CMI Roadbuilding, Inc.; CMI Roadbuilding, Ltd. Plaintiffs - Appellants
v.
Iowa Parts, Inc. Defendant-Appellee
Submitted: November 14, 2018
Appeal
from United States District Court for the Northern District
of Iowa - Cedar Rapids
Before
BENTON, BEAM, and ERICKSON, Circuit Judges.
BEAM,
Circuit Judge.
CMI
Roadbuilding appeals the district court's[1] adverse grant of
summary judgment in favor of Iowa Parts in this trademark
secrets and intellectual property case. We affirm the
district court.
I.
BACKGROUND
CMI
Roadbuilding owns assets related to the manufacturing of
asphalt and concrete plants, as well as landfill and dirt
compaction equipment. CMI Roadbuilding purchased these from a
host of other companies, and after a series of mergers and
acquisitions, the end result is that CMI Roadbuilding
now[2]
holds assets, including intellectual property, from companies
formerly called Terex Corporation; Cedarapids, Inc.; and
Standard Havens; as well as the CMI Corporation's own
line of asphalt plants (collectively CMI Roadbuilding). As
noted, CMI Roadbuilding is in the business of manufacturing
and selling asphalt plants, related equipment, and for a
time, also sold replacement parts. Sometime around 1999,
Terex significantly downsized its operation-from 1200
employees to 200-and stopped selling replacement and
after-market parts for its products, and instead sought
vendors to do so for them. CMI Roadbuilding sent the
technical drawings, plans and
specifications-"engineering documents" that are
required to make an asphalt plant and its component parts-to
the vendors who were in the business of making these
replacement and after-market parts.
In
2002, Iowa Parts got into the market of becoming a vendor of
replacement parts that were previously designed and
manufactured by Terex, Cedarapids, Standard Havens, and CMI.
Iowa Parts was formed by the former head of Standard
Havens' Parts Department, Michael Hawkins. Iowa Parts
represents that its parts meet "original equipment
manufacturer" (OEM) specifications. Several employees at
Iowa Parts used to work at the various companies that merged
into CMI Roadbuilding. Included in this group was Jay King,
former parts manager at Terex; Rick Merritt, a draftsman for
Cedarapids and Terex; and Timothy Franck, who worked in some
capacity for Cedarapids and Terex. In order to build the
parts, Iowa Parts approached other vendors who had been given
engineering documents from CMI Roadbuilding and its
predecessors, and asked if those vendors would manufacture
parts for Iowa Parts. Some of the vendors additionally
provided drawings to Iowa Parts that they had obtained from
CMI Roadbuilding. Iowa Parts also "reverse
engineered" other component parts by using a string line
and a tape measure.
On May
29, 2002, Terex sent a letter to King, reminding him of his
duty of loyalty to his former company and that it would be
"a crime" for him to disclose any of CMI
Terex's trade secrets without authorization. The letter
also stated that it knew Iowa Parts had been contacting and
recruiting Cedarapids customers. Undeterred, Iowa Parts
continued manufacturing component parts. As evidence of CMI
Roadbuilding's knowledge of this, during deposition
testimony, the parts manager for CMI Roadbuilding testified
that Iowa Parts directly competed with CMI Roadbuilding from
Iowa Parts' inception in 2002. The manager noted that
during this time frame she was perplexed as to how Iowa Parts
could quickly and easily provide customers with quotes for
parts, while she at CMI Roadbuilding struggled to provide
price information about component parts for its own products.
Evidence in the summary judgment record also indicates that
Iowa Parts advertised regularly in trade magazines between
2002 and 2014, and that Terex advertised in the same
magazine. Iowa Parts also attended and advertised at
prominent asphalt trade shows. Representatives of Terex
attended at least one of these same trade shows. Further,
Iowa Parts' current website,
www.iowapartsusa.com, which began operating in July
2011, advertises its business model, the parts it
manufactures for asphalt plants, and notes that its employees
gained knowledge in the business while working for CMI
Roadbuilding's predecessors.
More
recently, and what amounts to the real genesis of the current
dispute, Iowa Parts transitioned from making smaller and
cheaper ($50 to $250) parts to larger component parts, which
cost more in the range of $300, 000 to $400, 000. Once CMI
Roadbuilding found out about this turn of events, CMI
Roadbuilding instituted the present action on February 22,
2016, alleging: (1) Iowa Parts violated the Defend Trade
Secrets Act of 2016 (DTSA), 18 U.S.C. § 1836, by
converting CMI Roadbuilding's trade secrets; (2) that
Iowa Parts violated the similar Iowa trade secrets law, Iowa
Uniform Trade Secrets Act (UTSA), Iowa Code § 550; (3) a
common law claim that Iowa Parts converted its trade secrets;
and (4) that Iowa Parts was unjustly enriched by taking CMI
Roadbuilding's trade secrets.
Ultimately,
CMI Roadbuilding moved for summary judgment, and Iowa Parts
filed a competing motion for summary judgment, alleging that
the three-year statute of limitations on the statutory claims
had run because CMI Roadbuilding knew much earlier than
February 2013 what Iowa Parts was doing, and that CMI
Roadbuilding did not keep the trade secrets
"secret" because they distributed them to several
vendors. The district court agreed with Iowa Parts on the
statute of limitations argument, rejecting CMI
Roadbuilding's theory that the "discovery"
doctrine should toll the statute because CMI Roadbuilding
knew, or should have known, well before February 2013 that
its trade secrets were being used by Iowa Parts.
With
regard to the conversion claim, the court found that even if
a longer five-year statute of limitations did not bar the
conversion action, conversion is the "civil
equivalent" to theft. The court determined that while
conversion could be available in a trade secrets claim if the
offending party actually interfered with the original
owner's use of the secrets, in this case, Iowa Parts'
use of the engineering documents has not actually deprived
CMI Roadbuilding of any of its trade secrets. The court noted
that CMI Roadbuilding has never lost the ability to control
and utilize the documents it maintains, and it still retains
all of the engineering documents. Finally, with regard to
unjust enrichment, the court found that CMI Roadbuilding
would have had an adequate remedy at law if it had timely
brought suit, and thus, the equitable doctrine of unjust
enrichment was unavailable. CMI Roadbuilding appeals.
II.
DISCUSSION
Summary
judgment is appropriate "if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). "Summary judgment is proper 'if
the pleadings, the discovery and disclosure materials on
file, and any affidavits show'" an absence of a
genuine dispute as to a material fact. Torgerson v. City
of Rochester,643 F.3d ...