Opinions — Friday, March 20, 2026

The Federal Circuit affirmed the Central District of California's denial of attorney's fees to prevailing defendant Incstores LLC in patent litigation brought by Parallax Group International, LLC concerning dual-color interlocking floor mat patents. Incstores sought fees under 35 U.S.C. § 285 on two grounds: that Parallax's counsel committed inequitable conduct by failing to disclose prior art references during prosecution of the D764 design patent, and that contradictions between the inventor's testimony and the patent specification warranted an exceptional case finding after both patents were ultimately invalidated during reexamination.

The court applied clear error review to both the inequitable conduct and exceptional case determinations, underscoring the district court's primacy in assessing witness credibility and finding no abuse of discretion. On inequitable conduct, the Federal Circuit deferred to the trial court's credibility finding that counsel genuinely believed the prior art references were not material to the design patent under the "ordinary observer" standard, particularly given that the Patent Office later relied on a different primary reference during reexamination. On the exceptional case analysis, the court held that differences between a layman inventor's testimony and his counsel's patent drafting did not meet the standard for a case that "stands out from others" in terms of substantive weakness or unreasonable litigation conduct.

The First Circuit affirmed a jury verdict and partial judgment as a matter of law following a six-day trial on claims arising from an employee's attempt to acquire his former company while serving as president of his employer. The court upheld liability for breach of fiduciary duty, breach of contract (including breach of an IP Agreement requiring the employee to "devote his energy and skills to the promotion of the best interests of the Company"), and false designation under § 43(a) of the Lanham Act, awarding $1.5 million in compensatory damages. The court affirmed the district court's grant of judgment as a matter of law setting aside the jury's verdict on trade secret misappropriation claims under both Massachusetts law and the Defend Trade Secrets Act, and upheld a permanent injunction barring the defendant from acquiring the target company plus an award of over $2 million in attorneys' fees under a contractual fee-shifting provision.

The decision's significance for trademark practitioners lies in its treatment of what constitutes protectable information as a trade secret when the information originated with a third party. The court held that financial information about a target company provided by the seller (Q-Free) to facilitate an acquisition could not constitute the buyer's (ZipBy's) trade secret, even though ZipBy was obligated to keep it confidential, because Q-Free as the true owner did not object when the defendant used the information for his own competing acquisition attempt. The court reasoned that any license ZipBy possessed did not entitle it to stand in Q-Free's shoes in controlling use of Q-Free's own data. The court also rejected the plaintiff's attempt to characterize its internal decision to forego an acquisition opportunity as a trade secret, finding no evidence the company took measures to keep that strategic decision confidential when communicated to the seller, thus failing the "reasonable measures to keep such information secret" requirement under 18 U.S.C. § 1839(3)(A).

The Sixth Circuit affirmed the district court's partial denial of a preliminary injunction to Fetch! Pet Care, Inc. against thirty-one former franchisees operating competing businesses, upholding the denial on unclean hands grounds. Following a two-day evidentiary hearing on Fetch!'s motion for preliminary injunctive relief, the district court had granted limited relief (prohibiting use of Fetch!'s federally registered trademarks and barring communication with existing franchisees) but denied broader relief that would have shut down the competing businesses. The court applied the equitable doctrine of unclean hands as to the "2.0" and managed-services franchisees based on evidence that Fetch! aggressively and dishonestly marketed these newer, higher-fee franchise models while obscuring material differences from the legacy "1.0" model in its franchise disclosure documents and making inflated revenue representations. The Sixth Circuit affirmed under abuse-of-discretion review, finding sufficient record evidence to support the district court's factual findings and its conclusion that Fetch!'s conduct "transgressed equitable standards of conduct." The court extended the unclean hands bar to three "1.0" legacy franchisees, reasoning that Fetch! had cut off their system access without the written notice and cure periods required by Washington, Illinois, and Iowa franchise statutes before these franchisees operated competing businesses or misused confidential information.

The decision clarifies two procedural points of broad relevance to preliminary injunction practice in the Sixth Circuit. First, the court rejected the district court's reliance on an unpublished 2002 opinion (Patio Enclosures) that imported Ohio state law's clear-and-convincing-evidence standard for irreparable harm, holding that the correct federal standard requires only that irreparable injury be "likely" under Winter v. Natural Resources Defense Council and its progeny. Second, the court corrected the district court's misreading of Performance Unlimited v. Questar Publishers as imposing a heightened irreparable-harm showing when claims are subject to pending arbitration; the same four-factor test applies regardless of arbitration. The court also reinforced that competitive injuries involving lost goodwill and client relationships constitute irreparable harm precisely because they are difficult to calculate, rejecting the district court's characterization of such harms as "speculative." The practical effect is that a franchisor's violations of franchise disclosure requirements or statutory termination procedures can bar preliminary injunctive relief to enforce post-termination restrictive covenants, even where the franchisees admittedly breached their agreements.

In Khan v. Artivion, Inc., the Federal Circuit dismissed plaintiff-appellant Nazir Khan's appeal from district court orders dated June 4, 2025 and January 13, 2026, on jurisdictional grounds. The court held it lacked jurisdiction over the June 2025 order because Khan failed to appeal within the 30-day statutory deadline under 28 U.S.C. § 2107(a) and Fed. R. App. P. 4(a)(1)(A)—a jurisdictional requirement that cannot be waived under Bowles v. Russell—and lacked jurisdiction over the January 2026 order because it was not a final decision under 28 U.S.C. § 1295(a)(1) given ongoing district court proceedings on motions for attorney fees and to reverse the judgment. Each party was ordered to bear its own costs.

The Federal Circuit reversed in part the district court's grant of summary judgment of noninfringement to defendant EFC Systems but affirmed the exclusion of plaintiff Durr Systems's expert witness. The appeal involved five related patents directed to rotary atomizers for particulate paints, with disputes centered on the construction of "generally/substantially conical" overflow surfaces and "rear cover attached to the bell cup," as well as the qualifications required of an expert witness testifying on infringement.

On claim construction, the court held that the district court erred in construing "generally/substantially conical" to categorically exclude all curves or undulations, reasoning that "generally" and "substantially" are terms of approximation that allow deviation from strict geometric perfection. The court found that the specification's preferred embodiment and prosecution history—distinguishing a prior art reference with dramatic undulations—did not support excluding all surface variations, only those as pronounced as the prior art. Similarly, the court reversed the construction of "attached" as requiring separately formed pieces, holding that the plain meaning encompasses both pieces secured together and proximate pieces formed as a single unit, particularly where the invention's function does not require a two-piece assembly process. On the expert exclusion, however, the court reviewed for abuse of discretion under Fourth Circuit law and found none, concluding that the district court permissibly required the expert to possess technical experience in atomizer design features, not merely paint application knowledge.