Fifth Circuit Finds Use of Confidential Information In Filed Patent Applications Potentially Trade Secret Theft

In Triple Tee Golf, Inc. v. Nike, inc., Nos. 05-10934, 05-11442, 2007 U.S. App. LEXIS 8807 (5th Cir. April 17, 2007), Triple Tee Golf, Inc. developed a confidential design for an adjustable golf club.  In order to have a prototype made, Triple Tee contacted Tom Stites, a golf club designer.  Mr. Stites agreed to produce the prototype, and was shown rough prototype drawings and sketches, which Mr. Stites photographed for later reference.  Subsequently, Mr. Stites was hired by Nike as Director of Product Creation, and notified Triple Tee that he could no longer provide the prototype.  Further, while Triple Tee submitted the design idea to Nike for consideration, Nike returned the submission indicating it was not interested in the design.

On a trip to a golf trade show, Mr. Gillig, the owner of Triple Tee, noticed that Nike’s new CPR Woods bore a resemblance to his confidential design which he has submitted to Tom Stites.  Later, Mr. Gillig also found similar uses of his confidential design in Nike’s Slingshot Irons, and OZ T-100 putter. Thus, Triple Tee brought suit against Tom Stites and Nike for misappropriation of trade secrets due to the new clubs.

During trial, Triple Tee requested that Nike provide information about any patent applications which reflect the design, and Nike indicated that no patent applications included the design.  As such, Triple Tee was only able to point to the CPR Woods, Slingshot Irons, and OZ T-100 putter as possibly incorporating confidential aspects of the design shown to Mr. Stites. The District Court determined that Nike’s clubs did not include the confidential aspects of the design actually shown by Triple Tee such that the CPR Woods, Slingshot Irons, and OZ T-100 putter were not the product of a theft of trade secrets since they were not adjustable in the same way that the confidential designs showed adjustable clubs.  Since there remained no other allegation of trade secret theft, the case was dismissed on summary judgment.

Subsequently, Triple Tee discovered that Nike had filed two patent applications, naming Tom Stites as the inventor, which related to adjustable golf clubs and seemed to reflect the design shown to Mr. Stites.  Nike had not produced either patent application during discovery and Triple Tee had not been previously aware of the two patent applications.  As such, Triple Tee filed a Motion for Relief of Summary Judgment in order to proceed to trial due to a theft of trade secrets, which were used in the patent applications and which also showed that Nike was possibly planning to use the confidential design in new clubs.  The district court denied the Motion since, while the patent applications should have been produced in discovery, the patent applications were not included in the specific trade secret theft allegations brought by Triple Tee, which only related to the CPR Woods, Slingshot Irons, and OZ T-100 putter.

On appeal, the Fifth Circuit reversed.  On the issue of the summary judgment, the Fifth Circuit held that Triple Tee had produced enough evidence to sustain a theft of trade secret claim for the CPR Woods, Slingshot Irons, and OZ T-100 putter, but limited the number of clubs to only two.  As such, the Fifth Circuit reversed the grant of summary judgment as there remained material facts in dispute.

On the issue of whether the Motion should have been granted, the Fifth Circuit noted that the district court’s denial of the Motion was based upon the narrowing of the issues to only the known clubs during discovery: CPR Woods, Slingshot Irons, and OZ T-100 putter after the end of discovery.  However, the original complaint related to any theft of trade secrets used by Mr. Stites or Nike, and included the use of the confidential designs in any patent applications or plans for new clubs.  As such, had the patent applications been known during discovery, the scope of the trade secret complaint would not have been narrowed to exclude a trade secret theft occurring through the filing of these patent applications.  As such, the Fifth Circuit allowed Triple Tee to proceed with its allegation of misappropriation of trade secrets through the filing of the patent applications since such filing represented an unauthorized use of the confidential designs.

Potential Impact on Patent Applicants

While the precise fact pattern of Triple Tee Golf is somewhat unique, Triple Tee Golf highlights a dilemma posed to applicants hoping to improve on existing, but non-public, designs or standards.  A similar situation occurred in OddzOn Products Inc. v. Just Toys Inc., 122 F3d 1396; 43 USPQ2d 1641 (Fed. Cir. 1997), where an improvement on a confidential design, which was not disclosed but was prior art under 35 U.S.C. §102(f), was grounds for invalidity under 35 U.S.C. §103.  As such, there is a duty to disclose such confidential prior art being improved upon.  What the combination of Triple Tee Golf and Oddzon teaches is that any confidential design needs to be disclosed, but to prevent charges of trade secret theft as occurred in Triple Tee Golf, the actual confidential portions should not be included in the specification to the extent possible.  Instead, such designs should be submitted for evaluation by the Examiner through the process of submission of trade secret material as outlined at MPEP 724. 



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