521 F. App'x 453
6th Cir.2013Background
- PHPK sues Eden Cryogenics, Hensley, and Mitchell for misappropriation of trade secrets under OUTSA among other claims.
- Hensley and Mitchell previously worked for CVI/Old PHPK; Mitchell retained shop drawings after leaving in 1999 with Hensley’s alleged authorization.
- PHPK purchased Old PHPK assets in 2004 and continued using its drawings; Mitchell later worked for Eden (through Brehon Cryogenics) designing products.
- PHPK discovers Eden underbids and uses PHPK’s shop drawings; PHPK sues for misappropriation, along with other claims later narrowed to misappropriation only.
- District court granted summary judgment to defendants on OUTSA misappropriation, holding a four-year limitations period barred the claim.
- Appellate court reverses, finding disputed facts on (i) whether misappropriation occurred via improper means, (ii) scope of consent, (iii) whether drawings qualify as trade secrets, and (iv) Mitchell’s copyright interests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OUTSA tolls bar the claim as time-barred | PHPK argues discovery rule and improper timing preclude bar. | Defendants contend four-year limit runs from misappropriation and was triggered by 1999 events. | Material facts preclude summary judgment on limitations. |
| Whether Mitchell properly acquired/used PHPK's shop drawings | Mitchell retained drawings with authorization; misappropriation not shown. | Retention could be misappropriation if improper; otherwise no misappropriation. | Genuine disputes exist on scope of consent and possible improper acquisition. |
| Whether the shop drawings constitute trade secrets under OUTSA | Drawings were trade secrets given secrecy measures and business value. | Drawings may not have been protected as trade secrets; reasonableness of secrecy measures contested. | Factual questions on secrecy measures and trade-secret status remain. |
| Whether Mitchell held a copyright interest defeating misappropriation | Possible transfer of copyright to PHPK via agreement/language on shop drawings. | No clear work-made-for-hire or ownership transfer; potential issue precludes summary judgment. | Genuine issue of material fact on copyright ownership defeats summary judgment. |
Key Cases Cited
- Cada v. Baxter Healthcare Corp., 920 F.2d 446 (7th Cir. 1990) (discovery rule and injury prerequisite considerations under OUTSA)
- State ex rel. The Plain Dealer v. Ohio Dep’t of Ins., 687 N.E.2d 661 (Ohio 1997) (six-factor test for trade secrets reasonableness of confidentiality measures)
- Norgard v. Brush Wellman, Inc., 766 N.E.2d 977 (Ohio 2002) (accrual and discovery rule timing in trade secrets actions)
- Niemi v. NHK Spring Co., Ltd., 543 F.3d 294 (6th Cir. 2008) (reasonableness of secrecy measures is a question for trier of fact)
- Hoover Transp. Servs., Inc. v. Frye, 77 F. App’x 776 (6th Cir. 2003) (trade secret remedy and factual questions regarding secrecy)
- Valco Cincinnati, Inc. v. N & D Machining Serv., Inc., 492 N.E.2d 819 (Ohio 1986) (court should not substitute its judgment on the reasonableness of secrecy measures)
- Gilleland v. Schanhals, 55 F. App’x 257 (6th Cir. 2003) (work-made-for-hire transfers can obviate copyright ownership disputes; summary judgment premised on absence of clear agreement)