926 F. Supp. 2d 935
S.D. Tex.2013Background
- Ultraflo sues Pelican Tank, Mueller, and Worldwide for misappropriation of trade secrets, unfair competition, and copyright infringement seeking injunctive relief and damages.
- Ultraflo alleges Mueller used Ultraflo’s trade secret drawings to develop a competing valve at Worldwide after leaving Ultraflo in 2005.
- The court previously held certain state-law claims preempted by the Copyright Act; Ultraflo later amended to add Worldwide and asserted direct copyright claims.
- Defendants move for partial summary judgment on statute of limitations, asserting time-barred and/or not relation back to the original filings; Ultraflo opposes.
- Ultraflo contends the trade secrets include 390-series valve drawings and dimensional information, protected by secrecy and confidential relationships; defendants dispute secrecy and value.
- The court analyzes relation back, discovery rule, fraudulent concealment, and the proper measurement of damages under trade secret doctrine, ultimately denying in part and granting in part the motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Relation back and limitations applicability | Ultraflo argues relation back extends limitations to Worldwide via original filing and consolidated preemption context. | WorldWide asserts no relation back to original pleading and argues time-bar for misappropriation/conspiracy. | Relation back applies to Worldwide under same conduct; some claims time-barred for others. |
| Existence and protectability of Ultraflo's trade secrets | Drawings and dimensional data for 390 valve are trade secrets with secrecy and commercial value. | Dimensions are public/standard; information readily copi able; no meaningful secrecy or value. | Genuine issues of material fact exist; trade secrets may exist despite public dimensions, warranting trial. |
| Improper acquisition and use of trade secrets | Mueller and Worldwide obtained drawings through improper means and used them in competing products. | Drawings were disseminated broadly; reverse engineering and public access undermine secrecy; Mueller’s separate actions insufficient. | Evidence supports potential misappropriation; issues for trial on improper acquisition/use. |
| Damages and injunctive relief under trade secret law | Ultraflo seeks disgorgement and injunctive relief based on profits earned from misappropriation and ongoing risk. | Damages uncertain; profits may belong to Worldwide; no provable lost sales or profits; injunction moot for Mueller. | Damages and injunctive relief are plausible; the court denied certain limitations defenses and kept claims viable for trial. |
| Scope of misappropriation claims against Tank | Tank is closely connected to Worldwide; misappropriation entangled with related entities; Tank may be liable via agency/identity. | Tank had no involvement; claims against Tank should be dismissed; only Worldwide relevant. | Claims against Tank and Mueller relate to broader conspiracy/covering relationships; some claims survive to trial. |
Key Cases Cited
- Krupski v. Costa Crociere S.p.A., 560 U.S. 538 (2010) (relation back governs amendments adding parties based on plaintiff's intent and notice)
- Altai, Inc. v. Computer Assocs. Int’l, Inc., 918 S.W.2d 453 (Tex. 1996) (discovery rule not extended to misappropriation of trade secrets)
- University Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518 (5th Cir. 1974) (flexible damages measure for trade secrets; profits and royalties framework)
- Metallurgical Indus., Inc. v. Fourtek, Inc., 790 F.2d 1195 (5th Cir. 1986) (limits on secrecy and permissible disclosures; confidentiality context)
- Gonzales v. Zamora, 791 S.W.2d 258 (Tex. App.—Corpus Christi 1990) (secrecy and trade secret protections; public knowledge limits)