The U.S. Court of Appeals for the Federal Circuit has upheld a $91 million trade secret award obtained last year by an Irvine, California-based designer of prosthetic heart valves.
CardiAQ Valve Technologies Inc. persuaded jurors that its partner in developing the valves, Neovasc Inc. of Vancouver, British Columbia, secretly developed its own competing valve design with know-how stolen from CardiAQ. U.S. District Judge Allison Dale Burroughs of Massachusetts enhanced the jurors’ $70 million award to $91 million and ordered that two CardiAQ inventors be added to Neovasc’s patent on the devices.
“We agree with the district court’s well-reasoned decisions and affirm,” Judge Richard Taranto wrote for a unanimous panel Friday in CardiAQ Valve Technologies v. Neovasc. Judges Pauline Newman and Kathleen O’Malley concurred.
It’s a big win for Knobbe Martens, which represented CardiAQ on trial and appeal. Partner John Sganga Jr. argued the case before the Federal Circuit.
There was a silver lining for Neovasc, which was represented by Arnold & Porter Kaye Scholer and Wilson Sonsini Goodrich & Rosati. CardiAQ had tried to enjoin Neovasc from moving forward with its “Tiara” heart valve project for 18 months, but Burroughs and now the Federal Circuit have ruled that CardiAQ will have to settle for money damages.
CardiAQ’s non-disclosure agreement had provided for injunctive relief, but the Federal Circuit ruled that Burroughs appropriately considered other factors including the public interest in life-saving technology. Besides, Taranto wrote, “even if the nondisclosure agreement requires some injunction, it does not say what injunction is warranted or why the particular injunction CardiAQ seeks is appropriate.”
CardiAQ and Neovasc design mitral valves, called TMVIs, that are inserted into the heart via an incision in the femoral artery, thereby avoiding open heart surgery. Edwards Life Sciences acquired CardiAQ for $400 million in 2015.
CardiAQ turned to Neovasc in 2009 for help assembling its prototypes. While Neovasc was supplying animal tissue to help anchor the devices, it began working on its own TMVI project. Neovasc’s CEO told Randy Lane, the Neovasc employee managing the collaboration, to keep the project secret from CardiAQ, according to the Federal Circuit’s opinion.
Once the collaboration ended, Neovasc filed a provisional patent application that claimed many of the same features of CardiAQ’s design. Lane, who’d never designed a TMVI device before the collaboration with CardiAQ, was one of two named inventors on U.S. Patent No. 8,579,964.
On appeal, Neovasc argued that CardiAQ’s contributions to the design were already covered by prior art, and that the only novel claims involved anchoring that was developed by Lane and Neovasc. But the prior art Neovasc cited was published in secret under since-repealed Section 102(e) of the Patent Act. “The presence of the CardiAQ-contributed features in then-secret prior art does not, as a matter of law, automatically disqualify the CardiAQ employees as inventors,” Taranto wrote.
As for the three misappropriated trade secrets, the Federal Circuit ruled they were sufficiently specific. One of them—a mandrel for constructing the TMVI devices— is described in a CardiAQ patent, but Neovasc learned more details by holding them and viewing CAD files that weren’t included in the patent, Taranto wrote.
As for the injunction, the Federal Circuit acknowledged that CardiAQ’s NDA specified that “money damages would not be sufficient remedy for any breach of this agreement.”
“But,” Taranto wrote, “it is not an abuse of discretion for the district court to examine the facts to determine whether a particular injunction is warranted—considering, among other things, the public interest, over and above the parties’ interests.”