[00:00:04] Speaker 01: Mr. Gershenson. [00:00:08] Speaker 00: Good morning, Adam Gershenson. [00:00:21] Speaker 00: We're here today to address a district court ruling that cites almost nothing while imposing the most drastic version of an extraordinary remedy. [00:00:30] Speaker 04: Can I just interrupt you before you get involved in your argument to just update us on the status of this case? [00:00:36] Speaker 00: I thought that might be necessary, Your Honor, of course. [00:00:38] Speaker 00: So the 28-J letters indicated [00:00:40] Speaker 00: that the parties moved to modify the injunction. [00:00:43] Speaker 00: It's also moved for contempt, which was rejected. [00:00:47] Speaker 00: The new and operative order maintains all the problems of the old order, so it's not moot or anything like that. [00:00:54] Speaker 00: But it does make the situation much more dire and time sensitive for EO flow. [00:00:58] Speaker 00: And that's because it eliminates the carve-outs. [00:01:03] Speaker 04: There used to be the ability to... OK, I didn't want to... But I just want to know what's going on with the case itself. [00:01:08] Speaker 04: Is there a summary judgment? [00:01:09] Speaker 00: Oh, my apologies. [00:01:09] Speaker 00: Trial in November is what's going on. [00:01:12] Speaker 00: We have, in summary judgment, September slash October, the briefing for that. [00:01:18] Speaker 04: And both parties, nobody argued whether or not the district court had any. [00:01:23] Speaker 04: There was a jurisdictional question with respect to the district court modifying the order while the appeal was pending here. [00:01:30] Speaker 04: Neither party addressed that issue, Your Honor. [00:01:34] Speaker 04: Why didn't you move for a stay of the injunction at the outset? [00:01:37] Speaker 00: So we asked for a stay at a hearing, and the court said out of hand, I'm not doing that. [00:01:44] Speaker 00: So that was one piece of it. [00:01:45] Speaker 00: And then it's substantially gotten worse, as I noted, with the modification. [00:01:49] Speaker 00: So the urgency is much greater now, and I would request, if the court is leaning. [00:01:54] Speaker 04: No, but did you move to stay the initial injunction? [00:01:57] Speaker 00: We moved verbally. [00:01:58] Speaker 00: We did not move in writing. [00:02:00] Speaker 00: We were told, I'm not staying this case. [00:02:04] Speaker 03: And you only moved in the district court, not prior to us. [00:02:06] Speaker 00: That is accurate. [00:02:10] Speaker 00: If I may? [00:02:14] Speaker 00: The district court's vague, unsupported ruling contradicts Supreme Court precedent, the federal rules, and the Defense Trade Secrets Act. [00:02:22] Speaker 00: And there are real consequences, and there are three primary legal errors I'd like to address today. [00:02:28] Speaker 00: First, on the likelihood of success. [00:02:31] Speaker 00: The district court erred by not even determining whether the claim was timely, number one, and number two, not even analyzing or refusing to analyze the, quote, number or contours, which is to say the boundaries of the trade secrets that were asserted. [00:02:44] Speaker 00: Second, on irreparable harm, the district court's order was wrong. [00:02:48] Speaker 00: when made the first time. [00:02:49] Speaker 00: And the second order is doubly wrong, because the sole basis for reprehensible harm in the first place, the Medtronic acquisition, which was then pending, is gone. [00:02:59] Speaker 00: Terminated, canceled. [00:03:00] Speaker 04: So when did that happen? [00:03:02] Speaker 04: Was that after the district court issued the preliminary injunction, then circumstances changed? [00:03:07] Speaker 04: So did you go in and move for change circumstances facing reprehensible harm? [00:03:11] Speaker 00: We argued in the recent modification that this was off the table, but the harm to airflow was increasing, the harm to insulate was gone, and the district court paid it no mind. [00:03:22] Speaker 00: Said, for example, let the chips fall where they may. [00:03:26] Speaker 00: I'm disinclined to give any weight to the financial impact to airflow. [00:03:30] Speaker 00: That was the response we got on that issue, Your Honor. [00:03:32] Speaker 03: Where is it in the record that the Medtronic deal is off? [00:03:36] Speaker 03: And just to follow up on Judge Proce, did that happen after the first preliminary junction was entered? [00:03:44] Speaker 00: It is in the papers at A9942. [00:03:50] Speaker 00: 9942. [00:03:51] Speaker 00: Yes. [00:03:53] Speaker 00: And perhaps the following page 43 as well. [00:03:55] Speaker 00: The report is that the deal, quote, fell through, was called off, and was terminated. [00:04:00] Speaker 00: And yes, that was after the injunction to your second half of your question. [00:04:05] Speaker 03: So at the time, the district court found irreparable harm. [00:04:09] Speaker 03: The Medtronic deal was a fair consideration because it was still alive. [00:04:13] Speaker 00: So at the time, the transaction was still alive. [00:04:16] Speaker 00: It was not legally a reasonable or proper consideration for a number of reasons, including the alleged price erosion, no proof whatsoever that the products had been in the market together. [00:04:27] Speaker 00: Anything that would have come in this two-player market from Medtronic Law sales would have been far off. [00:04:32] Speaker 03: But just on the factual point, did you not have an obligation to go back to the district court if it found the Medtronic deal was a basis for reputable harm, rejecting your legal arguments to the contrary, and now the Medtronic deal disappears? [00:04:49] Speaker 03: If you want to get out from under the order, don't you have an obligation to go back to this report and say, by the way, the factual basis is no longer there? [00:04:58] Speaker 03: And then the modification, we did just that. [00:05:00] Speaker 00: We argued repeatedly. [00:05:02] Speaker 03: But not until this very recent amended order that we now have? [00:05:07] Speaker 04: Correct. [00:05:08] Speaker 04: Speaking of the amended order, if we were to reverse the preliminary injunction that's on appeal here, what happens to the second amended preliminary injunction? [00:05:19] Speaker 00: Well, so the district court specifically said, I'm going to hold that in abeyance until June 1st, because I may well be wrong, and the Federal Circuit can correct me. [00:05:27] Speaker 00: And so that is the opportunity that we have here, to right that wrong. [00:05:30] Speaker 04: But I mean, I guess we don't have time clocks, and we don't have orders that we have to do something by June 1st or whatever. [00:05:39] Speaker 04: So what if nothing happens by June 1st? [00:05:43] Speaker 04: that in effect then, so even if on June 2 we were to reverse the original preliminary injunction, you have to now go back and appeal the second injunction? [00:05:54] Speaker 00: We would certainly hope not. [00:05:55] Speaker 00: We would ask that if you were leaning toward anything, that you would at a minimum, we understand how busy you are, so we're not pushing for full ruling before June 1, but even a line that says we stay the most draconian parts of this, [00:06:07] Speaker 00: that would be useful and meaningful. [00:06:10] Speaker 04: So wait, but if we were to, before June 1st, all that's before Russ is the original preliminary injunction. [00:06:15] Speaker 04: So if we stay that before June 1st, does that take care of the second amended preliminary injunction? [00:06:22] Speaker 00: My understanding is that's how the district court is viewing it, yes. [00:06:25] Speaker 00: Right or wrong, the district court would obey any order certainly from this court regarding either of these injunctions. [00:06:31] Speaker 04: Well, again, do you know in other circumstance where we've done an appeal of a particular preliminary injunction and then the district court proceeds to change the injunction and puts a time frame on it that doesn't go into effect until a few weeks after we've heard it? [00:06:48] Speaker 04: I've just not seen a situation like this before. [00:06:52] Speaker 00: I have not seen that situation either. [00:06:54] Speaker 00: There are many decisions that the district court made that we find unprecedented and we don't agree with. [00:07:00] Speaker 00: That would be one of them, Your Honor. [00:07:03] Speaker 04: Well, I mean, I'm not lying necessarily entirely on the district court, because I don't know what went down. [00:07:09] Speaker 04: As I said, first question is, did he have the authority of the jurisdiction to do an amended injunction while this is pending? [00:07:17] Speaker 04: Neither the parties, apparently, [00:07:20] Speaker 04: urged him not to do that or raise that question. [00:07:22] Speaker 04: So I don't want anything I'm saying to suggest that this is all in the district court. [00:07:27] Speaker 00: Sure. [00:07:29] Speaker 00: We could have refused. [00:07:30] Speaker 00: We could have done any number of things. [00:07:31] Speaker 00: I think what we're trying to do is just practically, we have to address the order that's before this court, which agreed is the first one. [00:07:39] Speaker 00: The modification only makes it worse. [00:07:41] Speaker 00: The major problems with the order, though. [00:07:43] Speaker 01: Does the modification just annul it with the jurisdiction that passed here? [00:07:49] Speaker 00: We would welcome that ruling, Your Honor, yes. [00:07:53] Speaker 00: That would simplify the issue as well. [00:07:56] Speaker 04: On the lack of specificity of the trade secrets outlined, I get what you're saying about what's in paragraphs three and four, but five seems to have greater specificity in terms of the misappropriation of trade secrets. [00:08:14] Speaker 04: So are we free to say, OK, some of this stuff is way too broad, but some of it is specific enough so that we could hold the injunction with respect to that? [00:08:25] Speaker 00: As I understand it, agreed on three and four with any and all information that's ever been taken by anyone. [00:08:33] Speaker 00: Agreed. [00:08:33] Speaker 00: That is too vague. [00:08:35] Speaker 00: And the injunction goes far beyond any identified characteristics. [00:08:38] Speaker 00: For the next piece, you're talking about where he says design and those types of things. [00:08:42] Speaker 00: Those are categories. [00:08:44] Speaker 00: Those are not trade secrets. [00:08:46] Speaker 00: And so what the law says is you've got to identify the trade secrets, and the injunction can't go beyond the specifically identified trade secrets. [00:08:53] Speaker 00: That is crystal clear in this court's Nutrition 21, the Carl Zeiss decision. [00:08:58] Speaker 00: Well, what about 5-4? [00:09:01] Speaker 04: paragraph, item 5F. [00:09:04] Speaker 04: I'm sorry. [00:09:05] Speaker 04: That seems to be specific. [00:09:08] Speaker 04: And it describes specifications for device software, including but not limited to the occlusion detection algorithm. [00:09:15] Speaker 04: Now, that seems specific enough. [00:09:17] Speaker 04: I think you made an argument to the district court that said, you said, well, this is all public anyway. [00:09:23] Speaker 04: Correct. [00:09:23] Speaker 04: And he rejected that. [00:09:25] Speaker 04: And that's a kind of different standard of review. [00:09:28] Speaker 04: So here, the problem is not specificity. [00:09:31] Speaker 04: It's whether or not these will trade secrets. [00:09:34] Speaker 04: And isn't there a lot of deference that we should give the district court in terms of his conclusions there at this preliminary stage? [00:09:41] Speaker 00: So specifically to that point, Mr. Sherman, our expert, did demonstrate that all of these were generally known, readily ascertainable. [00:09:51] Speaker 00: That evidence, the district court never even referenced whatsoever. [00:09:54] Speaker 00: And so that does create conflicting evidence, which under the First Circuit case law, including McDonough and Spencer, says if there's conflicting evidence like that, an unresolved factual issue is an injunction cannot issue. [00:10:06] Speaker 00: In terms of specifically, you're looking [00:10:11] Speaker 00: Looking at 5D, I see bills of materials. [00:10:14] Speaker 00: I'm looking at 5F. [00:10:16] Speaker 00: 5F. [00:10:17] Speaker 00: Specifications for device software. [00:10:20] Speaker 00: Right. [00:10:20] Speaker 00: So the occlusion detection algorithm, for one, was generally known. [00:10:25] Speaker 00: For another point, there's been no exchange of the software, of the code. [00:10:29] Speaker 00: So there's no indication that this was used in any meaningful way. [00:10:33] Speaker 00: It has been disclosed in our investor presentations that they said in their briefing to you that they saw. [00:10:39] Speaker 00: But there's been no code review. [00:10:41] Speaker 00: So the idea of this device software doesn't really add up. [00:10:46] Speaker 00: And the others, as I said, are all really categories. [00:10:50] Speaker 00: They are not the documents. [00:10:51] Speaker 00: They are not the trade secrets themselves. [00:10:54] Speaker 00: And so it's really not defensible to say all of this is trade secret. [00:11:00] Speaker 00: And so the district court says, well, it falls within the statutory definition of the Defense Trade Secrets Act, these types of materials. [00:11:07] Speaker 00: But that's like saying my patent is valid because it falls within 101. [00:11:11] Speaker 00: There are additional requirements for each trade secret. [00:11:14] Speaker 00: And that includes that it's not readily ascertainable, that it's not generally known. [00:11:18] Speaker 04: Well, I understood that you were saying this is all available in the public. [00:11:22] Speaker 04: And I couldn't find whether the district court made any findings as to whether or not you were right or wrong in that regard. [00:11:27] Speaker 00: Agree. [00:11:28] Speaker 00: District court, well that's where I started on the citation problem, both on the law and the facts. [00:11:33] Speaker 00: There's no tying of any decision. [00:11:36] Speaker 00: That's the fundamental problem. [00:11:38] Speaker 00: Who can tell from this what was trade secret, number one, and what was taken, number two? [00:11:44] Speaker 00: And those are essential. [00:11:45] Speaker 00: They've enjoined this company. [00:11:46] Speaker 04: OK, I'm sorry. [00:11:47] Speaker 04: I'll cut you off. [00:11:47] Speaker 04: But your time is rough. [00:11:48] Speaker 04: Your clock is running. [00:11:49] Speaker 04: So I wanted to go back to one of the issues you started with, which was the statute of limitations and the district court's clear statement that he wasn't going to reach the statute of limitations. [00:11:59] Speaker 04: However, he did talk about the delay issue with respect to the timing of the preliminary injunction. [00:12:05] Speaker 04: And he made arguably some findings with regard to that. [00:12:09] Speaker 04: Couldn't we use those findings in terms of aligning the question of statutory limitations? [00:12:19] Speaker 00: Well, a few things. [00:12:19] Speaker 00: One, at a preliminary injunction, you can't actually affirm on grounds not addressed by the lower court. [00:12:24] Speaker 00: That's unlike many other scenarios. [00:12:26] Speaker 00: But two, those are two different analyses involving different time periods. [00:12:30] Speaker 00: And so Insulet says, no, he did roughly analyze it as you said, the substitute analysis for irreparable harm. [00:12:36] Speaker 00: But what he said was, could Insulet have brought a preliminary injunction claim at that time? [00:12:42] Speaker 00: Now, that is absolutely the wrong legal question if this was an analysis of statute of limitations. [00:12:48] Speaker 00: And the First Circuit has said so in the Epstein DCR Bard case. [00:12:52] Speaker 00: That's not what inquiry notice is about. [00:12:53] Speaker 00: And that's what Epstein said. [00:12:55] Speaker 00: That's a fundamental misapprehension. [00:12:57] Speaker 01: Counsel, you're well into your final time. [00:13:00] Speaker 01: Do you want to save it or continue? [00:13:02] Speaker 00: I will just say that the Board should express no opinion on statute of limitations. [00:13:05] Speaker 00: We should take it at its word. [00:13:07] Speaker 00: And I'll come back for the time. [00:13:08] Speaker 00: Thank you. [00:13:17] Speaker 02: Good morning, Your Honors. [00:13:20] Speaker 02: May it please the court? [00:13:21] Speaker 02: Let me begin just with the jurisdictional point, because I know the court was interested in that. [00:13:26] Speaker 02: As we understand it, this court has jurisdiction over the appeal, the P.I. [00:13:31] Speaker 02: appeal. [00:13:32] Speaker 02: The district court could not completely dissolve the P.I., but the district court, as with any preliminary injunction, retains jurisdiction to modify the injunction and supervise compliance with it. [00:13:44] Speaker 02: That's what makes a PI appeal different for jurisdictional purposes than a final decision appeal. [00:13:47] Speaker 04: So he can modify it while it's on appeal. [00:13:49] Speaker 04: What does that do to the appeal? [00:13:51] Speaker 04: Let's assume, I'm not suggesting that's in this case, but clearly the stuff that he modifies is at issue in this appeal. [00:13:58] Speaker 04: Do we then take it off the table? [00:14:00] Speaker 02: or what happened i'm not sure that that's right your honor that the stuff that he modified like none of that is the thrust of the no i'm suggesting hypothetically sure so the case that i'll cite you cite to you is am records versus napster which is a ninth circuit case which i think has the most thoughtful discussion of this which is that basically [00:14:20] Speaker 02: The district court can't proceed to re-adjudicate the substantial rights that are on appeal. [00:14:25] Speaker 02: So in other words, the district court could not change its mind on some fundamental aspect of the issues that are briefed before this court. [00:14:33] Speaker 02: But preliminary injunctions are preliminary. [00:14:35] Speaker 02: They're subject to adjustment. [00:14:36] Speaker 02: And certainly, the district court has to police compliance with them and address changed circumstances as they arise. [00:14:41] Speaker 02: So I think that's the test. [00:14:42] Speaker 04: OK, so if we're talking about what he could and couldn't do, why would he not have [00:14:45] Speaker 04: re-evaluated the irreparable harm based on the change circumstances with regard to Medtronic? [00:14:52] Speaker 02: It's not clear. [00:14:53] Speaker 02: So let us start with the record before this board. [00:14:57] Speaker 02: Because my friend on the other side cited you to two pages of the record. [00:15:01] Speaker 02: The second of those pages, 99.43, this is a transcript of an investor call with the CEO of Eoflo. [00:15:09] Speaker 02: He says, Medtronic continues to be interested in Eoflo. [00:15:12] Speaker 02: So in other words, it is not clear at all. [00:15:14] Speaker 02: that circumstances have changed. [00:15:17] Speaker 02: I think the court's questions did get at the point that that would be a matter for the district court to address. [00:15:22] Speaker 02: But we don't think that would be. [00:15:26] Speaker 02: That certainly is not a question before this court. [00:15:29] Speaker 02: And nor do we think that was the question presented to the district court regarding modification. [00:15:34] Speaker 02: But if it were, then the other side is free to appeal the second order that was issued a few weeks ago. [00:15:42] Speaker 01: deal with the statutory limitations. [00:15:45] Speaker 01: Isn't that absolutely essential to dealing with likelihood of success? [00:15:51] Speaker 01: And isn't that a fatal defect? [00:15:53] Speaker 02: No, Your Honor. [00:15:57] Speaker 02: Short answer is, the court made findings that established that our claim is timely. [00:16:02] Speaker 02: And the court approached that issue, frankly, on grounds that are more favorable to the other side. [00:16:07] Speaker 02: Here's what I mean by that. [00:16:09] Speaker 02: The court assessed whether we had promptly brought this action in looking at the irreparable harm prong and whether the equities lay with insolent reaffirming. [00:16:20] Speaker 01: And he said, I express no opinion about the accrual of the statute of limitations. [00:16:25] Speaker 01: That's not at issue here. [00:16:27] Speaker 02: So the court made findings, factual findings, about when Insulet had a basis for suspecting trade secret misappropriation. [00:16:39] Speaker 03: Statute of limitations was at issue. [00:16:41] Speaker 02: The judge was wrong about that, correct? [00:16:43] Speaker 02: I think the judge recognized that there are two distinct issues, and the tests for them are distinct. [00:16:51] Speaker 02: But both issues were presented to him, and he said, I'm just not going to reach one of them. [00:16:55] Speaker 02: So I think the best explanation for that, Judge Stark, is that- But first the answer is yes. [00:16:59] Speaker 02: He did not address statute of limitations. [00:17:02] Speaker 02: So he said what he said. [00:17:04] Speaker 02: But I think about not addressing the accrual. [00:17:08] Speaker 02: I agree that the quote is accurate. [00:17:09] Speaker 02: But I think if you look at the factual findings, you'll see that he's answering the same question on turf that is friendlier to the other side. [00:17:18] Speaker 03: What I mean by that is- Where does he ever answer the question [00:17:22] Speaker 03: whether your client was on inquiry notice in 2018 or 2019. [00:17:27] Speaker 03: I see where he says you didn't have enough to sue, you didn't have enough to move for preliminary injunction 2018, 2019. [00:17:33] Speaker 03: But where does he ever analyze what is really the test, which is with the exercise of reasonable diligence starting in 2018 or 2019, would you not have had a claim within three years? [00:17:44] Speaker 02: Right, and the three-year period is crucial, because when we're talking about limitations, all that matters are things that happened before August 3, 2020. [00:17:52] Speaker 02: Where he addresses that is on page 17, where he says, in March 2021, which is after that critical date, there's no real reason for Insulet to have thought otherwise. [00:18:01] Speaker 02: That is bolstered by his specific findings about the 2018 trade show, in which he says there's no evidence that there was a transparent [00:18:09] Speaker 02: device, he points out, and this I think really is the crucial point, that this device was not on the market until after the critical date had passed. [00:18:20] Speaker 02: So in other words, as the judge found, there's no basis for Insulet to have gone out and found a prototype. [00:18:28] Speaker 02: It's not even available on the market. [00:18:30] Speaker 02: The mere existence of the trade show display and an employee who left the company in 2010 [00:18:37] Speaker 02: having joined EOFLOW, that is not inquiry notice. [00:18:40] Speaker 04: So let me see if I understand what your argument is. [00:18:44] Speaker 04: You agree he did not reach the statute of limitations. [00:18:46] Speaker 04: He explicitly said he was not reaching the statute of limitations, which, as Judge Lurie pointed out, was a necessary predicate for this case, but that we should affirm [00:18:58] Speaker 04: a non-finding of statute of limitations not being breached because of other findings he made with respect to that matter. [00:19:06] Speaker 02: These findings are on an overlapping issue. [00:19:09] Speaker 02: And the district court went past the critical date and even made findings about things that happened closer to when suit was filed because he was approaching the same issue through the lens of- So why would he not have reached the statute of limitations? [00:19:21] Speaker 04: I mean, doesn't that raise some suspicion, at least, to a normal observer? [00:19:25] Speaker 02: I don't think so, Your Honor, not if you look at the findings that the court made. [00:19:30] Speaker 02: The court certainly found likelihood of success. [00:19:32] Speaker 02: This is all, of course, being done on an expedited basis after hasty discovery. [00:19:38] Speaker 02: And the court understood, I think, that the jury is going to be the ultimate decision maker about whether the other side can make a defense. [00:19:44] Speaker 04: Let me move to that now, which is likelihood of success on the merits. [00:19:47] Speaker 04: I mean, the breadth of some of the paragraphs here is really astounding, is it not? [00:19:53] Speaker 04: I mean, I tried to go back in the record and assess the evidence that was presented with respect to the breadth of the so-called trade secrets. [00:20:04] Speaker 04: I don't know if there were findings on what was a trade secret and what. [00:20:07] Speaker 04: I mean, I'm just at a loss with respect to the breadth of the complaint. [00:20:11] Speaker 02: Let me bring up for the court what I think is a very important distinction. [00:20:17] Speaker 02: found in its oral decision that the eight categories of trade secrets that Insulet presented had been misappropriated. [00:20:24] Speaker 02: At least, there was a likelihood that we would be able to show that there was substantial, indeed strong evidence that those categories of trade secrets had been misappropriated. [00:20:32] Speaker 02: That's not the same thing as what the court wrote in its order, but that is because the order is a remedial order. [00:20:37] Speaker 02: It's prophylactic. [00:20:38] Speaker 02: It says, [00:20:39] Speaker 02: Insulet is likely to prevail in establishing misappropriation of trade secrets. [00:20:43] Speaker 02: Here is what you may not do during this litigation in order to avoid further irreparable injury to insulet. [00:20:51] Speaker 04: So how do we evaluate that? [00:20:52] Speaker 04: Let's assume we accept your thing about the eight categories. [00:20:55] Speaker 04: To the extent that the order goes beyond that, you can say it's prophylactic. [00:20:59] Speaker 04: But what authority does the district court judge have to do on the likelihood of success on the merits? [00:21:05] Speaker 02: Beyond again assuming for the sake of this question that I agree with you about those eight categories being sufficient So I think in the context of this litigation where it was clear that after just a few weeks of discovery and thousands of purloined documents having been found in the other side's possession and [00:21:23] Speaker 02: The district court was not prepared to say that these were the only eight categories of trade secrets that we would succeed by the time of trial in proving were misappropriated. [00:21:32] Speaker 02: He therefore directed EFLO not to compound its violation by making public or exploiting any of the trade secrets taken from Insulet. [00:21:46] Speaker 04: those paragraphs cover beyond what the trade secret's taken by insolent. [00:21:50] Speaker 04: And there's been no finding and no clarity as to whether or not that information constitutes a trade secret at all. [00:21:56] Speaker 02: Respectfully, I disagree, Judge Prost. [00:21:58] Speaker 02: And if I can take you to the text of the PI. [00:22:02] Speaker 02: So the order specifically applies to these items relating to EO patch version 2. [00:22:09] Speaker 02: So the passage that you were [00:22:13] Speaker 02: your colloquy, which my friend was about, is about paragraph five. [00:22:17] Speaker 02: But what EO flow is restrained from doing is marketing any product that was designed in whole or in part using our trade secrets. [00:22:29] Speaker 02: That's paragraph one. [00:22:30] Speaker 02: Then the two definitional provisions, three and four. [00:22:33] Speaker 02: Trade secrets mean confidential information that was copied from Insulet by these named people or any other former employee. [00:22:41] Speaker 02: Confidential information means only things that are more marked confidential by insolent or CAD files drawings for specifications Okay, that's the confidential information all the stuff. [00:22:51] Speaker 04: It's not as you said see covers Information that was not marked confidential too [00:22:57] Speaker 02: Sure. [00:22:58] Speaker 02: It's not marked confidential. [00:23:00] Speaker 02: That's because CAD files can't be marked confidential. [00:23:02] Speaker 02: They're three-dimensional. [00:23:04] Speaker 02: There's ample evidence in the record about why some of these computer files did not have a confidentiality marking, but are nonetheless the most sensitive trade secrets. [00:23:14] Speaker 02: So the CAD files drawings are specifications. [00:23:17] Speaker 02: So then the rest of the order is aimed at [00:23:21] Speaker 02: making clear that a product that incorporates these things can't be sold and that, so 5A through G makes clear what the aspects of the product are. [00:23:34] Speaker 02: And there's a carve-out separately in paragraph six that says, okay, Insulet is not arguing that these aspects of the EO patch are derived from the trade secrets, so those are okay. [00:23:45] Speaker 02: So that's where, those are, [00:23:49] Speaker 01: permissible to market and the reason why I don't think council the court dealt very cursorily with two of the Four factors that are necessary balance of the equities five lines fourth factor public interest little impact these were clearly dealt with so I [00:24:10] Speaker 02: In a trade secret misappropriation case, where the claim of the balance of the equities is just, we'd like to go on exploiting the misappropriated invention. [00:24:21] Speaker 02: I think the district court correctly recognized that that is a very simple balance. [00:24:24] Speaker 02: He said it in two sentences. [00:24:26] Speaker 02: On the one hand, Insulet's facing irreparable injury. [00:24:28] Speaker 02: On the other, Ioflo would like to continue [00:24:31] Speaker 02: benefiting from the misappropriation. [00:24:34] Speaker 02: That's a pretty straightforward balance of the equities. [00:24:36] Speaker 02: I don't think it needed longer. [00:24:37] Speaker 03: But what about if in the meantime, EOFLOW has a thousand employees, they're all going to lose their job, the company's going to go out of business? [00:24:44] Speaker 03: And on the public interest, all the folks in Korea that are relying on this lifesaving medical information are going to suffer. [00:24:52] Speaker 03: The court doesn't have to say that outweighs the harm to you. [00:24:54] Speaker 03: But doesn't the court have to grapple with that? [00:24:56] Speaker 02: So that's all dealt with by the first modification, I think, because the court gave a draft of the order to EFLO, allowed them to look at it. [00:25:06] Speaker 02: They didn't propose any changes. [00:25:08] Speaker 02: Then they came in with an emergency motion and said they wanted the following modification. [00:25:11] Speaker 02: There's no further findings at that point, are there? [00:25:15] Speaker 02: about the uh... about the public interest i think the court recognizes a balance of arms no i think what we're going to recognize that he was a justin the district judge clearly recognized he was just in the balance of arms by allowing your flow to go on marketing in the diet in these jurisdictions [00:25:30] Speaker 02: And at page 9880, that's where EOFLOW told the district court that it would be able to go on as a company with these modifications, because these modifications would allow it to service its existing customers. [00:25:46] Speaker 02: Now, we can discuss whether the subsequent modification, which based on EOFLOW's bad behavior, [00:25:58] Speaker 02: changes the exceptions, but at the time this order was entered, the order that's on appeal, the public interest is dealt with by these exceptions that allows EOFLOW to go on market. [00:26:09] Speaker 03: How about you're asking us, I understand, to affirm this PI on grounds that the district court did not articulate itself [00:26:18] Speaker 03: Your friend on the other side, I think, thinks we can't do that, I guess, under First Circuit law. [00:26:24] Speaker 03: Do you have any case law that says we can do that? [00:26:27] Speaker 02: So I think, A, I believe we've cited at least one decision in our brief. [00:26:31] Speaker 02: And then also in footnote seven of our brief, I think the related point that if what this court [00:26:38] Speaker 02: perceives the district court to have done is not gotten it wrong, but simply failed to make an adequate explanation, then what the First Circuit law says is that you're not bound to vacate an injunction that is serving an important purpose. [00:26:53] Speaker 02: preventing irreparable harm that would have to be relitigated, what the court can do is remand for a further explanation. [00:27:02] Speaker 03: That's a slightly different point. [00:27:03] Speaker 03: But you think you cited a case that says we can affirm on alternative grounds. [00:27:06] Speaker 03: I believe it's on page 37 of our brief. [00:27:09] Speaker 04: Well, what if our problem with the articulation includes irreparable harm? [00:27:13] Speaker 04: We're supposed to say we have real questions about whether or not there is irreparable harm. [00:27:18] Speaker 04: But in order to prevent irreparable harm, [00:27:22] Speaker 04: Could have given them another chance. [00:27:23] Speaker 02: So I think that our two first circuit cases in that footnote are going to go both ways. [00:27:27] Speaker 02: One of them says, because the appellee is very, very likely to succeed on the merits, we need more explanation of irreparable harm, and we've remanded for that purpose. [00:27:37] Speaker 04: I know your time is running out, but I have one quick question on the process here, which is this question I was asking your friend about the judge's actions. [00:27:45] Speaker 04: And now he's given us kind of a time frame of June 1st or whatever it was. [00:27:50] Speaker 04: What if we do nothing? [00:27:51] Speaker 04: by June 1, then his amended order goes into effect. [00:27:55] Speaker 04: It supersedes, at least in certain respects, the issues that are before us on appeal. [00:28:01] Speaker 04: What are we doing here? [00:28:03] Speaker 02: I disagree that it supersedes any of the issues that are on appeal, Your Honor. [00:28:07] Speaker 02: And if the court were trying to do that and to change the categories of trade secrets at issue, that might be another matter. [00:28:14] Speaker 02: But I just disagree respectfully that the modification, which changes only the carve-outs that were sought by EO flow and granted to EO flow in the first modification, [00:28:27] Speaker 02: impacts any of the issues that are before this court. [00:28:30] Speaker 02: We think they were with EOFLOW asked the district court for modification. [00:28:35] Speaker 02: And having come here and saying that the district court was without authority to grant that modification, on EOFLOW's view, the May 1st deadline would still be operative, at least the view that Mr. Gershenson took this morning. [00:28:46] Speaker 02: We don't think that that's correct. [00:28:47] Speaker 02: We think the district court had authority to modify the preliminary injunction, because that is how the division of labor between district courts and courts of appeals work. [00:28:55] Speaker 02: when an interlocutory P.I. [00:28:56] Speaker 02: appeal is going on. [00:28:58] Speaker 02: So the answer to your question, Judge Prost, is that on June 1, unless this court tells the district court to do something else, that the modification of the injunction will take effect. [00:29:10] Speaker 03: at the risk of testing the patients and my colleagues. [00:29:12] Speaker 03: If you could just quickly answer, I've got just a couple very quick questions. [00:29:16] Speaker 03: On Medtronic, on the second page, they say that they may still be interested, but as I'm sure you know, on the prior page, I think Mr. Kim says the acquisition agreement was terminated. [00:29:30] Speaker 03: And it's been canceled. [00:29:35] Speaker 03: We can take that as correct. [00:29:36] Speaker 03: Can we not? [00:29:37] Speaker 02: Respectfully, no, Your Honor. [00:29:39] Speaker 02: I mean, I think that given what the same person says on the same investor call a page later that Medtronic is still interested. [00:29:49] Speaker 02: So I guess the question is, what did the CEO mean by canceled? [00:29:53] Speaker 02: But the same CEO, and this comes up in the contempt proceedings that we filed before the district court, [00:29:58] Speaker 02: The same CEO had said that they have plans B and C and D besides the Medtronic acquisition. [00:30:05] Speaker 02: So we certainly reject the premise, A, that Medtronic is definitively off, B, that it matters. [00:30:10] Speaker 03: OK, quickly. [00:30:12] Speaker 03: I think I heard you say that the jury's going to have to decide statute limitations. [00:30:17] Speaker 03: Is that how you see this going? [00:30:18] Speaker 03: It is. [00:30:19] Speaker 03: So you don't think we could decide or order the district court to address as a matter of law whether or not the claim that you timely brought your trade secrets claim? [00:30:30] Speaker 02: So at this stage, it's just likelihood of success. [00:30:34] Speaker 02: The district court is foreshadowing. [00:30:36] Speaker 02: And again, this was based on just a few weeks of expedited discovery that finished up in early October. [00:30:41] Speaker 02: District court was foreshadowing what the parties would be able to prove at trial. [00:30:46] Speaker 02: The ultimate question of statute of limitations is a defense. [00:30:48] Speaker 02: EO flow is going to assert it, and the jury will decide it. [00:30:51] Speaker 02: And EO flow will bear the burden on statute of limitations and proving on what date the claims accrued, just like any other limitations. [00:30:59] Speaker 03: On the public interest, you wrote that the strong public interest in protecting IP rights favors insolent. [00:31:05] Speaker 03: District court didn't say that, did they? [00:31:08] Speaker 02: I agree. [00:31:08] Speaker 03: The district court did not say that. [00:31:10] Speaker 03: And then just finally, the definition of trade secret in the order [00:31:16] Speaker 03: and includes all information and materials that were marked confidential by Insulet. [00:31:21] Speaker 03: That's far broader than anything, than what courts have said is a trade secret. [00:31:27] Speaker 03: Is that correct? [00:31:28] Speaker 02: So paragraph 4A. [00:31:31] Speaker 02: But it has to be that was copied, downloaded, removed, or otherwise taken from Insulet by one of these people. [00:31:39] Speaker 02: So in other words, it's a benefit. [00:31:41] Speaker 03: So if one of the four employees happens to have any document that for whatever reason someone at Insulet stamped confidential, [00:31:48] Speaker 03: The district court's saying that's a trade secret. [00:31:50] Speaker 02: No. [00:31:51] Speaker 02: Respectfully, Your Honor, the district court says that they're enjoined from exploiting it during this litigation. [00:31:56] Speaker 02: The reason for that is because the district court has found a likelihood of success on the eight categories. [00:32:01] Speaker 02: District court understands that those likely are not going to be the only categories. [00:32:05] Speaker 02: And if I may call your attention to paragraph two of the injunction order, paragraph two says, [00:32:10] Speaker 02: EOFLOW is enjoined from disclosing any further. [00:32:13] Speaker 02: Considering that EOFLOW has been putting our trade secrets into its own patent applications, this is an important provision so that the district court did not want to give the infringer the benefit of the doubt when information marked confidential is before it and they're deciding whether to exploit it. [00:32:34] Speaker 01: Thank you. [00:32:34] Speaker 01: Thank you, Mr. Jay. [00:32:35] Speaker 01: Thank you. [00:32:36] Speaker 01: Mr. Gershenson, take five minutes if you need it. [00:32:40] Speaker 00: Thank you, Your Honor. [00:32:45] Speaker 00: Just to address some of what we just heard about the plans B, C, and D, for example. [00:32:52] Speaker 00: So Winter says, Spring Precision and Winter says, possibility is not imminent harm. [00:32:57] Speaker 00: That's, quote, too lenient. [00:32:59] Speaker 00: So that's not enough. [00:33:01] Speaker 00: In terms of what I heard my colleagues say, [00:33:04] Speaker 00: He admitted the order goes beyond. [00:33:06] Speaker 00: It goes beyond any defined trade secrets. [00:33:09] Speaker 00: And it also goes beyond the relief that Insulet itself saw it in the beginning, which was at 7839. [00:33:16] Speaker 00: And that's not in the printed appendix. [00:33:19] Speaker 00: So I'll point also to ECF 108, just for clarity for the record. [00:33:23] Speaker 00: It was specifically to prevent disclosure of Insulet's trade secrets to its largest competitor, Medtronic. [00:33:31] Speaker 00: That's gone. [00:33:33] Speaker 00: Irreparable harm that we claimed, they asserted, they insisted, is gone. [00:33:37] Speaker 00: That the district court relied on entirely is gone. [00:33:40] Speaker 00: I think we also touched on the modification issue a little bit. [00:33:45] Speaker 00: So there has been a substantial modification, and it's made the balance of harms much worse. [00:33:50] Speaker 00: We talked about insolvency, Judge Stark mentioned. [00:33:54] Speaker 00: That's under Virginia Carolina Tools, the Fourth Circuit case, also the Remax case in DeMass, and the Greasemonkey case. [00:34:02] Speaker 00: You can't kill a company with a preliminary injunction, because then you never even get to the merits. [00:34:07] Speaker 00: And so as we speak, employees have been sent home, manufacturing lines shut down, patients losing choice. [00:34:13] Speaker 00: They're losing their sole alternative [00:34:15] Speaker 00: to the disposable patch pump. [00:34:18] Speaker 00: And that's even happening in areas and jurisdictions where insulin doesn't even operate. [00:34:22] Speaker 00: So there's no option. [00:34:24] Speaker 00: And everyone agrees that their product and the disposable patch pump is the clinically superior, safer option. [00:34:31] Speaker 00: The Medtronic MiniMed case that we talked about in our briefs addressed a very similar scenario, and the injunction was denied. [00:34:40] Speaker 00: Lastly, they mentioned, well, there's purloin documents [00:34:42] Speaker 00: Just to be clear, this is not a case of a company hiring employees to take information. [00:34:47] Speaker 00: Those employees were, as the court said, long gone before they ever came to EFLO. [00:34:52] Speaker 00: They left insulin in 2010, 2010, and 2015. [00:34:56] Speaker 00: So that idea of retention is very different than what we're talking about here. [00:35:02] Speaker 00: And finally, the whole reason for interlocutory appeal is not to decide that an injunction was wrong and improvidently granted and then let it stand. [00:35:13] Speaker 00: That doesn't make sense. [00:35:14] Speaker 00: And that's what this court held in Nutrition 21. [00:35:16] Speaker 00: That's what the First Circuit held in the trustees of Boston College and in the Newcom wireless case. [00:35:22] Speaker 00: So if they got it wrong, for example, if they got it wrong in likelihood of success, you vacate. [00:35:27] Speaker 00: If the issue wasn't analyzed, you vacate. [00:35:30] Speaker 00: If you try to support it on grounds that weren't dealt with in the district court, you vacate. [00:35:35] Speaker 00: And that makes perfect sense. [00:35:36] Speaker 00: And that's what we would ask for here. [00:35:38] Speaker 04: Before your time runs out, your friend referred to these eight categories. [00:35:41] Speaker 04: I don't know what the terminology is. [00:35:44] Speaker 04: Yeah, those are at least a little more specific or clearer in terms of trade secrets. [00:35:48] Speaker 00: Do you have a view on that? [00:35:50] Speaker 00: We do. [00:35:50] Speaker 00: And so that was what I referenced with the expert Mr. Sherman. [00:35:55] Speaker 00: And I should have the site for you momentarily. [00:35:57] Speaker 00: But essentially, what Mr. Sherman did was he looked at every one of those trades. [00:36:01] Speaker 00: And I do know that it's in our reply brief at page 15 of the citation to the appendix. [00:36:05] Speaker 00: And he looked at every one of them. [00:36:07] Speaker 00: And he said, this is generally known through Insulet's own patents, for example, and presentations. [00:36:13] Speaker 00: This is readily ascertainable. [00:36:14] Speaker 00: And they admit that you can reverse engineer it. [00:36:17] Speaker 00: You can look at it. [00:36:17] Speaker 00: You can see a cannula seal. [00:36:19] Speaker 00: You can see the roughness of a tube nut. [00:36:21] Speaker 00: You can see a silicon coating. [00:36:22] Speaker 00: You can see a reservoir running through a product. [00:36:25] Speaker 00: It's readily ascertainable. [00:36:27] Speaker 00: And third was the reasonable measures. [00:36:29] Speaker 00: And we know that they didn't take reasonable measures. [00:36:31] Speaker 00: They got unsigned exit. [00:36:33] Speaker 00: documents. [00:36:34] Speaker 00: They say these documents were purloined. [00:36:36] Speaker 04: The district court dealt with some of those arguments. [00:36:40] Speaker 00: Maybe not all of them. [00:36:40] Speaker 00: So you're right. [00:36:41] Speaker 00: And what the district court didn't do as a strictly legal matter is look at any reasonable measures after misappropriation, as the Pi vs. Pi Fifth Circuit case mandates, as NeuroMagic indicates. [00:36:52] Speaker 00: I believe the Alpha Pro case also. [00:36:54] Speaker 00: So the Alomar case, excuse me, the Alomar case also deals with failure, right? [00:36:59] Speaker 00: You've seen something. [00:37:00] Speaker 00: You're on notice. [00:37:01] Speaker 00: What do you do? [00:37:02] Speaker 00: Well, they didn't look at any access logs and find every document that was taken. [00:37:07] Speaker 00: They didn't reach out and say, here's a reminder of your obligations. [00:37:11] Speaker 00: They didn't request the documents back. [00:37:13] Speaker 00: They didn't even send a cease and desist to EOFLOW. [00:37:15] Speaker 00: So it doesn't seem like a reasonable measure, if you're not willing to take 90 minutes of work to send a letter, [00:37:22] Speaker 00: To then say a billion-dollar trade secret. [00:37:23] Speaker 00: Please. [00:37:23] Speaker 03: I have a question about balance of harms and the public interest. [00:37:27] Speaker 03: As Judge Laurie pointed out, the district court analysis seemed pretty cursory on those two points. [00:37:32] Speaker 03: But then, as Mr. Jay pointed out, you had an opportunity to suggest changes to the original order, and then the district court seemed to have made some modifications. [00:37:43] Speaker 03: Can we not infer from that that there was a further balancing and understanding of potential harm to you and to the public? [00:37:52] Speaker 00: So let me address both pieces. [00:37:55] Speaker 00: First, we said we disagree in total with the entire piece, and we need to appeal it. [00:38:03] Speaker 00: That was the message to the district court. [00:38:06] Speaker 00: Second, we were allowed, quote, minor supplementation [00:38:10] Speaker 00: that the judge said. [00:38:11] Speaker 00: And we said, no big arguments. [00:38:12] Speaker 00: And yeah, it was wordsmithing. [00:38:13] Speaker 00: And so we were managed. [00:38:15] Speaker 00: We did stave off the worst of the worst briefly in Korea and the European Union. [00:38:20] Speaker 00: We were allowed to sell. [00:38:22] Speaker 00: And now we're not. [00:38:23] Speaker 03: And that's the whole problem. [00:38:24] Speaker 03: But in terms of trying to understand whether the district court considered harm to you and to the public, isn't it clear that he did, given that he accepted these modifications? [00:38:34] Speaker 00: I have no indication of that in the record, Your Honor. [00:38:37] Speaker 00: And certainly, if he did, he has withdrawn any such consideration. [00:38:42] Speaker 00: And so that's not available to us now. [00:38:44] Speaker 00: Thank you. [00:38:45] Speaker 00: Thank you all. [00:38:45] Speaker 01: Thank you to both counsel. [00:38:47] Speaker 01: The case is submitted.