Abb Turbo Systems Ag v. Turbousa, Inc.
774 F.3d 979
Fed. Cir.2014Background
- ABB (plaintiff) sells turbochargers and alleged that TurboNed and TurboUSA (defendants) and certain individuals misappropriated ABB’s turbocharger trade secrets and conspired to do so; ABB amended to add state-law trade-secret and conspiracy claims and joined Hans and Willem Franken.
- ABB’s amended complaint alleges decades-long covert transfers (cash payments, secret meetings, alteration of documents) from ABB employees to TurboNed, subsequent passing of information to TurboUSA, and use of the information by TurboUSA.
- ABB alleged specific protective measures (confidentiality obligations, document markings, access controls) and alleged that TurboNed/TurboUSA paid for and used protected information.
- Defendants moved to dismiss under Rule 12(b)(6), arguing among other things that ABB’s trade-secret claim was time-barred (Fla. Stat. § 688.007) and that ABB failed to plead reasonable secrecy measures (Fla. Stat. § 688.002(4)(b)); Hans also raised personal jurisdiction.
- The district court dismissed the trade-secret and derivative conspiracy claims, reasoning (1) ABB should have discovered misappropriations earlier given their scope and duration, and (2) the scope made it unlikely ABB had reasonable secrecy measures.
- On appeal, the Federal Circuit reversed and remanded, holding that the district court improperly made factual merits determinations at the pleading stage and that ABB’s allegations were sufficient to survive a Rule 12(b)(6) dismissal; alternative defenses not ruled on by the district court were left for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness (statute of limitations under Fla. Stat. § 688.007) | ABB alleges no earlier discovery; complaint does not show discovery before June 2009 | Long-running, geographically dispersed misconduct meant ABB should have discovered earlier | Reversed: statute-of-limitations dismissal improper at pleading stage because complaint does not make untimeliness apparent |
| Adequacy of secrecy measures (Fla. Stat. § 688.002(4)(b)) | ABB pleaded concrete protective measures (NDAs, markings, access restrictions) | Scale and duration of misappropriation make it implausible ABB reasonably protected secrets | Reversed: factual assessment inappropriate at Rule 12(b)(6); allegations plausibly plead reasonable protections |
| Independent economic value & ascertainability | ABB alleges non-reverse-engineerable information, investment, failed reverse engineering, and payments for info | Defendants argue ABB did not adequately allege independent economic value | Not decided on appeal; left to district court to address |
| Knowledge/intent of TurboUSA/Willem (state of mind) | ABB alleged close, long-standing ties and control links between TurboNed, TurboUSA, Hans, and Willem supporting inference of knowledge | Defendants argue most allegations target TurboNed/Hans, not TurboUSA/Willem | Not decided on appeal; left to district court to address |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (apply Twombly’s plausibility test; separate facts from conclusions)
- Speaker v. U.S. Dep’t of Health & Human Servs., 623 F.3d 1371 (11th Cir. standard for reviewing Rule 12(b)(6) dismissal)
- La Grasta v. First Union Secs., Inc., 358 F.3d 840 (statute-of-limitations is an affirmative defense; dismissal appropriate only if time-bar apparent on face)
- Marks v. CDW Computer Ctrs., Inc., 122 F.3d 363 (inquiry notice is generally a factual question)
- Raytheon Co. v. Indigo Sys. Corp., 688 F.3d 1311 (factual disputes about knowledge of misappropriation defeat early disposition)
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (context-specific pleading of scienter; evaluate allegations holistically)