The U.S. Court of Appeals for the Seventh Circuit recently affirmed the imposition of a preliminary injunction obtained by Illinois-based medical device maker, Life Spine Inc., against a former business partner who allegedly misappropriated Life Spine’s trade secrets and gave them to its parent company, a competitor of Life Spine. The outcome affirms that injunctive relief is available to plaintiffs when irreparable harm is plausibly alleged, but also highlights that a company need not personally use the trade secrets to be found liable under the Defend Trade Secrets Act (DTSA), 18 U.S.C. §1836 et seq., and the Illinois Trade Secrets Act (ITSA), 765 ILCS 1065/1 et seq.
This trade secret misappropriation case arises from a short-lived business relationship between two companies that sell spinal implant devices. Life Spine makes and sells a spinal implant device known as the ProLift Expandable Spacer System. Life Spine partnered with Aegis Spine, Inc. to distribute the ProLift to hospitals and surgeons. In the distribution agreement, Aegis promised to protect Life Spine’s confidential information, act as a fiduciary for Life Spine’s property, and refrain from reverse engineering the ProLift. Unbeknownst to Life Spine, Aegis allegedly funneled information about the ProLift to its parent company, L&K Biomed, Inc., to help L&K develop a competing spinal implant device.
Shortly after L&K’s competing device hit the market, Life Spine filed suit against Aegis alleging claims of trade secret misappropriation and breach of contract. Following a nine-day evidentiary hearing, the district court ruled in favor of Life Spine and entered a preliminary injunction against Aegis and its business partners, preventing them from marketing the competing product. Aegis appealed arguing that a company cannot have trade secret protection in a device that it publicly discloses through patents, displays, and sales. The Seventh Circuit disagreed. Continue reading ›