242 F. Supp. 3d 789
W.D. Wis.2017Background
- Thomas Rudd founded Kuryakyn, remained an officer after sale to MAG, and helped his son Aero form Ciro while still a Kuryakyn executive; Rudd also directed Kuryakyn employees to work on projects related to Aero’s ventures.
- Three of Kuryakyn’s in-house designers (Madden, May, Lindloff) left in 2014 and signed with Ciro; some design work (snake logo variants) was created by Madden using a Kuryakyn-provided program but primarily outside business hours.
- Kuryakyn alleges 18 claims (trade secrets, copyright, breach of contract, breach of fiduciary duty, conspiracy, etc.); it amended its complaint and voluntarily dismissed nine counts.
- Defendants moved for summary judgment on the remaining eight claims; the court considered the second amended complaint.
- The court granted summary judgment to defendants on seven claims (breach of contract, state and federal trade secret misappropriation, copyright, conspiracy under Wis. Stat. § 134.01, and others) and denied summary judgment only on Kuryakyn’s breach of fiduciary duty claim against Rudd (Count X), which proceeds to trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract (designers’ employment agreements) | Designers used Kuryakyn resources and failed to keep confidences/assign copyrights in violation of Sections 1–3 | Designers acted outside scope or claims waived/dismissed; plaintiff abandoned many contract claims | Court: Plaintiff waived/dismissed the contract claims; summary judgment for defendants on all breach of contract claims |
| Trade secret misappropriation (UTSA & DTSA) | Kuryakyn identified product designs, supplier info, market research, pricing, app development, etc., as trade secrets | Alleged categories are vague, publicly ascertainable, or reverse-engineerable; plaintiff failed to specify discrete secrets | Court: Plaintiff’s categories are too vague and not shown to meet statutory trade-secret elements; summary judgment for defendants |
| Breach of fiduciary duty (Rudd) | Rudd diverted company resources to Aero, forwarded confidential emails, paused/bought megaphone project, and solicited designers to join Ciro | Rudd was preparing to compete (permitted), did not usurp opportunity, and no proof of personal profit or corporate harm tied to specific confidential uses | Court: Genuine disputes exist as to (1) diverting resources (Klock Werks work) and (2) conspiring to effectuate mass resignation of designers; summary judgment denied as to Count X (goes to trial) |
| Copyright ownership of Ciro logo | Madden created logo while employed and thus it is a work made for hire owned by Kuryakyn | Madden designed the logo off-hours, for Aero/Ciro, was paid separately; not within scope of employment | Court: Evidence shows work done outside authorized time/space and not motivated to serve employer; no work-for-hire — summary judgment for defendants on copyright claim |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard) (sets genuine-dispute/material-fact standard for summary judgment)
- Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (copyright) (elements for copyright infringement: ownership and copying)
- IDX Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581 (7th Cir.) (trade-secret specificity requirements at summary judgment)
- ConFold Pac., Inc. v. Polaris Indust., Inc., 433 F.3d 952 (7th Cir.) (reverse engineering as lawful means to obtain product design)
- Broz v. Cellular Info. Sys., Inc., 673 A.2d 148 (Del.) (corporate fiduciary cannot usurp corporate opportunity)