Farmers Edge Inc. v. Farmobile, LLC
970 F.3d 1027
8th Cir.2020Background
- Farmers Edge, successor to Crop Ventures (FEI), sued three former Crop Ventures personnel (Tatge, Gerlock, Nuss) and their new company Farmobile, alleging they took proprietary information and asserted claims for breach of express/implied contract, failure to assign inventions, breach of duty of loyalty, and trade-secret misappropriation.
- Nuss signed an April 2012 Confidentiality and Non-Competition Agreement as an independent contractor; he later rejoined Crop Ventures as an employee in October 2012 and did not re-sign that contract. All three left Crop Ventures in July 2013 and founded Farmobile by September 2013, filing provisional patent applications that month and a Canadian application in 2015.
- The district court denied FEI’s summary judgment motion and granted in part and denied in part Farmobile’s cross-motion; FEI appealed only the adverse rulings discussed here.
- The district court held (1) the April 2012 agreement did not bind Nuss during his later employment, (2) no implied "hired-to-invent" assignment existed, (3) no breach of duty of loyalty was shown, and (4) FEI failed to take reasonable steps to keep the alleged trade secrets confidential (disclosing them to a third party without an NDA), so NTSA/DTSA claims failed.
- The Eighth Circuit affirmed the district court on all issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Express contract (Nuss) | April 2012 confidentiality/non-compete continued to bind Nuss after he rejoined as an employee | April 2012 agreement applied only to his contractor term and did not resume on re-employment | Agreement did not bind Nuss during his later employment; no breach of express contract |
| Implied contract / hired-to-invent | Defendants were hired to invent products, creating an implied assignment of invention ownership to FEI | No specific directive to invent; no meeting of the minds for an implied assignment | No implied-in-fact hired-to-invent contract; insufficient specific assignment to invent |
| Duty of loyalty | Defendants misused insider info and formed Farmobile, breaching loyalty | Actions were preparatory, not concurrent duty-breaching conduct; no solicitation or dual employment | No breach of duty of loyalty; FEI failed to show substantial hindrance to employer |
| Trade secrets (NTSA/DTSA) | Alleged information qualifies as trade secrets and was misappropriated | FEI failed to take reasonable measures to keep information secret | FEI disclosed information to a third party without confidentiality protections; no reasonable steps, so NTSA/DTSA claims fail |
Key Cases Cited
- Torgerson v. City of Rochester, 643 F.3d 1031 (8th Cir. 2011) (standard of review for summary judgment de novo)
- Baltimore & O.R. Co. v. United States, 261 U.S. 592 (1923) (definition of implied-in-fact contract)
- Teets v. Chromalloy Gas Turbine Corp., 83 F.3d 403 (Fed. Cir. 1996) (framework for hired-to-invent implied assignment analysis)
- Banks v. Unisys Corp., 228 F.3d 1357 (Fed. Cir. 2000) (general rule that inventors own patent rights absent contract or hired-to-invent exception)
- West Plains, LLC v. Retzlaff Grain Co., 870 F.3d 774 (8th Cir. 2017) (examples of loyalty-breach liability where employees aided a competitor and harmed employer)
- CMI Roadbuilding, Inc. v. Iowa Parts, Inc., 920 F.3d 560 (8th Cir. 2019) (DTSA/NTSA require reasonable measures to maintain secrecy and economic value)
- Armstrong v. Clarkson Coll., 901 N.W.2d 1 (Neb. 2017) (Nebraska standard for finding implied contracts)