No. 21-1784 ___________________________

Sleep Number Corporation

Plaintiff - Appellee

v.

Steven Jay Young; Carl Hewitt; UDP Labs, Inc., a Delaware corporation

Defendants - Appellants ____________

Appeal from United States District Court for the District of Minnesota ____________

Submitted: December 15, 2021 Filed: May 11, 2022 ____________ Before SMITH, Chief Judge, GRUENDER and KOBES, Circuit Judges. ____________ GRUENDER, Circuit Judge.

Sleep Number Corporation sued Steven Young, Carl Hewitt, and UDP Labs, Inc., asserting ownership of the inventions claimed in certain patent applications filed by UDP with the United States Patent and Trademark Office (“USPTO”). The district court granted Sleep Number’s motion for a preliminary injunction preventing the defendants from further prosecuting or amending the patent applications.1 The defendants appeal, and we affirm.

I.

Steven Young founded BAM Labs, a California-based company, in 2006. Carl Hewitt joined BAM Labs a few years later. Together, Young and Hewitt developed technology that monitors infants’ biometrics while they sleep. Sleep Number, a Minnesota-based corporation specializing in the manufacture and sale of adjustable air beds, partnered with BAM Labs in 2012. Through their partnership, Young and Hewitt’s inventions were adapted to create SleepIQ technology for Sleep Number smart beds. This technology measures biometric data such as breathing patterns, movements, and blood flow through the use of sensors. The smart-bed user may view this data through Sleep Number’s mobile app. In 2015, Sleep Number acquired BAM Labs as a business unit, renaming it SleepIQ LABS. Young and Hewitt continued to develop sleep technology for SleepIQ LABS, serving as the Chief Technology Officer and Vice President of Engineering, respectively.

After two years as employees, Young and Hewitt informed Sleep Number that they wished to pursue their own medical-technology venture. Sleep Number asked that Hewitt and Young remain involved as consultants to ensure a smooth transition. Accordingly, Young and Hewitt entered into consulting agreements with Sleep Number in December of 2017. The consulting agreements required Young and Hewitt to disclose and assign to Sleep Number the rights to inventions within a defined Product Development Scope (“PDS”) that were developed or ideated during the period of the consulting agreements. The PDS covered “any ideas, conceptions, inventions, or plans relating to sleep, mattresses, bedding, sleep monitoring, health or wellness as it relates to sleep (including biometric monitoring relating to sleep), or bedroom or sleep technologies.” The PDS expressly excluded “monitoring

1 The Honorable Nancy T. Brasel, United States District Judge for the District of Minnesota.

-2- technologies for sudden infant death syndrome” (“SIDS”) and “blood pressure monitoring technologies.”

In January 2018, shortly after entering into the consulting agreements, Young and Hewitt incorporated their new venture, UDP. In October, Young and Hewitt filed a provisional patent application (the “’613 application”) with the USPTO on behalf of UDP. The ’613 application was for an invention that uses load‐bearing sensors placed under a substrate―such as a bed, couch, or examination table―to measure biometric data including respiration, heart rate, and weight. This biometric data may be gathered while the user is asleep or awake. According to the ’