2021 Ohio 147
Ohio Ct. App.2021Background
- NovoSource developed FDA-cleared knee and hip implants and assembled design-history files (DHF) used in 510(k) submissions; Harris was a director and had business ties through SCM/TPOC.
- NovoSource CEO Cothrel gave NovoSource DHFs on a flash drive to Harris (addressed to Harris/TPOC) in August 2014; Cothrel testified he intended use limitations (no mirrored/identical products) but provided no written restrictions.
- Harris (via TPOC/Modal) later submitted mirrored 510(k) applications and obtained FDA clearances for products essentially identical to NovoSource’s.
- Rhododendron acquired many NovoSource assets from a receiver in 2017 (pursuant to a Fiduciary Bill of Sale that expressly excluded contracts) and sued in 2017 asserting trade-secret and contract claims among others.
- The trial court granted defendants’ motion for summary judgment on remaining counts while a motion to compel discovery and earlier motions to dismiss were pending; Rhododendron appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Trial court ruled on summary judgment without deciding motion to compel | Trial court’s failure to rule on motion to compel deprived Rhododendron of due process and prejudiced its ability to oppose summary judgment | Where a motion to compel is pending, the nonmovant must seek delay under Civ.R.56(F) or allege prejudice; absence of such request waives the complaint | Overruled for Rhododendron — no Civ.R.56(F) request or prejudice shown, so implied denial is not reversible error |
| 2) Whether DHFs remained trade secrets after Cothrel’s disclosure to Harris and whether Harris misappropriated them by "use" | DHFs retained trade-secret status because limitations on Harris’s use existed (oral agreement, fiduciary/contractual duties); Harris exceeded scope by mirrored 510(k)s | Cothrel voluntarily disclosed DHFs to Harris for his own use; that disclosure destroyed secrecy as a matter of law | Partial reversal: court found a genuine issue of material fact that an oral limitation existed and that Harris may have misappropriated the DHFs by improper use; summary judgment on OUTSA claims as to Harris vacated in part |
| 3) Whether Rhododendron had standing to sue for breach of contract (counts 9–10) | Rhododendron claims it was assigned NovoSource’s legal claims and can sue for contract breaches | Fiduciary Bill of Sale expressly excluded "each and every Contract to which [NovoSource] is a party," so Rhododendron did not acquire contract rights | Affirmed for defendants — no genuine issue: contracts were Excluded Assets, so Rhododendron lacked contractual standing to sue |
| 4) Whether the trial court improperly converted prior motions to dismiss into summary-judgment rulings on other counts | Trial court converted Motions to Dismiss into summary judgment and erred, or improperly adopted defendants’ factual narrative by incorporation | Defendants filed their own summary-judgment motion that incorporated prior arguments; incorporation alone does not convert motions, and summary judgment may resolve standing where no fact issue exists | Overruled for Rhododendron — trial court permissibly decided issues on summary judgment; incorporation by reference is not reversible error; factual disputes remain only as to Harris’s misuse |
Key Cases Cited
- Miller v. Bike Athletic Co., 80 Ohio St.3d 607, 687 N.E.2d 735 (1998) (explains the Civ.R.56 standard for summary judgment)
- Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) (public disclosure extinguishes trade-secret protection)
- Hubbell v. Xenia, 115 Ohio St.3d 77, 873 N.E.2d 878 (2007) (denial of summary judgment is generally not appealable)
- Rhodes v. Rhodes Indus., Inc., 71 Ohio App.3d 797, 595 N.E.2d 441 (1991) (parol evidence cannot contradict a clear written agreement)
- Cotton v. Certain Underwriters at Lloyd's of London, 831 F.3d 592 (5th Cir. 2016) (contractual standing concerns the merits, not jurisdiction)
- U.S. Bank Natl. Assn. v. Courthouse Crossing Acquisitions, LLC, 101 N.E.3d 1243 (Ohio Ct. App. 2017) (contractual standing is assessed with the merits)