Its Biggest Battle Yet with the World’s Largest Tech Corp
As I write this post on Wednesday, it is the opening day of the patent infringement and trade secrets trial based on a lawsuit filed by Masimo Corporation [NASDAQ: MASI] and Cercacor Laboratories, Inc. (a Masimo-affiliated company) versus Apple, Inc. [NASDAQ: AAPL]. You could call it David vs. Goliath, as tiny Masimo tangles with Apple, the largest corporation in the world. This lawsuit was originally filed back in January 2020 by Masimo who claims that Apple has misappropriated trade secrets by hiring former Masimo employees and stealing Masimo patented technologies, valuable intellectual property (IP) they consider trade secrets, for use in Apple products.
Learn more about Masimo vs. Apple…
Taking place in the U.S. District Court, Central District in Southern California before Judge James V. Selna, today isn’t technically considered Day 1 of the trial. That actually took place on Tuesday when a jury was selected from a large pool of juror candidates and then impaneled to hear this trial. Today, however, is the first day the jury will begin hearing the case, which is a very detailed and, in my mind, complicated matter involving a multiplicity of issues surrounding patent infringement, employment contracts. non-compete clauses, patent filings & authorship, and misappropriation of trade secrets.
How complicated is it? Well, I reviewed a document in which each side presented their views on just what the proper instructions the judge should give to the jurors when it comes time for them to decide the case. This document is known as the “Joint Proposed Jury Instructions” and it is what the judge will use when each side has completed the presentation of their side of the case and the jury will need to retire from the courtroom to the jury room to deliberate and decide all issues.
Just this one document of proposed instructions for the jury is 375 pages long.
The Scale of This Patent Litigation is Supersized
Another example of the scale of this case is exemplified by another document known as the “Joint Statement of Case.” This document is prepared and agreed upon by both parties, and it is a brief presentation by the judge for the jury to give them an initial idea of what the lawsuit is all about. This document offers a crystallized distillment of the issues in dispute between the two parties.
Surprisingly, given the breadth and depth of the complexities surrounding the multiple elements of this case, I was amazed to see that they were able to distill the issues down to just a one-page presentation (more on that below). Also surprising – it took more than a page to enumerate all of the participating lawyers and law firms. Masimo has an army of twelve attorneys from three separate law offices representing them. Apple has nine attorneys from seven separate law offices representing them.
Case Spans Three Years and Thousands of Documents
A couple of other things I should mention that also give a sense of the scale of this matter. One, the massive number of filings, motions, and orders in this matter is extraordinary. Since the beginning of this case, no fewer than 1,538 documents have been filed with the court – many of them with page upon page of exhibits, lists, and other attachments. Many of these filings run hundreds of pages long. On Monday (April 3) alone, there were sixteen legal filings with the court in this one case.
Side note: This has been an extremely difficult case to follow, as both sides in this matter have relied heavily on “sealed” documents. These documents are not unusual in a patent issue, as companies seek to keep trade secrets confidential – as well as to protect other business secrets. Sealed documents are not accessible for public review, which limits what folks like me can report to their readers. Sometimes, the court will order redacted versions for publication…but not always.
But this case has more sealed documents than I have ever seen in other patent actions…ever!
Apple Plans to Have CEO Tim Cook Testify
But, the last sign of how significant this matter has become, I find quite interesting. Just within days of the start of the trial, Apple’s attorneys notified Masimo and the court that they have decided to call Apple CEO Tim Cook as a live (meaning in-person) witness to testify in this case. This surprised me because when Masimo sought to take Cook’s deposition – Apple tried to fight against allowing Masimo to depose him. In fact, they filed a motion asking the Special Master (yes, this case is so big it had a Special Master to oversee discovery) for a Special Protective Order that would actually bar Masimo from taking Cook’s deposition. However, Apple’s motion was denied.
As I mentioned in another post, Tim Cook is allegedly an active participant in the matter of a former Masimo employee going to work for Apple. And by the way, that post – Sound United Parent Masimo Wins Big as Judge Finds Former Employee Stole Its Trade Secrets – tells the story of a separate lawsuit Masimo filed against another company called True Wearables in which a judge found that certain former employees did in fact steal Masimo’s trade secrets. Those are the same employees in this case and more importantly, it is the same judge from that case – Judge James V. Selna – that is presiding in this case as well.
So this case is important enough to have the CEO himself come and testify.
Masimo’s Take on What This Case is All About
So just what is this case about? Well, I’ll pull from the Joint Statement of Case to answer that, as it does a nice job of concisely presenting the major issues. First, is from Masimo’s perspective…
In this case, Plaintiffs Masimo Corporation and Cercacor Laboratories, Inc. have brought claims against defendant Apple Inc.
Masimo and Cercacor claim that Apple improperly obtained, disclosed, and used alleged trade secret information through two of their former employees. Some of the information is technical in nature, and other information relates to business and marketing strategies.
Masimo and Cercacor also claim that Apple filed patents on inventions to which Masimo and Cercacor employees contributed, and Masimo and Cercacor contend those employees should be added as named inventors on those patents. Masimo and Cercacor claim that they should be part owners of those Apple patents.
Masimo and Cercacor seek monetary damages.Masimo Corp. vs. Apple Inc., Joint Statement of Case
Apple’s Take on What This Case is All About
And now let’s see this dispute from defendant Apple’s perspective…
Apple denies all of Masimo’s and Cercacor’s claims. Apple contends that the information that Masimo and Cercacor claim are trade secrets are not actually trade secrets. Apple also contends it did not misappropriate Plaintiffs’ alleged trade secrets through Masimo’s or Cercacor’s former employees or through any other means.Masimo Corp. vs. Apple Inc., Joint Statement of Case
Apple also contends that Masimo and Cercacor employees should not be added as co-inventors to the disputed patents and neither Masimo nor Cercacor is a joint owner of those patents.
Apple also asserts the defense that Masimo and Cercacor did not file this lawsuit within the time permitted by law. Masimo and Cercacor contend that they filed the lawsuit within the time permitted by law.
Apple also asserts that Masimo and Cercacor are not entitled to obtain relief because they have unclean hands. Masimo and Cercacor disagree.
Apple disputes Masimo’s and Cercacor’s monetary damages theories.
Apple Says Masimo has ‘Unclean Hands’
I want to quickly call the reader’s attention to that last point that Apple makes, that “…Masimo and Cercacor are not entitled to obtain relief because they have unclean hands…” This is an interesting tactic by the tech giant. I am NOT an expert in California law, but this is a well-known defense that exists in pretty much every state. Here in New Jersey, it is known as an affirmative defense called the Doctrine of Unclean Hands. Just what is the doctrine of unclean hands?
Here is how Westlaw defines the Doctrine of Unclean Hands: “An equitable defense that bars relief to a party who has engaged in inequitable behavior (including fraud, deceit, unconscionability or bad faith) related to the subject matter of that party’s claim.”
Jury to Decide Who’s Hands are Clean, and Who’s are Unclean
Basically, the Doctrine of Unclean Hands is kind of like that old saying that “two wrongs don’t make a right.” Essentially, what Apple is saying is that, even if we did something wrong here, Masimo should be blocked from winning any judgment because they’ve done wrong things in this same area as well. Apple asserted this doctrine as a defense relative to two separate factors in this case.
What is interesting about Apple’s tactic is that the Doctrine of Unclean Hands, in most jurisdictions, is the kind of affirmative defense that is typically handled by the chief “finder of fact,” which is the judge. Apparently, in California, the judge can opt to have the jury hear and decide on this defense. In this case, Judge Selna denied Apple’s motion in regard to one of the claimed unclean factors but is allowing the other unclean factor to proceed with the jury.
Judge Warns Jury to Leave Their Apple Watches at Home
This trial is likely to span several days to perhaps a week or more before the jury is finally handed the case for deliberation. And speaking of that jury – legal newsletter Law360 reports that after jury selection was complete, Judge Selna warned jurors to keep their Apple watches at home – because those are the devices that have technology that is at the heart of this trial.
Learn more about Masimo by visiting masimo.com.
See all that Apple offers at apple.com.