Justia U.S. Federal Circuit Court of Appeals Opinion Summaries

International Development Solutions, LLC (IDS), a security service contractor, entered into a contract with the Department of State for the provision of personal protection services in Afghanistan. IDS was initially a joint venture between ACADEMI Training Center, Inc. (ATCI) and Kaseman, LLC. However, ATCI later purchased all of Kaseman, LLC’s membership interest in IDS, making IDS a sole member LLC with ATCI as the sole member and owner. IDS then sold and transferred all of its interests in all of its contracts, subcontracts, and all property and assets to ATCI. ATCI requested the State to recognize it as the successor-in-interest to IDS’s contract through a formal novation agreement, but the State denied the request.The Civilian Board of Contract Appeals denied IDS’s consolidated appeal seeking cost-reimbursement of tax payments made by related corporate entities. The Board found no entitlement to reimbursement as IDS did not present evidence that tax amounts paid were costs incurred by IDS, the contractor, rather than by entities higher in IDS’s ownership chain.The United States Court of Appeals for the Federal Circuit affirmed the Board’s decision. The court found substantial evidence supporting the Board’s finding that IDS did not present evidence that tax amounts paid were costs incurred by IDS, the contractor, rather than by entities higher in IDS’s ownership chain. Therefore, IDS was not entitled to reimbursement. View "INTERNATIONAL DEVELOPMENT SOLUTIONS, LLC v. SECRETARY OF STATE " on Justia Law

Insulet Corp. and EOFlow are medical device manufacturers that produce insulin pump patches. Insulet began developing its OmniPod product in the early 2000s, and EOFlow started developing its EOPatch product after its founding in 2011. Around the same time, four former Insulet employees joined EOFlow. In 2023, reports surfaced that Medtronic had started a process to acquire EOFlow. Soon after, Insulet sued EOFlow for violations of the Defend Trade Secrets Act (DTSA), seeking a temporary restraining order and a preliminary injunction to enjoin all technical communications between EOFlow and Medtronic in view of its trade secrets claims.The U.S. District Court for the District of Massachusetts temporarily restrained EOFlow from disclosing products or manufacturing technical information related to the EOPatch or OmniPod products. The court then granted Insulet’s request for a preliminary injunction, finding strong evidence that Insulet is likely to succeed on the merits of its trade secrets claim, strong evidence of misappropriation, and that irreparable harm to Insulet crystallized when EOFlow announced an intended acquisition by Medtronic. The injunction enjoined EOFlow from manufacturing, marketing, or selling any product that was designed, developed, or manufactured, in whole or in part, using or relying on alleged trade secrets of Insulet.The United States Court of Appeals for the Federal Circuit reversed the district court’s order. The court found that the district court had failed to address the statute of limitations, lacked a tailored analysis as to what specific information actually constituted a trade secret, and found it hard to tell what subset of that information was likely to have been misappropriated by EOFlow. The court also found that the district court had failed to meaningfully engage with the public interest prong. The court concluded that Insulet had not shown a likelihood of success on the merits and other factors for a preliminary injunction. The case was remanded for further proceedings consistent with the opinion. View "INSULET CORP. v. EOFLOW, CO. LTD. " on Justia Law

The Enterprises, Fannie Mae and Freddie Mac, suffered financial losses in 2008 when the housing market collapsed. The Housing and Economic Recovery Act of 2008 (HERA), created the Federal Housing Finance Agency (FHFA), an independent agency tasked with regulating the Enterprises, including stepping in as conservator, 12 U.S.C. 4511.With the consent of the Enterprises’ boards of directors, FHFA placed the Enterprises into conservatorship, then negotiated preferred stock purchase agreements (PSPAs) with the Treasury Department to allow the Enterprises to draw up to $100 billion in exchange for senior preferred non-voting stock having quarterly fixed-rate dividends. A “net worth sweep” under the PSPAs replaced the fixed-rate dividend formula with a variable one that required the Enterprises to make quarterly payments equal to their entire net worth, minus a small capital reserve amount, causing the Enterprises to transfer most of their equity to Treasury, leaving no residual value for shareholders.Shareholders challenged the net worth sweep. Barrett, an individual shareholder, separately asserted derivative claims on behalf of the Enterprises. The Claims Court dismissed the shareholders’ direct Fifth Amendment takings and illegal exaction claims for lack of standing; dismissed for lack of subject matter jurisdiction the shareholders’ direct claims for breach of fiduciary duty, and breach of implied-in-fact contract; and found that Barrett had standing to bring his derivative claims, notwithstanding HERA. The Federal Circuit affirmed the dismissal of shareholders’ direct claims but concluded that the shareholders’ derivatively pled allegations should also be dismissed. View "Fairholme Funds, Inc. v, United States" on Justia Law

The Small Business Act requires that many federal agencies set aside contracts to be awarded to certain categories of small businesses, including service-disabled-veteran-owned (SDVO) small businesses, 15 U.S.C. 644(g)(1)(B). For a limited liability company (LLC) to qualify as SDVO, one or more SDVs must directly and unconditionally own at least 51% of each class of member interest. For an LLC to be controlled by SDVs, one or more SDVs must control the company’s long-term decision making, conduct its day-to-day management and administration of business operations, hold the highest officer position, serve as managing members, have “control over all decisions” of the LLC and “meet all supermajority voting requirements,”XOtech LLC, previously organized with Marullo (an SDV) as its only manager, became a multiple-manager company with four “Members” as owners. The Army issued a Request for Proposals seeking an SDVO contractor to provide logistics support for Army Reserve facilities. XOtech was awarded the contract. The Director of the SBA’s Office of Government Contracting determined that XOtech did not qualify for SDVO status and sustained a protest, finding that, although Marullo owned XOtech, he lacked sufficient control over XOtech’s operations because he required the vote of at least one non-SDV to make management decisions. The Claims Court and the Federal Circuit affirmed, finding that service-disabled veterans do not control “all decisions” of XOtech as required by 13 C.F.R. 125.13(d). View "XOTech, LLC v. United States" on Justia Law

Before selling their business, Page Printing, the Pettinatis followed the tax strategy suggested by their attorney and formed BASR, a general partnership. BASR assumed Treasury Note obligations, which increased its cost basis; each of the partners contributed all their Page shares to BASR in 1999. Two months later, BASR sold 100% of its Page stock for $6,898,245. When offset against its overstated cost basis, BASR realized a gain of only $263,934. The Pettinati partners reported their shares on their 1999 individual returns. In 2010, the IRS issued a final partnership administrative adjustment (FPAA), disallowing the tax benefits generated from BASR’s 1999 tax filing. Pettinati challenged the FPAA as untimely under I.R.C. 6501(a)’s three-year statute of limitations. BASR had “zero assets,” and had filed its last partnership return in 1999. BASR offered the government $1.00 to settle; the government refused. In 2013, the Claims Court granted BASR summary judgment. The Federal Circuit affirmed. In 2016, BASR sought litigation costs under 26 U.S.C. 7430(c)(4)(E). The Federal Circuit affirmed an award of $314,710.69, rejecting the government’s arguments: that BASR does not qualify for lcosts under section 7430(a) because a partnership is not a prevailing “party,” that BASR did not pay or incur costs because a partnership has no legal obligation, that the amount of individual tax liability was not “in issue” during the Tax Equity and Fiscal Responsibility Act (TEFRA) partnership-level court proceeding, and that the qualified offer rule did not apply. View "BASR Partnership v. United States" on Justia Law

Maxchief has its principal place of business in China and distributes one of the plastic tables it manufactures (UT-18) exclusively through Meco, which is located in Tennessee. Meco sells the UT-18 tables to retailers. Wok competes with Maxchief in the market for plastic folding tables, and also has its principal place of business in China. Wok owns patents directed to folding tables. Wok sued Maxchief’s customer, Staples, in the Central District of California, alleging that Staples’ sale of Maxchief’s UT-18 table infringed the Wok patents. Staples requested that Meco defend and indemnify Staples. Meco requested that Maxchief defend and indemnify Meco and Staples. The Staples action is stayed pending the outcome of this case. Maxchief then sued Wok in the Eastern District of Tennessee, seeking declarations of non-infringement or invalidity of all claims of the Wok patents and alleging tortious interference with business relations under Tennessee state law. The district court dismissed the declaratory judgment claim for lack of personal jurisdiction. With respect to the state law tortious interference claim, the district court concluded it lacked subject matter jurisdiction. The Federal Circuit affirmed. Wok lacked sufficient contacts with the forum state of Tennessee for personal jurisdiction as to both the declaratory judgment claim and the tortious interference claim. View "Maxchief Investments Ltd. v. Wok & Pan, Ind., Inc." on Justia Law

TAOS and Intersil were both developing ambient light sensors for electronic devices. Ambient light sensors use a silicon- or other semiconductor-based photodiode that absorbs light and conducts a current. The resulting photocurrent is detected by a sensor, and measurements of the current, a function of the ambient light, are used to adjust the brightness of an electronic screen display. One benefit is better visibility; another is improved battery efficiency. In 2004, the parties confidentially shared technical and financial information during negotiations regarding a possible merger that did not occur. Soon after, Intersil released new sensors with the technical design TAOS had disclosed in the confidential negotiations. TAOS sued for infringement of its patent, and for trade secret misappropriation, breach of contract, and tortious interference with prospective business relations under Texas state law. A jury returned a verdict for TAOS and awarded damages on all four claims. The Federal Circuit affirmed liability for trade secret misappropriation, though on a more limited basis than TAOS presented to the jury, and affirmed liability for infringement of the asserted apparatus claims of the patent, but vacated the monetary awards. The court noted that there was no evidence of Intersil’s independent design of the photodiode array structure. View "Texas Advanced Optoelectronic Solutions, Inc. v. Renesas Electronics America, Inc." on Justia Law

MOVA technology can capture an actor’s facial performance for use in motion picture special effects and video games; it is secured by trademarks, copyrights, and patents, and is reflected in hardware, source code, and physical assets. VGHL claims that Perlman, the head of Rearden, declined to acquire the MOVA assets from OL2 and proposed OL2 sell to a Rearden employee, LaSalle. Perlman introduced LaSalle to Rearden’s corporate attorney who helped LaSalle establish his own company, MO2, and negotiated with OL2. Perlman later demanded that LaSalle convey the MOVA assets to Rearden and terminated LaSalle’s employment when LaSalle refused. MO2 sold the MOVA assets to SHST, which hired LaSalle, and began selling the technology. The Rearden parties claimed that SHST never obtained ownership and that LaSalle was simply hired to handle the acquisition on Rearden’s behalf. SHST sued, alleging that Rearden had made “false or misleading representations ... concerning the ownership of the MOVA Assets ... to mislead the public and actual and prospective users and licensees” and had falsely recorded assignments of the MOVA patents. During discovery, SHST moved to compel Rearden to produce documents exchanged between MO2 and Rearden’s corporate attorney. The district court granted the request, concluding that Rearden had not shown entitlement to assert attorney-client privilege on behalf of MO2 and that LaSalle waived privilege when he shared documents. The Federal Circuit denied a petition for mandamus. Rearden's arguments failed to carry the high burden required on mandamus to overturn the court’s discovery determination. View "In re: Rearden, LLC" on Justia Law

The Internal Revenue Service denied Wells Fargo’s claims for refunds based on interest-netting under 26 U.S.C. 6621(d) between interest on tax underpayments and interest on tax overpayments. Section 6621(d) reads: To the extent that, for any period, interest is payable under subchapter A and allowable under subchapter B on equivalent underpayments and overpayments by the same taxpayer of tax imposed by this title, the net rate of interest under this section on such amounts shall be zero for such period. Absent an interest-netting provision , a taxpayer might make equivalent underpayments and overpayments yet owe the IRS interest because corporate taxpayers pay underpayment interest at a higher rate than the IRS pays overpayment interest. The Claims Court granted Wells Fargo partial summary judgment, finding that it satisfied the “same taxpayer” requirement, although the current embodiment of the company is the result of seven mergers. The companies involved in these mergers made tax underpayments and overpayments. The Federal Circuit identified three merger “situations” and concluded that two qualified for interest netting and one did not. The situations involved consideration of the whether the entities had separate identities at the time of the payments at issue and the amount of change in the entity’s identity as a result of the merger. View "Wells Fargo & Co. v. United States" on Justia Law

SightSound’s patents disclose methods for sale and distribution of digital audio and video signals, requiring: connection, by telecommunications lines, between a party’s memory and a second party’s memory; selling digital signals to the second party for a fee through telecommunications lines; transmitting the signal from the first memory to the second memory by telecommunications lines; and storing the signal in the second memory. Apple sought covered business method (CBM) review under the America Invents Act, 125 Stat. 284, arguing that claims were invalid as anticipated under 35 U.S.C. 102. The Patent Board determined that the patents are CBM patents because they recite an activity that is “financial in nature,” and do not include novel, non-obvious technological features, then determined that there was a reasonable likelihood that the claims were anticipated or obvious by disclosures relating to a 1980s CompuSonics computer system. The petitions did not specifically allege obviousness over CompuSonics. The Board granted SightSound additional time and authorized sur-replies and new declaration testimony on the issue of obviousness, then rejected SightSound’s contention that the term “second memory” is limited to non-removable media and held seven claims invalid as obvious. The Federal Circuit found that it lacked jurisdiction to review the decision to consider issues not explicitly raised in the petitions, but affirmed that the patents are CBM patents and the final decision with respect to claim construction and obviousness. View "Sightsound Techs., LLC v. Apple Inc." on Justia Law