foster failed to request non-publication of the application and did not enter into a confidentiality agreement with Pitney Bowes.

The Federal Circuit also affirmed that the misrepresentation claim should fail because the publication of the application negated any reliance of Mr. Foster on alleged representations of confidentiality.  Further, the district court’s finding on the conversion claim was affirmed because Mr. Foster relinquished any control he had over his idea when he permitted it to be published.  Finally, the Federal Circuit affirmed that no unjust enrichment existed because the ideas in the application were already public when Mr. Foster met with Pitney Bowes and there was no evidence that Mr. Foster disclosed other ideas to Pitney Bowes not already disclosed in the application.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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