J.P. STADTMUELLER, District Judge.
On October 17, 2007, plaintiff Metso Minerals Industries, Inc. ("Metso") filed suit against FLSmidth-Excel LLC ("Excel"). In the ensuing years, Metso filed several amended complaints, adding numerous new defendants. In Metso's fifth, and final, amended complaint, it alleged that all of the defendants (excluding Cheryl Sullivan) partook in misappropriation of certain trade secrets from Metso. Defendants
Metso is engaged in the manufacture and sale of high performance conical rock crushers, including the model HP400. In December of 2002, Metso sold all of the engineering, design information, and intellectual property rights (except for patent and trademark rights) related to the HP400 to Metso Minerals Macon ("Macon"), a separate legal entity located in Macon, France. As part of that transaction,
Metso contends that two of the individual defendants, Messrs. Wade and Martinez, misappropriated trade secrets relating to the HP400. Martinez was previously employed by Metso, and Wade was previously employed by one of Metso's authorized repair facilities; both are currently employed by Excel. Metso alleges that Wade impermissibly took HP400 technical data sheets and other Metso detailed design information to his new job at Excel Foundry & Machine, Inc. ("Foundry"), and then to Excel where he transferred a year later. Metso alleges that Martinez impermissibly took a copy of the HP400 General Assembly, Master Layout CAD
Defendants have moved for summary judgment on Metso's claims pertaining to HP400 trade secrets. Defendants claim that because Metso did not "own" the HP400 trade secrets when they were taken, but rather merely possessed such information pursuant to a non-exclusive license
Summary judgment is appropriate where the movant establishes that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Material facts" are those facts which "might affect the outcome of the suit," and a material fact is "genuine" if a reasonable finder of fact could find in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate where a party has failed to make "a showing sufficient to establish the existence of an element essential to that party's case and on which the party will bear the burden of proof at trial." Celotex, 477 U.S. at 317, 106 S.Ct. 2548. A party opposing summary judgment may not rest upon the mere allegations or denials of the adverse party's pleading, but must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). Any doubt as to the existence of a material fact is to be resolved against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.
Federal courts are, per Article III of the Constitution, limited to adjudicating actual "cases" and "controversies." From this limitation emerges the requirement that a litigant have "standing" to invoke the power of a federal court. To have constitutional standing, "[a] plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) (citation omitted). The test for constitutional standing is a three-part inquiry:
See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Defendants' argument focuses exclusively on the first question—whether plaintiff has suffered the invasion of a legally protected interest.
Metso's cause of action for misappropriation of trade secrets arises from Wisconsin's version of the Uniform Trade Secrets Act, Wis. Stat. § 134.90. Thus, for Metso to demonstrate that misappropriation of its HP400 trade secrets constituted the invasion of a legally protected interest, it must show that its interest in those trade secrets is protected by § 134.90. The statute reads in relevant part:
Wis. Stat. § 134.90(2). Thus, the question before the court is whether § 134.90 requires that a plaintiff "own" the trade secret in order to bring suit for the trade secret's misappropriation. Both parties agree that this is a question that the Wisconsin courts have not addressed. Defendants maintain that the plain language of the statute requires ownership, and that persuasive case law requires ownership. Metso argues that the plain language of the statute does not require ownership, and that persuasive case teaches that possession of the misappropriated trade secret is sufficient to confer standing under the act.
Clearly, the above cited portion of § 134.90 does not expressly limit protection under the statute to those who own the trade secret in question. Defendants argue that the statute's utilization of the phrase: "the trade secret of another" (emphasis added) implicitly limits trade secret protection to owners. However, the phrase "of another" on its face simply describes the relationship between the misappropriator and the trade secret—namely that the trade secret belongs to one other than the misappropriator. The phrase does not, implicitly or otherwise, limit protection only to the "owner" of the trade secret. Presumably, if the legislature had wanted to so limit the protection of the act it would have used language explicitly stating as much. See Wis. Stat. § 943.205 (making it a Class I felony to "with intent deprive or withhold from the owner thereof the control of a trade secret") (emphasis added).
Though the relevant language of the statute does not expressly limit statutory protection to the owner or exclusive licensee of the trade secret, and though the comment to the UTSA teaches away from imposing such a limitation, defendants argue that § 134.90(3)(b) evidences that such a limitation should be imposed. Wis. Stat. § 134.90(3)(b) reads in relevant part:
Id. However, Metso is not seeking a royalty under § 134.90(3)(b); Metso is seeking compensatory damages, punitive damages, attorney fees, and injunctive relief. The portions of the statute pertaining to injunctive relief, damages, and attorneys fees make no reference to an "owner" of the trade secrets, rather they allude only to the "complainant" and the "prevailing party." See Wis. Stat. § 134.90(3)(a) & (4). Metso is certainly the "complainant," and Metso could certainly conceivably end up being the "prevailing party." Thus, there is no indication from the text of the statute that Metso would not fall within the protection of § 134.90.
Defendants describe Omnitech Int'l., Inc. v. Clorox Co., 11 F.3d 1316, 1323 (5th Cir.1994) as "affirming on other grounds but noting district court was correct in finding plaintiff could not assert trade secret misappropriation claim against Clorox because plaintiff had previously transferred relevant trade secrets to another company." (Defs. Br. Supp. Mot. S.J. [Dkt. 286] at 12). However, this description of Omnitech is simply disingenuous. The Omnitech court explained that the trial court granted Clorox's Rule 50 motion on Omnitech's trade secrets claim because the trial court found that: 1) Omnitech had transferred any trade secrets it had to a third party; 2) that Omnitech did not own the trade secrets and did not have any interest in them;
Id. at 1323 n. 8. While the standing issue was not addressed or decided by the court of appeals, one cannot help but note that the court, despite stating that it was undisputed that Omnitech had sold the trade secrets prior to its dealings with Clorox, still only went so far as to say there was "some question ... as to whether Omnitech had standing." Under defendants' proffered view of standing in trade secret cases, there would have been no question as to the fact that Omnitech lacked standing. This court, in reaching its holding in the instant case, certainly is not relying on the Omnitech court's dicta regarding standing; however, suffice it to say that Omnitech offers no support for defendants' position, and could conceivably be read as offering very mild support for Metso's position.
Defendants also cite to RMS Software Development, Inc. v. LCS, Inc., 1998 WL 74245 (Tex.App.) in support of their claim that Metso lacks standing. The RMS court found that the plain language of the Colorado Uniform Trade Secret Act (the applicable law in the case) "contemplate[d] that the `owner' of a trade secret is responsible
RMS Software, 1998 WL 74245 at *4 (emphasis in original) (quoting in full Colo. Rev.Stat. Ann. § 7-74-102(4)). Unlike the Colorado statutory language, Wisconsin's statutory definition of "trade secret" makes no reference to the "owner" of the secret. There is nothing in the Wisconsin statutory language that indicates that only the "owner" of a trade secret may be responsible for preventing the secret's unauthorized disclosure. Hence, RMS Software is inapposite to the question of whether or not Metso possesses standing under Wis. Stat. § 134.90.
Also inapposite is Althin CD Medical, Inc. v. West Suburban Kidney Center, S.C., 874 F.Supp. 837 (N.D.Ill.1994), another case cited by defendants as evidence that a licensee of a trade secret lacks standing to sue for misappropriation. In that case, Albert Einstein Medical College ("Einstein") owned trade secrets that it licensed to a company called Archon, which in turn licensed the trade secrets to a company named Althin. Id. at 839. Archon was not an exclusive licensee of the trade secrets, and thus neither was Althin. Id. at 838-39. Separately, Einstein also granted permission to Montifiore Medical College ("MMC") to utilize the trade secrets for the term of one year. Id. at 839. It was alleged that the defendants in the case, West Suburban Kidney Center (WSKC) and Dr. Sherman Levine, misappropriated the trade secrets from MMC. Id. Althin filed suit.
Althin is immediately distinguishable from the instant case, because Althin was not the party from which the secrets were allegedly misappropriated, whereas Metso is. See UTSA §§ 2, 3 cmt. Additionally, in finding that Althin did not have standing to sue for trade secret misappropriation, the court focused on the terms of Archon's license from Einstein, and Althin's sub-license from Archon. The license from Einstein to Archon required Archon to notify Einstein if misappropriation occurred, and to obtain written consent from Einstein prior to filing suit. Id. at 841. Because Archon could not license to Althin any more rights than it had, clearly Althin was under the same contractual obligation to notify Einstein and obtain its consent before filing suit for trade secret misappropriation. Id. at 841-42. The court found that because Althin did not comply with these contractual requirements, Althin lacked standing on its trade secret claims. This too is distinguishable, for there is no allegation that the agreement between Metso and Macon required Metso to notify Macon of misappropriation or to obtain Macon's consent to file suit. Not only is Althin distinguishable, it simply does not support defendants' argument. The Althin court's ruling on Althin's standing to bring trade secret claims was based purely on Althin's failure to comply with its contractual obligations. The court gave no indication that Althin lacked standing due to the fact that it merely
The only case cited by defendants, regarding the standing of a "non-owner" to sue for trade secret misappropriation, that actually supports defendants' proposition is Gabriel Int'l, Inc. v. M & D Industries of Louisiana, Inc., 719 F.Supp. 522 (W.D.La.1989). However, that is a four page opinion, decided in 1989, which conclusorily states that the Louisiana's UTSA
In DTM, the Fourth Circuit Court of Appeals held that a company that had neither "fee simple ownership" of a trade secret, nor had an exclusive license to the trade secret, nonetheless had standing to sue for misappropriation of the trade secret. 245 F.3d at 332. The court reasoned that "[t]he `proprietary aspect' of a trade secret flows, not from the knowledge itself, but from its secrecy." Id. Thus, "one who possesses non-disclosed knowledge may demand remedies as provided by the [Maryland Uniform Trade Secrets Act]
Defendants in the instant case attempt to distinguish DTM by arguing that it did not involve a licensee-licensor relationship.
It is well established that non-exclusive licensees lack standing to bring a claim for patent infringement. The requirement of an ownership interest in a patent is found in the Patent Act of 1952 itself which states "a patentee shall have remedy by civil action for infringement of his patent." 35 U.S.C. § 281. "The word `patentee' includes not only the patentee to whom the patent was issued but also the successors in title to the patentee." 35 U.S.C. § 100 (emphasis added). Simply being a licensee of a patent is not sufficient though, as "[a] holder of such a nonexclusive license suffers no legal injury from infringement and, thus, has no standing to bring suit or even join in a suit with the patentee." Ortho Pharmaceutical Corp. v. Genetics Institute, Inc., 52 F.3d 1026, 1031 (Fed.Cir. 1995).
Despite defendants' arguments to the contrary, patent infringement and trade secret misappropriation are not analogous. There is no statutory language in the UTSA limiting standing based on proprietary interest as there is in the patent statute. Additionally, the reason that a non-exclusive patent licensee does not suffer legal injury from a patent infringement is because he does not own the property with which has been interfered (i.e., the patent). At its core, patent infringement is an intrusion upon the property of another. It is, of course, logical that only a party that has the right to exclude others (i.e., the owner or an exclusive licensee) from that property should have standing to sue for such an intrusion. However, misappropriation of a trade secret is not only an intrusion on property, it is also a breach of confidence. See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 481-82, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974) ("The maintenance of standards of commercial ethics and the encouragement of invention are the broadly stated policies behind trade secret law."); Abbott Lab. v. Norse Chem. Corp., 33 Wis.2d 445, 147 N.W.2d 529, 533 (1967) ("The basis of the doctrine [of trade secret law] is an attempt to enforce morality in business."); Drill Parts & Serv. Co., Inc. v. Joy Mfg. Co., 439 So.2d 43, 49 (Ala.1983) (Alabama Supreme Court adopting the law of trade secret for the first time and noting that it protects generally against breach of faith and reprehensible means of learning another's secret); Ed Nowogroski Ins., Inc. v. Rucker, 137 Wn.2d 427, 971 P.2d 936, 942 (1999) ("A purpose of trade secrets law is to maintain and promote standards of commercial ethics and fair dealing in protecting those secrets."); 1 Melvin F. Jager, Trade Secret Law § 1.03, at 1-4 to 1-8 ("The encouragement of increasingly higher standards of fairness and commercial morality continues to be the touchstone of trade secret law in the courts."). The victim of such a breach of confidence has suffered legal injury as a result of the breach, and has standing to file suit.
Ultimately, patent infringement and trade secret misappropriation are not directly analogous, especially in regards to whom may bring suit therefor. As the court in DTM recognized, a party in possession of a trade secret should be able to bring suit against another party that "misappropriates" that trade secret. This holding has been followed by other courts facing similar questions. See Daimler Chrysler Services v. Summit Nat'l, 2006 WL 1420812, *8 (E.D.Mich.2006) ("The Court agrees with the holding in DTM Research that for purposes of trade secrets law, the focus is appropriately on the knowledge, or possession, of the trade secret, rather than on mere `ownership' in the traditional sense of the word."); Parking Co., L.P. v. Rhode Island Airport Corp., 2005 WL 419827, *3 (R.I.Super.2005) (citing DTM and holding that Rhode Island's UTSA
Defendants maintain that Metso is not the "Real Party in Interest" on the trade secret claims. See Fed.R.Civ.P. 17(a)(1) ("An action must be prosecuted in the name of the real party in interest."). However, defendants only present three arguments regarding the real-party-in-interest question: 1) that a finding of constitutional standing is not dispositive of the Rule 17 inquiry; 2) that defendants have not waived their Rule 17(a) objection; and 3) that it is too late for Metso to substitute Macon as the Real Party in Interest. Nowhere do defendants present argument as to why Metso is not the Real Party in Interest.
Wisconsin's version of the UTSA does not expressly require trade secret ownership in order to bring suit for misappropriation. Additionally, comments to the UTSA teach away from such a requirement. These facts, coupled with Wisconsin's generous standing test, see Guardianship & Protective Placement of Carl F.S., 2001 WI App 97, § 5, 242 Wis.2d 605, 626 N.W.2d 330 (2001)
Furthermore, despite stating that Metso is not a Real Party in Interest, defendants present no specific argument in support thereof. Regardless, in this instance the court finds that Metso is a Real Party in Interest.
Accordingly,
MODERN LICENSING LAW § 17:10 (footnotes omitted).