MarkleyLabs Brief 1st Place Chicago GRMC Compet

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04-1234
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UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
________________________________________________________________
MARKLEYLABS, INC.,
Defendant-Cross Appellant,
v.
SMILEYVISION, INC.,
Plaintiff-Appellant.
________________________________________________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ALIFORNIA IN No. 2332.
________________________________________________________________
BRIEF OF DEFENDANT-CROSS APPELLANT MARKLEYLABS, INC.
JAMES LUND
PAUL SHERBURNE
LUND & SHERBURNE, P.A.
8910 Bucklemyshoe Ct.
San Andreas, AF 32123
(651) 555-4321
Attorneys for Defendant-Cross Appellant
February 7, 2005

CERTIFICATE OF INTEREST
UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
SmileyVision, Inc. v. MarkleyLabs, Inc.
No. 04-1234
Counsel for the defendant-cross appellant MarkleyLabs, Inc.,
certify the following:
1. The full name of every party or amicus represented by me is:
MarkleyLabs, Inc.
2. The name of the real party in interest (if the party named
in the caption is not the real party in interest)
represented by me is:
MarkleyLabs, Inc.
3. All parent corporations and any publicly held companies that
own 10 percent or more of the stock of the party or amicus
curiae represented by me are:
None
4. The names of all law firms and the partners or associates
that appeared for the party or amicus now represented by me
in the trial court or expected to appear in this court are:
February 7, 2005 _____________________________
James Lund
_____________________________
Paul Sherburne
ii

TABLE OF CONTENTS
CERTIFICATE OF INTEREST ......................................ii
TABLE OF CONTENTS ...........................................iii
TABLE OF AUTHORITIES .........................................vi
STATEMENT OF RELATED CASES ....................................x
JURISDICTIONAL STATEMENT ......................................1
ISSUES ........................................................1
STATEMENT OF THE CASE .........................................2
FACTS .........................................................2
SUMMARY OF THE ARGUMENT .......................................6
ARGUMENT ......................................................7
I. The district court properly construed claim 2 of
Smiley’s ‘321 patent as being limited to “proteins
which are inherently adhesive,” which are not literally
infringed by Markley’s “lock and key” proteins............7
A. The district court’s patent claim construction is
a matter of law, subject to de novo review on
appeal...............................................9
B. The district court correctly looked first to the
plain meaning of the claim language, viewed in
light of the intrinsic evidence provided by the
written specification and prosecution history, in
defining “adhesive proteins” to exclude
“lock and key” proteins..............................9
C. If this court considers dictionary definitions to
define “adhesive proteins” as “sticky proteins
derived from vegetable or animal matter,”
Markley’s non-sticky, synthetic “lock and key”
proteins remain outside the literal scope of
claim 2.............................................11
iii

II. The district court properly held claim 2 of the‘321
patent invalid under 35 U.S.C. § 102 in view of the
fully-enabled anticipatory JME reference.................12
A. The district court’s legal determination of patent
invalidity is reviewed de novo, while the
underlying fact determinations are reviewed for
“clear error.”......................................13
B. The district court properly held claim 2 of the
‘321 patent invalid in view of the advanced state
of the art, as the anticipatory JME reference
enables one skilled in the art to make and use the
claimed nano-pump without undue
experimentation.....................................13
C. Alternatively, if the district court erred in
invalidating the ‘321 patent as anticipated by the
JME reference, the patent is nevertheless invalid
under 35 U.S.C. § 112 ¶ 1............................14
D. Public policy also supports invalidation of the
‘321 patent in view of Smiley’s attempt to
improperly extend its exclusive right to make
the nano-pump beyond the patent term................16
III. The District court erred as a matter of law in holding
that Smiley’s knowledge of Drexlerian robot
construction by means of SCFD is protectable as a trade
secret...................................................17
A. The Federal Circuit reviews the district court’s
determination of state law de novo..................17
B. Knowledge of Drexlerian robot construction by
means of SCFD was readily ascertainable, and thus
cannot qualify as a trade secret....................19
C. Smiley did not take reasonable measures under the
circumstances to maintain the secrecy of its
knowledge of Drexlerian robot construction, which
thus does not qualify as a trade secret.............19
D. The district court’s holding of trade secret
protection for Drexlerian robot technology
undermines the patent system because the
information is necessary to practice Smiley’s ‘321
patent..............................................22
IV. The district court’s finding that Markley
misappropriated a trade secret from Smiley was clearly
erroneous in view of the evidence on record..............23
iv

A. The district court’s holding of misappropriation
is clearly erroneous because Markley never used
Smiley’s trade secret...............................24
B. Gross’ disclosure of a Drexlerian robot
construction method was not improper conduct on
the part of Markley.................................25
C. Markley did not know or have reason to know that
Gross owed a duty to Smiley not to disclose
information relating to Drexlerian robot
construction........................................26
D. A ruling that Markley’s and Gross’ conduct
constituted trade secret misappropriation would
hinder the development of technology, undermining
a primary policy behind trade secret laws...........26
CONCLUSIONS AND RELIEF SOUGHT ................................29
PROOF OF SERVICE..............................................30
CERTIFICATE OF COMPLIANCE.....................................31
JOINT APPENDIX................................................32
v

TABLE OF AUTHORITIES
CASES
Athletic Alternatives, Inc. v. Prince Mfg., Inc., 73 F.3d
1573, 1581 (Fed. Cir. 1996)................................9
Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S.
141, 161 (1989)...........................................23
Burten v. Milton Bradley Co., 763 F.2d 461, 467 (1st Cir.
1985).....................................................28
Carboline Co. v. Lebeck, 990 F. Supp. 762, 767-68 (E.D. Mo.
1997).....................................................20
Clearstream Wastewater Sys., Inc. v. Hydro-Action, Inc., 206
F.3d 1440, 1444 (Fed. Cir. 2000)................................8
Corning Glass Works v. Sumitomo Elec. U.S.A., Inc., 868 F.2d
1251, 1259 (Fed. Cir. 1989).....................................8
CVD, Inc. v. Raytheon Co., 769 F.2d 842, 852 (1st Cir. 1985)
cert. denied 475 U.S. 1016 (1986).........................27
Cybor Corp. v. FAS Tech., Inc., 138 F.3d 1448, 1454 (Fed.
Cir. 1998) en banc.........................................9
Defiance Button Mach. Co. v. C & C Metal Prod. Corp., 759
F.2d 1053, 1063 (2d Cir. 1985)............................24
Del Monte Fresh Produce Co. v. Dole Food Co., 148 F. Supp.
2d 1326, 1339 (S.D. Fla. 2001)............................25
E.I. DuPont De Nemours & Co., Inc. v. Christopher, 431 F.2d
1012, 1014 (5th Cir. 1970)............................17, 25
Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d
890, 901-02 (Minn. 1983)..................................20
Enzo Biochem, Inc. v. Calgene, Inc., 188 F.3d 1362, 1369-70
(Fed. Cir. 1999)..........................................13
Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)..................17
Ferroline Corp. v. Gen. Aniline & Film Corp., 207 F.2d 912,
923 (7th Cir. 1953) cert. denied 347 U.S. 953 (1954)......25
Fields v. Conover, 443 F.2d 1386, 1391, 58 CCPA 1366, 1372
(1971)....................................................10
vi

Forest Labs., v. Pillsbury Co., 452 F.2d 621, 623 (7th Cir.
1971).....................................................17
Hupp v. Siroflex of America, Inc., 122 F.3d 1456, 1460 (Fed.
Cir. 1997)................................................14
In re Barker, 559 F.2d 588, 591 (CCPA 1977)....................10
In re Donohue, 766 F.2d 531, 533 (Fed. Cir. 1985)..............12
In re Glass, 492 F.2d 1228, 1232 (CCPA 1974)...................15
In re Indep. Serv. Orgs. Antitrust Litig., 203 F.3d 1322,
1325 (Fed. Cir. 2000).....................................16
In re LeGrice, 301 F.2d 929, 939 (1962)........................12
Ingersoll-Rand Co. v. Ciavatta, 110 N.J. 609, 638 (N.J.
1988).....................................................28
Jotan, Inc. v. Barnett, 229 B.R. 218, 230-32 (Bankr. M.D.
Fla. 1998)................................................21
Kennedy Bldg. Assocs. v. Viacom, Inc., 375 F.3d 731, 738
(8th Cir. 2004)...........................................17
Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 486-87 (U.S.
1974).............................................21, 22, 25
Kimberly-Clark Corp. v. Johnson & Johnson, 745 F.2d 1437,
1454 (Fed. Cir. 1984).....................................14
Maxwell v. Baker, Inc., 86 F.3d 1098 (Fed. Cir. 1996)..........11
Microbiological Research Corp. v. Muna, 625 P.2d 690, 697
(Utah 1981)...............................................27
Renishaw PLC v. Marposs Societa' per Azioni, 158 F.3d 1243,
1249 (Fed. Cir. 1998).....................................10
Salve Regina College v. Russell, 499 U.S. 225, 231 (U.S.
1991).....................................................17
Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 452
(Fed. Cir. 1985)..........................................11
Sun Studs, Inc. v. ATA Equipment Leasing, Inc., 872 F.2d
978, 982 (Fed. Cir. 1989).................................15
U.S. v. Microsoft Corp., 253 F.3d 34, 63 (U.S. App. D.C.
2001).....................................................16
Unique Concepts, Inc. v. Brown, 939 F.2d 1558, 1562-63
(Fed.Cir. 1991)...........................................11
vii

United Rentals, Inc. v. Keizer, 355 F.3d 399, 412 (6th Cir.
2004).....................................................25
Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582
(Fed. Cir. 1996)......................................10, 11
White Consol. Indus., Inc. v. Vega Servo-Control, Inc., 713
F.2d 788, 791 (Fed. Cir. 1983)........................15, 16
CONSTITUTIONAL PROVISIONS
U.S. Const. art. I, § 8, cl. 8.................................16
STATUTES
28 U.S.C. § 271 (2004)..........................................1
28 U.S.C. § 1295(a)(1) (2004)...................................1
28 U.S.C. § 1338(a)(2004).......................................1
35 U.S.C. § 102 (2004)................1, 2, 6, 12, 13, 14, 15, 16
35 U.S.C. § 112 ¶ 1 (2004)............3, 6, 10, 13, 14, 15, 16, 22
35 U.S.C. § 282 (2004)..........................................7
Wis. Stat. § 134.90 (2004).....................................18
COURT RULES
Fed. R. Civ. P. 18(a)...........................................1
Fed. R. App. P. 25(d)..........................................30
Fed. R. App. P. 25(d)(1)(B)....................................30
Fed. R. App. P. 32(a)(5)(A)....................................31
Fed. R. App. P. 32(a)(7)(B)....................................31
Fed. R. App. P. 32(a)(7)(C)....................................31
LAW REVIEWS
Andrew Beckerman-Rodau, Trade Secrets - The New Risks to
Trade Secrets Posed by Computerization, 28 Rutgers
Computer & Tech. L.J. 227, 233 (2002).....................18
viii

Frank J. Cavico, Business Plans and Strategies as Legally
Protected Trade Secrets: Florida and National
Perspectives, 9 U. Miami Bus. L. Rev. 1, 60
(2001)....................................................21
Kenneth J. Vanko, “You're Fired! And Don't Forget Your Non-
Compete ...”: The Enforceability of Restrictive
Covenants in Involuntary Discharge Cases, 1 DePaul Bus.
& Comm. L.J. 1, 44-47.....................................21
TREATISES AND OTHER MATERIALS
2 R. Callman, Unfair Competition, Trademarks & Monopolies,
§ 54.2(a) at 417 (3rd ed. 1967)...........................27
Grant & Hackh’s Chemical Dictionary 15 (5th ed. 1987)..........11
Restatements (First) of Torts § 757 (1939).................18, 19
Restatements (Third) of Unfair Competition § 42, cmt. d.
(1985)....................................................27
Uniform Trade Secrets Act § 1(4) (1985).....7, 18, 19, 20, 22, 24
ix

STATEMENT OF RELATED CASES
Pursuant to Federal Circuit Rule 47.4, attorneys for defendant-
cross appellant MarkleyLabs, Inc. certify the following:
1. That no other appeal in or from the same civil action or
proceeding in the lower court or body was previously before
this or any other appellate court.
2. The following cases are known by counsel to be pending in
this or any other court that will directly affect or be
directly affected by this court’s decision in the pending
appeal:
a. No. 03-1269, 03-1286 Phillips v. AWH Corp.
February 7, 2005 _____________________________
James Lund
(651) 555-4321
_____________________________
Paul Sherburne
(651) 555-4321
x

JURISDICTIONAL STATEMENT
Plaintiff SmileyVision, Inc. (“Smiley”), a Delaware
corporation with principal place of business in View Mountain,
Alifornia (A1 ¶ 1), filed suit in the United States District
Court for the Northern District of Alifornia (A1) alleging
literal infringement of U.S. Patent No. 7,654,321 (“‘321 patent”)
under 28 U.S.C. § 271 (2004), and trade secret misappropriation
by Defendant MarkleyLabs, Inc. (“Markley”) (A1). Markley, an
Alifornia corporation, denied infringement, asserted invalidity
of claim 2 under 35 U.S.C. § 102, and denied misappropriation.
Subject matter jurisdiction was proper in U.S. district
court, which has exclusive jurisdiction over patent suits. 28
U.S.C. § 1338(a) (2004). The trade secret misappropriation claim
was proper, as it arose out of the patent infringement claim.
Fed. R. Civ. P. 18(a). Smiley timely filed an appeal from final
judgment, and Markley cross appealed (A1). The Court of Appeals
for the Federal Circuit has exclusive jurisdiction over patent
appeals. 28 U.S.C. § 1295(a)(1) (2004).
ISSUES
1. Does Markley’s nano-pump literally infringe claim 2 of the
‘321 patent?
The district court correctly held that Markley’s nano-pump
did not literally infringe claim 2 of Smiley’s ‘321 patent.
(A6 ¶ 5.)
2. Is claim 2 of the ‘321 patent valid?
The district court correctly held that claim 2 of the ‘321
patent was invalid under 35 U.S.C. § 102. (A6 ¶ 7.)
1

3. Did Smiley’s knowledge of Drexlerian robot construction
constitute a trade secret?
The district court erred in its application of law and thus
held incorrectly that Smiley’s Drexlerian robot construction
method was a trade secret. (A7 ¶ 14.)
4. Did Markley misappropriate Smiley’s trade secret?
The district court committed clear error in finding that
Markley’s conduct constituted trade secret misappropriation.
(A7 ¶ 14.)
STATEMENT OF THE CASE
This case was tried in a bench trial after a Markman hearing
to determine the scope of claim 2 (A1). (See SmileyVision, Inc.
v. MarkleyLabs, Inc., No. 2332 (N.D. Alifornia).) The district
court held that Markley did not literally infringe claim 2 of
Smiley’s ‘321 patent. The court interpreted “adhesive protein”
to mean “proteins that are inherently adhesive,” which excludes
synthetic proteins used to attach parts through a “lock and key”
approach (A6 ¶ 5). The court also held claim 2 of the ‘321
patent invalid as anticipated under 35 U.S.C. § 102 by an article
published in January, 1999 in The Journal of Molecular
Engineering (“JME”). (A2 ¶ 5.)
The court also held that Smiley’s knowledge of Drexlerian
robot fabrication using SCFD was protectable as a trade secret
(A7 ¶ 14). The court further held that Markley misappropriated
Smiley’s trade secret because Markley would not have been able to
make a Drexlerian robot without wrongfully obtaining trade secret
information from Smiley’s former employee, Gross. (Id.)
FACTS
In 1998 while working for Markley, Dr. Markley filed a
patent application for a nano-pump. The nano-scale pump
2

invention was a molecular machine made for pumping blood in the
arteries of a patient (A2 ¶ 3). The pump design had been
validated on a CAD system capable of validating the operating
characteristics of such small systems. (Id.) While the CAD
system takes into account various atomic and molecular forces and
has proven that such a machine would be stable and work as
intended if it were made, the technology to make the machine did
not actually exist in 1998. (Id.) Making such a machine would
require a Drexlerian robotic atomic assembler, as proposed by Dr.
Eric Drexler. (Id.) But the theoretical possibility of making
such an assembler was cast into doubt by such theorists as Dr.
Smiley, a Nobel laureate for his work in nanotechnology. (Id.)
Dr. Markley filed a patent application for the nano-pump, but the
patent examiner finally rejected the application under 35 U.S.C.
§ 112, as lacking enablement because the nano-pump had not been
reduced to practice (A2 ¶ 4). The examiner stated that because
the necessary Drexlerian robot could not be made at the time of
filing the patent application, the specification could not tell
one of ordinary skill how to make the claimed nano-pump. (Id.)
Dr. Markley appealed up through the Court of Appeals for the
Federal Circuit; all adjudications affirming the examiner’s
findings. (Id.)
In January 1999, Dr. Markley published the JME paper which
included a description of a nano-scale pump that was
substantially identical to the detailed description used in
Markley’s rejected patent application. (Id.) This paper stated
that the nano-pump could be made using a Drexlerian robot having
3

a computer based on carbon nanotubes controlling an articulated
robotic arm. (Id.)
In 2001, Smiley reduced a Drexlerian robot to practice by
combining two technologies that were available in January of 1999
(A2 ¶ 6). Specifically, the Drexlerian robot included a computer
based on carbon nanotubes that controlled an articulated robotic
arm, (id.), as disclosed in the JME paper (A2 ¶ 5). The robotic
arm was formed using super critical fluid deposition (“SCFD”),
(A2 ¶ 6). Jim Johnson, a Ph.D. in chemical engineering at
Smiley, testified that he and two technicians spent six months in
the laboratory to reduce the Drexlerian robot to practice, (A2 ¶
7). When this six-month period started, Johnson had about two
years of nanotechnology experience and fifteen years of
deposition experience in the semiconductor field. (Id.) Randy
Nader, a Ph.D. physicist and expert witness for Markley,
testified that it would have been obvious to combine a carbon
nanotube computer with a SCFD robotic arm (A2 ¶ 8). He further
testified that a team of two competent scientists should have
been able to reduce the Drexlerian robot to practice within a
month. (Id.) He noted that Jim Johnson did not have significant
formal training in nanotechnology, let alone carbon nanotube
computers or SCFD robotic arms. (Id.) Rich Cheney, a Ph.D.
physical chemist and expert witness for Smiley, conceded that it
would have been obvious to combine a carbon nanotube computer
with a deposited robotic arm, (A2 ¶ 9). Both parties to this
suit have stipulated that the level of ordinary skill in the art
at the time the JME paper was published was a Ph. D. in
4

nanotechnology or a related field, and four years of work
experience, (A5 ¶ 21(1)).
After making the Drexlerian robot, Smiley also made a nano-
pump, filing a patent application in January 2001, which issued
as the ’321 patent in 2002, (A2 ¶ 10). Claim 2 reads:
2. A nano-pumping system, comprising:
a. a nano-pumping membrane, the nano-pumping membrane
including:
i. a porous substrate comprising at least one
noble metal; and
ii. a plurality of nano-scale drive assemblies
fused to the porous substrate by an adhesive
protein, wherein each of the nano-scale drive
assemblies comprises at least one driving
element for moving a fluid through the porous
substrate, the driving element comprising a
metal oxide and being coupled to a bio-motor
that rotates the driving element; and
b. a power supply electrically coupled to the nano-
pumping membrane, wherein the power supply powers
the bio-motor in each of the nano-scale drive
assemblies.
(A4 ¶ 16.) The ‘321 patent’s preferred embodiment utilizes
bacteria which have been genetically modified to excrete an
“adhesive coat protein” to bind the biomotor to the porous
substrate. (‘321 pat. ¶ 4.) Other naturally adhesive proteins
produced by other organisms were also listed. (‘321 pat. ¶ 5.)
In February of 2003, John Gross started working for Markley
as director of sales. (A1 ¶ 13.) Smiley had fired Gross, an
employee who had knowledge of Smiley’s Drexlerian robot
construction methods. Markley had already been working on
several means for producing Drexlerian robots, including SCFD.
(Id.) During a sales meeting, Gary Edwards, director of
engineering for Markley, heard Gross make reference to a method
5

for making a Drexlerian robot. Markley later successfully made
and sold Drexlerian robots. (A1 ¶ 14.)
SUMMARY OF THE ARGUMENT
The district court correctly held that claim 2 of the ‘321
patent is not literally infringed by Markley’s nano-scale pump,
which uses synthetic “lock and key” proteins, not an “adhesive
protein” as required by the amended claim. (A6 ¶ 5.) The
district court properly looked first to the intrinsic evidence
and plain meaning of the claim language to construe “adhesive
protein” as meaning “proteins that are inherently adhesive.” The
only proteins recited in the specification are naturally
occurring, inherently sticky proteins. Markley’s synthetic “lock
and key” proteins are not inherently sticky, and are thus outside
the scope of the written description required of the patent
disclosure and the literal scope of claim 2.
The district court also properly held that claim 2 of the
‘321 patent is invalid under 35 U.S.C. §102, as the JME reference
is fully-enabled prior art that anticipates the claimed nano-
pump. The court properly looked to the high level of skill in
the art to determine that one skilled in the art could make and
use Smiley’s claimed nano-pump from the JME disclosure without
undue experimentation. In the alternative, if the district court
erred in determining that the JME reference is fully-enabled
anticipatory prior art, that error is harmless because the ‘321
patent is nevertheless invalid under 35 U.S.C. § 112 ¶ 1, as the
‘321 patent specification itself lacks an enabling disclosure
teaching one skilled in the art how to make and use the
6

Drexlerian robot required to assemble the nano-pump. Public
policy also supports invalidation of the ‘321 patent in view of
Smiley’s attempt to improperly extend its exclusive right to make
the nano-pump beyond the patent term by reserving as trade secret
its method of fabricating a Drexlerian robot, which is essential
to practice the patent.
The district court erred in holding that Smiley’s knowledge
of Drexlerian robot construction constituted a trade secret. (A7
¶ 14.) Although a matter of first impression in Alifornia, a
majority of states have adopted the Uniform Trade Secret Act.
Information fails to qualify as a trade secret under the Uniform
Trade Secret Act if, as in this case, insufficient effort under
the circumstances was made to keep the information a secret.
Furthermore, the information Smiley asserts as a trade secret is
necessary to practice Smiley’s ‘321 patent. Thus, trade secret
protection would undermine patent policy and improperly extend
the life of Smiley’s patent beyond 20 years. Also, the district
court’s conclusion that Markley misappropriated Smiley’s alleged
trade secret was clearly erroneous as the record contains no
evidence that Markley employed improper means to solicit Gross’
disclosure or that Markley even had reason to know Gross owed a
duty to Smiley not to disclose its trade secrets. (A7 ¶ 14.)
ARGUMENT
I. The district court properly construed claim 2 of Smiley’s
‘321 patent as being limited to “proteins which are
inherently adhesive,” which are not literally infringed by
Markley’s “lock and key” proteins.
Claim 2 of the ‘321 patent is not literally infringed by
Markley’s nano-pump. Patents are presumptively valid, 35 U.S.C.
7

§ 282; consequently, the district court properly determined the
infringement issue first, followed by the patent invalidity
issue. Patent infringement analysis involves two steps: claim
construction, in which the scope and meaning of the patent claims
are determined; and factual investigation of infringement, in
which the properly constructed claims are compared to the
allegedly infringing product. Clearstream Wastewater Sys., Inc.
v. Hydro-Action, Inc., 206 F.3d 1440, 1444 (Fed. Cir. 2000). To
find infringement, every limitation set forth in the patent claim
must be found in the accused product. Corning Glass Works v.
Sumitomo Elec. U.S.A., Inc., 868 F.2d 1251, 1259 (Fed. Cir.
1989). Infringement under the doctrine of equivalents was not
alleged by Smiley at trial. The district court correctly held
that claim 2 of the ‘321 patent is not literally infringed by
Markley’s nano-pump, (A6 ¶ 5), since it does not encompass every
limitation set forth in the claimed invention.
The district court correctly held that Markley’s nano-pump
device does not literally infringe Smiley’s ‘321 patent by
correctly construing the claimed “adhesive proteins” to exclude
Markley’s synthetic “lock and key” proteins. (A6 ¶ 4.) The
plain and ordinary meaning of the term, as well as the meaning
inferred form the intrinsic evidence provided by the
specification and prosecution history, all clearly show that
“adhesive protein” encompasses only naturally sticky proteins
that are “inherently adhesive,” and not synthetic “lock and key”
proteins. “[T]o the extent that the claim is ambiguous, a narrow
reading which excludes the ambiguously covered subject matter
8

must be adopted.” Athletic Alternatives, Inc. v. Prince Mfg.,
Inc., 73 F.3d 1573, 1581 (Fed. Cir. 1996). Even if technical
dictionaries are consulted, the definition of “adhesive protein”
is “sticky proteins derived from vegetable or animal matter,”
which is consistent with the district court’s construction of
claim 2. Thus, Markley’s nano-pump does not literally infringe
Smiley’s ‘321 patent.
A. The district court’s patent claim construction is a matter
of law, subject to de novo review on appeal.
The trial court’s construction of the scope and meaning of
claim 2 is a purely legal issue and does not involve underlying
fact questions. The parties have stipulated that if the claim
construction of the district court is affirmed, all elements are
not present in the accused device and the accused device is not
infringing. The Court of Appeals reviews claim construction de
novo. See Cybor Corp. v. FAS Tech., Inc., 138 F.3d 1448, 1454
(Fed. Cir. 1998) en banc.
B. The district court correctly looked first to the plain
meaning of the claim language, viewed in light of the
intrinsic evidence provided by the written specification and
prosecution history, in defining “adhesive proteins” to
exclude “lock and key” proteins.
By construing “adhesive protein” to mean “inherently
adhesive protein,” the district court correctly gave the claim
scope that was within Smiley’s possession as of their filing
date. Consequently, Markley’s synthetic polypeptides lie outside
the scope of claim 2 of the ‘321 patent, and Markley’s nano-pump
does not literally infringe the ‘321 patent. In construing
claims, the court first looks to the plain meaning of claim
terms, then to the specification to determine if the inventor has
9

implied a definition of the claim term contrary to the term’s
ordinary meaning. Vitronics Corp. v. Conceptronic, Inc., 90 F.3d
1576, 1582 (Fed. Cir. 1996). If the specification implies a
definition of the claim term, i.e. if the inventor acted as his
own lexicographer, the implied definition takes precedence over
other definitions of the claim terms. Renishaw PLC v. Marposs
Societa' per Azioni, 158 F.3d 1243, 1249 (Fed. Cir. 1998).
The district court properly looked to the intrinsic evidence
provided by the claims, the specification, and the prosecution
history of the ‘321 patent. Smiley’s ‘321 patent specification
refers to various embodiments, all describing adhesive proteins
derived from natural materials such as excretions from cells,
mussels, and spiders. (‘321 pat. ¶¶ 4-5.) Smiley, by merely
stating that “[o]ther proteins can be used with this invention,
however,” (‘321 pat. ¶ 5), does not adequately meet the written
description requirement of 35 U.S.C. § 112 ¶ 1 to show possession
of any generic protein used to bond the E. coli cell to the
porous substrate.
“A specification may contain a disclosure that is sufficient
to enable one skilled in the art to make and use the invention
and yet fail to comply with the description of the invention
requirement.” In re Barker, 559 F.2d 588, 591 (CCPA 1977)
(citing Fields v. Conover, 443 F.2d 1386, 1391 (CCPA 1971)).
Furthermore, the prosecution history clearly reveals that Smiley
explicitly disclaimed all but naturally sticky “adhesive
proteins” in order to obtain their patent. (A4 ¶ 16-17.) “[T]he
prosecution history (or file wrapper) limits the interpretation
10

of claims so as to exclude any interpretation that may have been
disclaimed or disavowed during prosecution in order to obtain
allowance.” Standard Oil Co. v. American Cyanamid Co., 774 F.2d
448, 452 (Fed. Cir. 1985). Moreover, "subject matter disclosed
but not claimed in a patent application is dedicated to the
public.” Maxwell v. Baker, Inc., 86 F.3d 1098 (Fed. Cir. 1996)
(quoting Unique Concepts, Inc. v. Brown, 939 F.2d 1558, 1562-63
(Fed. Cir. 1991)). Therefore, the district court correctly
construed the scope of claim 2 based upon Smiley’s written
description of the invention less that which Smiley explicitly
disclaimed in order to secure the patent grant. Markley’s lock
and key device thus lies outside the scope of claim 2 and thus
does not literally infringe the ‘321 patent.
C. If this court considers dictionary definitions to define
“adhesive proteins” as “sticky proteins derived from
vegetable or animal matter,” Markley’s non-sticky, synthetic
“lock and key” proteins remain outside the literal scope of
claim 2.
“Adhesive proteins” do not encompass Markley’s non-sticky,
synthetic “lock and key” proteins even if dictionary definitions
are consulted in construing the claim 2. “The court may always
freely consult and rely on dictionary definitions when construing
claims, to the extent the dictionary definition does not
contradict the patent documents.” Vitronics, 90 F.3d at 1582.
“Adhesive” means “[a]ny substance that sticks or binds materials
together.” Grant & Hackh’s Chemical Dictionary 15 (5th ed.
1987). “Protein” means “[n]itrogenous organic compounds,
containing more than about 100 amino acid residues, mol. wt.
8,000 - 200,0000, in vegetable and animal matter.” Id. at 477.
11

Therefore, “adhesive protein” means “sticky proteins derived from
vegetable or animal matter.”
Such a definition is not inconsistent with the claims, the
specification, and the prosecution history. Moreover, to
construe “adhesive proteins” so broadly as to encompass “lock and
key” proteins would be inconsistent with both the specification
and the prosecution history. Consequently, Markley’s non-sticky,
synthetic polypeptide proteins lie outside the scope of “adhesive
proteins,” and Markley’s nano-pump device therefore does not
infringe Smiley’s ‘321 patent.
II. The district court properly held claim 2 of the‘321 patent
invalid under 35 U.S.C. § 102 in view of the fully-enabled
anticipatory JME reference.
The JME paper is an enabled anticipatory reference that
invalidates Smiley’s ‘321 patent. "It is not...necessary that an
invention disclosed in a publication shall have actually been
made in order to satisfy the enablement requirement." In re
Donohue, 766 F.2d 531, 533 (Fed. Cir. 1985). The proper standard
for the enablement of an anticipatory reference is “whether one
skilled in the art to which the invention pertains could take the
description of the invention in the printed publication and
combine it with his own knowledge of the particular art and from
this combination be put in possession of the invention on which a
patent is sought.” In re LeGrice, 301 F.2d 929, 939 (1962). One
skilled in the art, stipulated as a Ph.D. in nanotechnology or a
related field and four years of work experience, (A5 ¶ 21 (2)),
would have possessed such knowledge prior to the Smiley’s date of
12

invention. Consequently, the JME reference anticipates Smiley’s
‘321 patent, which is therefore invalid under 35 U.S.C. § 102.
A. The district court’s legal determination of patent
invalidity is reviewed de novo, while the underlying fact
determinations are reviewed for “clear error.”
The trial court correctly found the JME reference to be
enabled anticipatory prior art, since one skilled in the art
could make a nano-pump based on the JME disclosure without undue
experimentation at the time Smiley made their invention.
"Whether undue experimentation would have been required to make
and use an invention, and thus whether a disclosure is enabling
under 35 U.S.C. § 112, ¶ 1, is a question of law that we review
de novo, based on underlying factual inquiries that we review for
clear error. Enzo Biochem, Inc. v. Calgene, Inc., 188 F.3d
1362, 1369-70 (Fed. Cir. 1999).
B. The district court properly held claim 2 of the ‘321 patent
invalid in view of the advanced state of the art, as the
anticipatory JME reference enables one skilled in the art to
make and use the claimed nano-pump without undue
experimentation.
The JME paper is an enabling prior art reference since it
teaches one skilled in the art how to make and use the nano-pump
of Smiley’s ‘321 patent at the time of Smiley’s invention. The
evolution of technology in the field of nanotechnology occurred
at a rapid pace between publication of the JME paper and Smiley’s
filing date.
By combining the JME reference with a computer based on
carbon nanotubes and super critical fluid deposition (SCFD), two
technologies that became available in January 1999, (A2 ¶ 6), one
skilled in the art “should have been able to reduce the
13

Drexlerian robot to practice within a month,” according to
Markley’s expert, Ph.D. physicist Randy Nader, (A2 ¶ 8). A
reduction to practice within one month does not constitute undue
experimentation. Nader also testified that Smiley inventor Jim
Johnson, who took six months to reduce a working robot to
practice, (A2 ¶ 7), had little training in nanotechnology, let
alone carbon nanotube computers or SCFD robotic arms, and thus
was not skilled in the art. (A2-3 ¶ 8.) “It should be clear
that that hypothetical person is not the inventor, but an
imaginary being possessing ‘ordinary skill in the art’ created by
Congress to provide a standard of patentability.” Kimberly-
Clark Corp. v. Johnson & Johnson, 745 F.2d 1437, 1454 (Fed. Cir.
1984).
Further, Smiley expert witness, Ph.D. physical chemist Rich
Cheney, conceded that it would have been obvious to combine a
carbon nanotube computer with a deposited robotic arm. (A3 ¶ 9.)
Therefore since the stipulated level of skill in the art is at a
high level and nanotechnology was evolving at such a rapid pace,
the JME paper was a fully enabled 102 reference at the time of
Smiley’s nano-pump invention and the ‘321 patent is consequently
invalid under 35 U.S.C. §102.
C. Alternatively, if the district court erred in invalidating
the ‘321 patent as anticipated by the JME reference, the
patent is nevertheless invalid under 35 U.S.C. § 112 ¶ 1.
“The judgment of invalidity must be affirmed if there was
substantial evidence, on the record as a whole, to support the
findings of fact needed to sustain the jury verdict.” Hupp v.
Siroflex of America, Inc., 122 F.3d 1456, 1460 (Fed. Cir. 1997)
14

(citing Sun Studs, Inc. v. ATA Equipment Leasing, Inc., 872 F.2d
978, 982 (Fed. Cir. 1989)).
Smiley’s ‘321 patent was not enabled on the patent filing
date since the disclosure did not teach one skilled in the art
how to make and use the Drexlerian robot required to fabricate
the nano-pump. An enabling disclosure must exist as of the
application filing date; it is the basic quid pro quo for the
exclusive patent right. In re Glass, 492 F.2d 1228, 1232 (CCPA
1974). No evidence of record indicates that Drexlerian robots
were commercially available to the public at the time of the '321
application in January, 2001. Because Smiley elected to withhold
as trade secret it's knowledge of how to combine a carbon nano-
tube computer with SCFD to assemble a Drexlerian robot, the '321
patent did not disclose how to make a Drexlerian robot. Thus,
the '321 specification lacked an enabling disclosure teaching one
skilled in the art how to make a nano-pump using a Drexlerian
robot.
Moreover, even if Smiley can establish that they produced
Drexlerian robots commercially at the time of the patent
application, the enablement requirement is still not satisfied.
Enablement is not sufficient to satisfy 35 U.S.C. § 112 ¶ 1 where
a component required for enablement is kept as an underlying
trade secret, even if that component is commercially available
for purchase from the patentee. See White Consol. Indus., Inc.
v. Vega Servo-Control, Inc., 713 F.2d 788, 791 (Fed. Circ. 1983)
(the court reasoned that White could potentially extend the
monopoly right beyond the term of the patent, “a result
15

inconsistent with the patent system.” Id.) Similarly, by
exclusively controlling the Drexlerian robot, Smiley also may
potentially extend its exclusive right beyond the life of the
patent by controlling access to the Drexlerian robot, a result
inconsistent with the objectives of the patent system. In the
absence of disclosure of Drexlerian robot technology, Smiley’s
‘321 patent specification does not enable one to make a nano-pump
as of the filing date, and the ‘321 patent is invalid for lack of
enablement. 35 U.S.C. 112 ¶ 1. The district court thus did not
err in holding the '321 patent invalid, as the facts of record
establish invalidity. 35 U.S.C. 112 ¶ 1.
D. Public policy also supports invalidation of the ‘321 patent
in view of Smiley’s attempt to improperly extend its
exclusive right to make the nano-pump beyond the patent
term.
By reserving exclusive control over the only means of
manufacturing nano-pumps, Smiley maintained an unfair monopoly in
the field which far exceeds that intended in the Constitutional
patent grant in both exclusivity and time. Our founding fathers
did not intent the exclusive patent right to be extended
indefinitely; they gave Congress the power “to promote the
progress of science and the useful arts, by securing for limited
times to authors and inventors the exclusive right to their
respective writings and discoveries.” U.S. Const. art. I, § 8,
cl. 8. "Intellectual property rights do not confer a privilege
to violate the antitrust laws." U.S. v. Microsoft Corp., 253
F.3d 34, 63 (D.C. Cir. 2001) (citing In re Indep. Serv. Orgs.
Antitrust Litig., 203 F.3d 1322, 1325 (Fed. Cir. 2000)). By
intentionally maintaining exclusive control over the only means
16

of producing nano-pumps through trade secret protection of
Drexlerian robot technology, Smiley has not met the quid pro quo
with the public in exchange for its exclusive patent right.
Consequently, Smiley’s attempt to improperly extend its exclusive
right supports invalidation of the ‘321 patent as a matter of
sound public policy.
III. The district court erred as a matter of law in holding that
Smiley’s knowledge of Drexlerian robot construction by means
of SCFD is protectable as a trade secret.
Smiley’s knowledge of Drexlerian robot construction by means
of SCFD fails to satisfy the requirements for protection under
Alifornia trade secret law. The district court must apply
Alifornia law. Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938).
In the absence of a precendential opinion from the Alifornia
Supreme Court, the district court applies analogous state law to
determine how the Alifornia Supreme Court would determine a state
law claim of trade misappropriation. Kennedy Bldg. Assocs. v.
Viacom, Inc., 375 F.3d 731, 738 (8th Cir. 2004).
A. The Federal Circuit reviews the district court’s
determination of state law de novo.
A court of appeals reviews de novo a district court's
determination of state law. Salve Regina College v. Russell, 499
U.S. 225, 231 (1991). When addressing trade secret
misappropriation the district court only cited Forest Labs., v.
Pillsbury Co. and E.I. DuPont De Nemours & Co., Inc. v.
Christopher, both of which rely on the Restatements (First) of
Torts § 757 (1939). Forest, 452 F.2d 621, 623 (7th Cir. 1971)
(applying Wisconsin law); Christopher, 431 F.2d 1012, 1014 (5th
Cir. 1970) (applying Texas law). However, Wisconsin has since
17

dropped the Restatements (First) of Tort § 757 (1939) in favor of
the Uniform Trade Secret Act (UTSA). See Wis. Stat. § 134.90
(2004). Thus, it is unclear which jurisdiction or set of laws
the district court was applying.
Forty-four jurisdictions have enacted, at least in part, the
UTSA. Andrew Beckerman-Rodau, Trade Secrets - The New Risks to
Trade Secrets Posed by Computerization, 28 Rutgers Computer &
Tech. L.J. 227, 233 (2002). Thus, the district court should have
applied the UTSA in this case.
The UTSA defines a trade secret as:
“information, including, but not limited to a formula,
pattern, compilation, program, device, method,
technique or process, that:
(A) Derives independent economic value, actual or
potential, from not being generally known to and
not being readily ascertainable by proper means by
other persons who can obtain economic value from
its disclosure or use; and
(B)Is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy”
Uniform Trade Secret Act § 1(4) (1985).
Smiley’s knowledge of Drexlerian robot construction fails to
qualify as a trade secret under the UTSA, as this knowledge is
readily ascertainable and Smiley failed to take reasonable
measures to maintain its secrecy. Thus, the conclusion of the
district court that Smiley possessed a trade secret is incorrect,
as the district court failed to apply the proper law (UTSA),
under which Smiley’s knowledge of Drexlerian robot construction
fails to qualify as a trade secret.
18

B. Knowledge of Drexlerian robot construction by means of SCFD
was readily ascertainable, and thus cannot qualify as a
trade secret.
The district court abused its discretion in applying the
Restatements (First) of Torts (1939) instead of the UTSA. It is
clear that Smiley’s knowledge of Drexlerian robot construction
does not qualify as a trade secret under the UTSA. A trade
secret must “[d]erive independent economic value, actual or
potential, from . . . not being readily ascertainable by proper
means by other persons who can obtain economic value from its
disclosure or use.” Uniform Trade Secrets Act § 1(4) (1985).
Randy Nader, a Ph.D. physicist, testified that two competent
scientists should be able to reduce a Drexlerian robot to
practice within a month. (A1 ¶ 8). He also noted that Jim
Johnson, Smiley’s developer of Drexlerian robots, did not have
significant formal training in nanotechnology, which could
account for why it took him six months to develop a Drexlerian
robot. (A1 ¶ 7-8). As can be understood, knowledge of Drexlerian
robot construction was readily ascertainable and should not be
subject to trade secret protection. Thus, the district court’s
finding of a protectable trade secret is incorrect, as Smiley’s
knowledge of Drexlerian robot construction fails to satisfy the
requirements of the UTSA.
C. Smiley did not take reasonable measures under the
circumstances to maintain the secrecy of its knowledge of
Drexlerian robot construction, which consequently does not
qualify as a trade secret.
The district failed to apply the UTSA and thus failed to
hold that the measures taken by Smiley were insufficient to
sustain protection of a trade secret. A trade secret must be
19

“the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.” Uniform Trade Secret Act
§ 1(4) (1985). Smiley fails this standard because the only
precaution Smiley took to protect its knowledge of Drexlerian
robot construction was to have Gross sign a N.D.A. and later
remind him of the agreement, which under the circumstances is not
sufficient to qualify Smiley for trade secret protection.
Having employees sign a N.D.A. alone is not sufficient to
justify trade secret status. Carboline Co. v. Lebeck, 990 F.
Supp. 762, 767-68 (E.D. Mo. 1997) (finding that having employees
sign non-disclosure agreements, in addition to other measures,
was not sufficient to justify trade secret status); Electro-Craft
Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 901-02 (Minn.
1983) (finding that having employees sign confidentiality
agreements was not sufficient to justify trade secret status).
The only additional step Smiley took in protecting its
information was to remind Gross of the agreement. Additional
measures were reasonable and required under the circumstances to
justify trade secret protection, but Smiley relied almost
entirely on the N.D.A. to protect its information.
It would have been reasonable under the circumstances for
Smiley to specifically tell Gross which information it considered
to be confidential. See id. at 902 (suggesting the plaintiff
should warn outgoing employees which information it considered
confidential in order to qualify for trade secret status). It is
far easier for an employer to identify to an employee which
information it considers to be trade secrets than it is for the
20

employee to guess the same, especially considering the desire of
an ex-employee to maximize the usefulness of such knowledge in
his or her career. Such a measure would have cost Smiley
essentially nothing yet would have clearly established in Gross’
mind what information he had an obligation not to disclose.
It also would have been reasonable under the circumstances
for Smiley to offer Gross a severance package that would have
provided him with incentives contingent on keeping certain
information confidential or not competing with Smiley. See
Jotan, Inc. v. Barnett, 229 B.R. 218, 230-32 (Bankr. M.D. Fla.
1998) (featuring a contract with severance benefits contingent on
compliance with non-compete and disclosure terms); Kenneth J.
Vanko, “You're Fired! And Don't Forget Your Non-Compete ...”: The
Enforceability of Restrictive Covenants in Involuntary Discharge
Cases, 1 DePaul Bus. & Comm. L.J. 1, 44-47. Such measures have
been envisioned by the Supreme Court as a way to assure the
loyalty of the faithless. Kewanee Oil Co. v. Bicron Corp., 416
U.S. 470, 486-87 (1974). Smiley’s failure to take such a
reasonable and inexpensive precaution further demonstrates
Smiley’s lack of sufficient effort invested to protect the
information it now asserts as a trade secret.
Another reasonable precaution Smiley failed to take was to
alert Markley that one of its new employees had information that
Smiley considered confidential. See Frank J. Cavico, Business
Plans and Strategies as Legally Protected Trade Secrets: Florida
and National Perspectives, 9 U. Miami Bus. L. Rev. 1, 60 (2001)
(identifying such a step as a “prudent practical measure”). Such
21

a precaution would have cost Smiley very little and would have
placed Markley on notice of Gross’ non-disclosure obligations
under the N.D.A. Yet Smiley left it to the employee it just
fired to police himself instead of equipping Markley with the
kind of warning that could have prevented or mitigated Gross’
disclosure. The failure to take such a precaution further
demonstrates Smiley’s insufficient measures taken to protect the
information it now asserts as a trade secret.
In conclusion, the decision of the district court must be
vacated as the court erred as a matter of law. When the
appropriate trade secret law (UTSA) is applied it is clear that
Smiley’s knowledge of Drexlerian robot construction does not
qualify as a trade secret because Smiley failed to take adequate
measures to protect the secrecy of the information and the
information was readily ascertainable.
D. The district court’s holding of trade secret protection for
a Drexlerian robot fabrication method undermines the patent
system because the information is necessary to practice
Smiley’s ‘321 patent.
The district court erred as a matter of law in extending
Smiley trade secret rights for knowledge that was required to
enable Smiley’s ‘321 patent. Patents require “a written
description . . . of the manner and process of making and using
it, in such full, clear, concise, and exact terms as to enable
any person skilled in the art to which it pertains.” 35 U.S.C. §
112 ¶ 1 (2004). This disclosure is part of the quid pro quo
exchange with the public that drives the patent system, trading
enabling knowledge with the public for a temporary monopoly.
Kewanee, 416 U.S. at 484. But recognition of enabling knowledge
22

as a trade secret for the patentee would undermine this quid pro
quo exchange by granting the patentee greater control over this
knowledge with respect to the public. In this case, Smiley has a
patent on nano-pumps, which requires Drexlerian robot’s to
fabricate. Recognition of trade secret rights for Smiley over
Drexlerian robot construction would frustrate the public’s
ability to practice the technology disclosed in the patent upon
expiration of the patent.
Trade secret and patent law may be used in complementary
ways to protect investments in innovation. Bonito Boats, Inc. v.
Thunder Craft Boats, Inc., 489 U.S. 141, 161 (1989) (stating that
state trade secret law complements patent law by protecting not
fully developed technologies before patenting). But recognition
of Smiley’s knowledge of Drexlerian robot construction as a trade
secret has a compounding effect rather than a complementary one.
The public would not be able to rely the on the ‘321 disclosure
to practice the patent even after the ‘321 patent has expired if
the court recognizes Smiley’s claimed trade secret rights. Thus,
the district court erred as a matter of law by awarding trade
secret protection to Smiley for what is necessary to practice its
patent, thereby undermining the policies behind patent law.
IV. The district court’s finding that Markley misappropriated a
trade secret from Smiley was clearly erroneous in view of
the evidence on record.
The district court’s holding that Markley misappropriated a
trade secret was clearly erroneous because no evidence was
presented at trial which would support that conclusion.
23

Furthermore, this conclusion must be overturned because its
effects work to undermine the policy behind trade secret laws.
Trade secret misappropriation is a question of fact and
determinations by the trier of fact will be overturned if clearly
erroneous. Defiance Button Mach. Co. v. C & C Metal Prod. Corp.,
759 F.2d 1053, 1063 (2d Cir. 1985).
Trade secret misappropriation is constituted by:
“[d]isclosure or use of a trade secret of another
without express or implied consent by a person
who:
(1) Used improper means to acquire knowledge
of the trade secret; or
(2) At the time of disclosure or use, knew or
had reason to know that his knowledge of the
trade secret was:
(iii) Derived from or through a person
who owed a duty to the person seeking
relief to maintain its secrecy or limit
its use”
Uniform Trade Secret Act § 1(2) (1985).
The district court’s holding was clearly erroneous
because Markley never knew or had reason to know of Gross’
obligation of non-disclosure nor did Markley employ improper
means.
A. The district court’s holding of misappropriation is clearly
erroneous because Markley never used Smiley’s trade secret.
The District court’s finding that Markley used Smiley’s
trade secret is not supported by substantial evidence and is
clearly erroneous. The record does not contain any evidence that
Markley manufactures its Drexlerian robots by SCFD. Moreover,
the record does not contain any evidence that Markley relied on
Gross’ disclosure. Rather, Markley was already developing the
very method that Gross disclosed before Gross’ disclosure. (A3 ¶
13.) Independent development of another’s trade secret is not
24

misappropriation. Kewanee, 416 U.S. at 476. Thus, the district
court’s finding that Markley misappropriated Smiley’s trade
secret was clearly erroneous as use of Smiley’s trade secret is
essential for Smiley’s misappropriation claim.
B. Gross’ disclosure of a Drexlerian robot construction method
was not improper conduct on the part of Markley.
The district court’s finding of trade secret
misappropriation was clearly erroneous as Markley never solicited
confidential information from Gross. See United Rentals, Inc. v.
Keizer, 355 F.3d 399, 412 (6th Cir. 2004) (finding no
misappropriation where a new employee brought in a customer list
from a former employer because the employer did not solicit or
condone this activity); Ferroline Corp. v. Gen. Aniline & Film
Corp., 207 F.2d 912, 923 (7th Cir. 1953) cert. denied 347 U.S.
953 (1954) (stating that the “plaintiff should [be] required to
prove affirmatively that [the] defendant acquired its knowledge
as a knowing participant in a breach of trust” in a trade secret
misappropriation claim). In contrast to E.I. DuPont DeNemours &
Co. v. Christopher, where the defendant deliberately flew a plane
over the Plaintiff’s land to acquire information, Markley took no
such deliberate action. 431 F.2d 1012 (5th Cir. 1970). Moreover,
Markley placed Gross in its sales department, minimizing his work
relating to technical issues. See Del Monte Fresh Produce Co. v.
Dole Food Co., 148 F. Supp. 2d 1326, 1339 (S.D. Fla. 2001)
(placing a new employee with a duty of confidentiality owed to a
previous employer in a position unrelated to his previous one
mitigated away from finding trade secret misappropriation).
Thus, acquisition of trade secret information by improper means
25

could not form the basis of Smiley’s trade secret
misappropriation claim, and the district court’s finding of
misappropriation was therefore clearly erroneous.
C. Markley did not know or have reason to know that Gross owed
a duty to Smiley not to disclose information relating to
Drexlerian robot construction.
It was clearly erroneous for the district court to conclude
that any duty owed by Gross was imputed to Markley. The record
does not state that Smiley or Gross informed Markley about Gross’
duty of confidentiality owed to Smiley. Furthermore, nothing on
the record would have given Markley notice of Gross’ duty of
confidentiality. It would be impractical for employers to
investigate the origin of all information their employees
disclose. Because of the nature of trade secrets it is far more
practical for those who believe that they have trade secret
rights to inform others of their rights when it appears that
confidential information could be disclosed. In this case
Markley did not know or have reason to know of Gross’ obligations
to Smiley and thus Markley should not be held accountable for
Smiley’s failure to inform Markley of Smiley’s rights. The
district court’s holding thus was clearly erroneous as nothing
from the record reflects a duty was imputed to Markley or a duty
was breached by Markley as Markley never used Smiley’s trade
secret.
D. A ruling that Markley’s and Gross’ conduct constituted trade
secret misappropriation would hinder the development of
technology, undermining a primary policy behind trade secret
laws.
Gross’ disclosure of general knowledge must not be held to
breach a duty of confidentiality owed to Smiley, otherwise the
26

public interests of open competition and advancement of
technology suffers. Terminated employees are allowed to use
general knowledge gained in prior employment. CVD, Inc. v.
Raytheon Co., 769 F.2d 842, 852 (1st Cir. 1985) cert. denied 475
U.S. 1016 (1986) (such a “principle effectuates the public
interest in labor mobility, promotes the employee's freedom to
practice a profession, and freedom of competition”); See
Restatements (Third) of Unfair Competition § 42, cmt. d. (1985)
(“information that forms the general skill, knowledge, training
and experience of an employee cannot be claimed as a trade secret
by a former employer”).
“The distinction between general and special knowledge
[subject to confidentiality agreements] can only be resolved by a
balancing of the conflicting social and economic interests” of
fostering competition and discouraging unfair trade practices.
Microbiological Research Corp. v. Muna, 625 P.2d 690, 697 (Utah
1981) (citing 2 R. Callman, Unfair Competition, Trademarks &
Monopolies, § 54.2(a) at 417 (3rd ed. 1967).
In this case a balance of the interests clearly favors
finding that the subject matter of Gross’ disclosure was general
knowledge. This balance recognizes the social utility in
allowing Gross to exercise his knowledge and the innocence of
Markley and also potentially increases the number of Drexlerian
robot marketers while not unduly prejudicing Smiley who already
owns a patent in intertwined technology.
Preventing employees from using such general knowledge
under a non-disclosure agreement would stifle innovation by
27

blocking workers from working in positions where they might be
most productive and useful to society. Ingersoll-Rand Co. v.
Ciavatta, 110 N.J. 609, 638 (N.J. 1988) (stating that “such
[hold-over] agreements . . . probably interfere with an employee
securing a position in which he could most effectively use his
skills, at the same time depriving society of a more productive
worker”). Also, consider that trade secret doctrine is designed
to increase the pace of innovation. Burten v. Milton Bradley Co.,
763 F.2d 461, 467 (1st Cir. 1985) (“[t]he underlying goal of the
law which protects trade secrets . . . is to encourage the
formation and promulgation of ideas”). Thus, finding trade
secret misappropriation in this case would undermine one of the
main policy justifications for trade secret doctrine by
restricting the flow of skilled employees and their knowledge.
Thus, the district court erred in finding trade secret
misappropriation.
28

CONCLUSIONS AND RELIEF SOUGHT
Markley requests this Court to uphold as a matter of law the
district court’s holding that Markley’s nano-pump does not
literally infringe claim 2 of Smiley’s ‘321 patent, as well as
the finding that Smiley’s ‘321 patent is invalid. Markley also
requests the court to the district court’s clear error in holding
that Markley misappropriated Smiley’s trade secret.
Respectfully submitted,
February 7th
, 2005 _____________________________
James Lund
_____________________________
Paul Sherburne
29

PROOF OF SERVICE
Counsel for Defendant-Cross Appellants MarkleyLabs, Inc.
files the foregoing BRIEF OF DEFENDANT-CROSS APPELLANT
MARKLEYLABS, INC. pursuant to Rule 25(d) of the Federal Rules of
Appellate Procedure. I hereby certify that Defendant-CROSS
Appellant’s brief was served on the Court of Appeals for the
Federal Circuit and on opposing counsel in compliance with Rule
25(d)(1)(B) and submit the following proof of service:
(i) Service was made by depositing a copy of the brief with
the United States Postal Service, first class postage
prepaid, on February 7, 2005.
(ii) The following individuals were served:
Kevin E. Noonan
(iii) The following addresses were used to effect service:
McDonnell, Boehnen, Hulbert & Berghoff
300 South Wacker Drive, 32
nd
Floor
Chicago, IL 60606
February 7
th
, 2005 _____________________________
James Lund
_____________________________
Paul Sherburne
30

CERTIFICATE OF COMPLIANCE
Counsel for Defendant-Cross Appellants MarkleyLabs, Inc.
submits this brief in conformance with Rules 32(a)(5)(A) and
32(a)(7)(B) of the Federal Rules of Appellate Procedure. As
required by Rule 32(a)(7)(C), I hereby certify that Defendant-
Cross Appellant’s brief complies with the type-volume limitation
therein provided, and I further certify that the foregoing BRIEF
OF DEFENDANT- CROSS APPELLANT MARKLEYLABS, INC. contains 9,243
words as determined by Microsoft Word 2002, including headings,
footnotes and quotations.
February 7th
, 2005 _____________________________
James Lund
_____________________________
Paul Sherburne
31

JOINT APPENDIX
Omitted pursuant to Competition Rule 10
All citations to the record refer to the problem statement as it
would appear in this Joint Appendix
32

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