The First Circuit ruled Thursday that a district court did not abuse its discretion in denying health care products company Covidien LP the rights to inventions by a former employee who breached proprietary information.
A jury found that former Covidien employee Brady Esch breached confidential information after he incorporated a new company, which would develop products to treat varicose veins, after he was terminated from his Covidien position, where he also worked to develop similar products and devices. Covidien moved for a post-trial declaratory judgment that Esch be required to assign the rights to his patented inventions that he made at his new company. The District of Massachusetts struck down Covidien’s request, bringing it to the First Circuit.
In its denial Dec. 13, 2019, the district court reasoned that, “(t)o agree with Covidien’s logic, the jury would have had to reach the inconsistent conclusion that Esch’s publication of Covidien’s confidential information in the ‘338 Patent Application was simultaneously a breach of confidentiality and in satisfaction of his duty to disclose Inventions to Covidien,” adding that the jury concluded that none of Esch’s inventions post-employment with Covidien were covered by his breached employment agreement — so, he technically did not fail to disclose his inventions. Covidien disputed this, claiming that the court improperly inferred the jury’s verdict; nevertheless, the circuit court sided with the district.
“The district court’s inference was not only permissible but also necessary and consistent with the jury’s findings as to the confidentiality and disclosure obligations contained in the Employment and Separation Agreements,” the court explained. “As previously discussed, the jury instructions meticulously tied together the concepts of breach of confidentiality and duty to disclose ‘Inventions’ under the Employment and Separation Agreements. … In this regard, we confer considerable discretion and deference to the district court’s explanation and common-sense approach and reasoning.”