Plаintiff Heraeus Medical GmbH, a German company specializing in the production of bone cements, alleges that Defendant Esschem, Inc. worked in concert with Respondent Biomet, Inc. in misappropriating Heraeus' trade secrets to produce competing bone cements for Biomet. Heraeus learned of Biomet's alleged misappropriation in August of 2005, when the competing bone cements were launched into the marketplace. By 2009 at the latest, Heraeus possessed еvidence revealing that Esschem was allegedly assisting Biomet in misappropriating Heraeus' trade secrets by supplying critical copolymers used to create the competing bone cements.
More than five years later, on September 8, 2014, Heraeus filed a complaint against Esschem. Esschem now moves for summary judgment, arguing that all of Heraeus' claims are time barred by the applicable statutes of limitations. For reasons that follow, the Court will grant the motion.
I. BACKGROUND
Unless otherwise noted, the following facts are undisputed. Heraeus Medical
In 1959, Heraeus introduced a successful bone cement line called Palacos to the market. In 1972, it entered into a distribution agreement with Merck to expand its market share, whereby Heraeus would provide its trade secrets to Merck so that Merck could obtain regulatory approval for the products and distribute them in the United States and elsewhere. Merck was required to protect Heraeus' trade secrets under the terms of the agreement.
More than twenty years later, in 1997, Merck entered into a joint venture with Biomet. Heraeus initially agreed to supply bone cement products to the Merck/Biomet joint venture. However, in the spring of 2004, Merck sold its interest in the joint venture to Biomet, without informing Heraeus. This sale transferred Merck's interest in its distribution agreement with Heraeus to Biomet. Specifically, Biomet obtained Heraeus' trade secrets from the sale, without Heraeus' consent. After learning of the sale to Biomet, in February of 2005, Heraeus advised Biomet that it would stop supplying its bone cement products to the joint venture as of August 31, 2005.
However, by that point, Biomet had contracted with Defendant Esschem, a Pennsylvania company specializing in the creation of copolymers used in medical products, to produce certain copolymers needed to manufacture its own bone cements. It is alleged that Biomet provided Heraeus' trade secrets to Esschem to make these copolymers. With Biomet's guidance, Esschem developed copolymers R262 and R263, which are used in Biomet's bone cements.
By August of 2005, Biomet was able to introduce a line of bone cements that directly competed with Heraeus' products. At this time, Heraeus suspected that its trade secrets had been misappropriated, and conducted an investigation. Heraeus tested samples of Biomet's bone cements, confirming that they were virtually identical to those Heraeus sold, except for minor variations. Its investigation also "revealed that raw materials for bone cement products bearing Esschem's name and address were delivered to ... [Biomet's] contract manufacturer in Germany."
On December 30, 2008, Heraeus filed suit against Biomet in Germany, alleging that Biomet's bone cement products were developed using trade secrets misappropriated from Heraeus.
Heraeus has sued Biomet in courts throughout Europe. As part of its litigation strategy against Biomet, on January 29, 2009, Heraeus brought a discovery action pursuant to
Esschem is the central character because in order to prove trade secret[ ] [mis]appropriation in Germany, Heraeus is going to need to show that those trade secrets were in Esschem's file. Esschem is the party that's manufacturing the two key components of the bone cements. If Esschem doesn't have the trade secrets, it's going to be impossible to show that the trade secrets were used inappropriately, and thus the German action would not be able to be fully successful....Because they need the Esschem evidence, and the Esschem evidence would very likely show which Biomet entity gave it to them, which provide the link in the chain of custody to Biomet.6
On July 28, 2010, the Third Circuit vacated this Court's ruling with instructions to grant discovery on an expedited basis.
I will represent as [an] officer of the court that [Heraeus'] German counsel, including Dr. Klinkert believes that with the information that we have from Esschem, combined with the information that we have [from] Biomet, that he has a very strong case, a trade secret[ ] [mis]appropriation [case] in Germany, but without that evidence, it's going to be awful hard for them, so it's really important evidence.9
Counsel continued by stating: "it's the specific ones in the Esschem production combined with the ones in the Biomet production that really support the case strongly in Germany,"
II. STANDARD OF REVIEW
Upon motion of a party, summary judgment is appropriate if the "materials in the record" show "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."
In evaluating a summary judgment motion, a court "must view the facts in the light most favorable to the non-moving party," and make every reasonable inference in that party's favor.
III. DISCUSSION
A. THE MISAPPROPRIATION OF TRADE SECRETS CLAIMS ARE TIME BARRED
Heraeus raises a misappropriation of trade secrets claim and a conspiracy to misappropriate trade secrets claim against Esschem. A party misappropriates a trade secret when it "acquires knowledge of another's trade secret in circumstances giving rise to a duty to maintain its confidentiality and then discloses or uses that trade secret without the other's consent."
The three-year statute of limitations in PUTSA incorporates the "discоvery rule," which is an exception to the general rule that a claim accrues at the time the alleged wrongful act was committed.
Heraeus' misаppropriation of trade secrets claims are premised on the allegation that Biomet gained access to Heraeus' trade secrets and disclosed them to Esschem to create the competing bone cements that were introduced to the market in August of 2005. However, Heraeus waited until September 8, 2014 to bring its misappropriation claims against Esschem. Pursuant to PUTSA's three-year statute of limitations, in order for Heraeus' misappropriation claims to be actionable, the Court would have to find that the claims did not accrue until after September 8, 2011. To so conclude would be contrary to the evidence that Heraeus knew, or reasonably should have known, of the facts upon which its misappropriation claims are based years before September 8, 2011.
Heraeus' admissions in the German litigation and the § 1782 discovery action demonstrate that there is no genuine issue of material fact that its misappropriation claims are time barred because Heraeus knew, оr reasonably should have known, of the factual basis for the misappropriation claims well before September 8, 2011. In fact, the Court concludes that Heraeus knew, or reasonably should have known, of the facts supporting its misappropriation claims by January 29, 2009 at the very latest.
First, in August of 2005, Heraeus reasonably suspected that Biomet had misappropriated its trade secrets once Biomet had introduced its competing products into the market. Shortly thereafter, Heraeus conducted an investigation and discovered that Esschem was providing the raw materials that were essential in creating the competing bone cements. By Heraeus' own admission, the investigation "revealed that raw materials for bone cement products bearing Esschem's name and address were delivered to ... [Biomet's] contract manufacturer in Germany."
Third, on January 29, 2009, Heraeus brought a § 1782 discovеry action against Esschem in this Court to support its claims against Biomet in the German action. Heraeus brought this discovery action because it believed that Biomet had misappropriated its trade secrets by disclosing them to Esschem. During this § 1782 action, Heraeus admitted that it believed "that one or more members of the Biomet Group instructed Esschem to manufacture these raw materials using Heraeus' highly confidential information and trade secrets."
Heraeus contends that it not only needed the discovery in the § 1782 action before this Court, but also needed discovery that it sought in a § 1782 action it filed against Esschem in Indiana, in order to bring its misappropriation claims against Esschem. This argument is unpersuasive. Heraeus knew that it had been injured, but rathеr than follow Pennsylvania's approach to the discovery rule, it now seeks to apply a knowledge standard in which a party could effectively toll the statute of limitations until it receives all the evidence it needs to prove its claims. Such a "discovery first, claim second" standard would significantly undermine the discovery rule, and "would require an insufficient degree of diligence on the part of the potential claimant."
B. THE REMAINING CLAIMS ARE TIME BARRED
Next, the Court must determine whether any of Heraeus' remaining claims may proceed. In addition to the misappropriation of trade secrets claims, Heraeus raised claims of unjust enrichment, unfair competition, tortious interference with economic advantage, and conversion, whiсh rely on the same factual allegations as its misappropriation claims.
While claims of unjust enrichment are subject to a four-year statute of limitations, claims of unfair competition, tortious interference with economic advantage, and conversion are subject to a two-year statute of limitations.
IV. CONCLUSION
For the foregoing reasons, Esschem's motion for summary judgment on the applicable statutes of limitations will be granted. An appropriate order follows.
Notes
Compl. at ¶ 60.
On June 5, 2014, the Frankfurt Court of Appeals in Germany reversed a ruling of the lower court and entered judgment in favor of Heraeus, finding that Biomet used three technical specifications which were Heraeus' trade secrets, and which Biomet knew were trade secrets, to guide Esschem in developing copolymers for use in Biomet's bone cement. The court enjoined Biomet from manufacturing, offering, or distributing bone cement products which use Heraeus' trade secrets, including those containing Esschem's copolymers R262 and R263. Heraeus alleges that, despite the German court order, Biomet continues to buy R262 and R263 from Esschem and to sell bone cement developed using Heraeus' trade secrets оutside of Germany. Both parties have appealed the ruling of the Frankfurt Court of Appeals.
In a brief Heraeus submitted in the German Action on October 28, 2009, Heraeus wrote: "It is therefore proven that [Biomet]...has direct access to [Heraeus'] industrial secrets with respect to the precise specifications and margins of the copolymers used by [Heraeus], as [Biomet] knew them and passed them on to Esschem." Mot. for Summ. J. on Statutes of Limitations, Ex. 5 at 19 (translated from German to English). Additionally, in a brief submitted on July 30, 2010 to thе German court, Heraeus noted that Biomet "makes every effort to prevent [Heraeus from] prov[ing] that [Heraeus'] trade secrets from CE certification documents were used by Esschem when selecting and producing the co-polymers."
In re Heraeus Kulzer GmbH, No. 09-mc-17,
Mot. for Summ. J. on Statutes of Limitations, Ex. 14 at 9.
Heraeus Kulzer GmbH v. Esschem, Inc. ,
For example, a November 10, 2010 declaration of Dr. Klinkert stated that "[o]utside counsel for Heraeus has reviewed the documents produced by Esschem so far and found evidence in those documents that support Heraeus' misappropriation claim under German law." Mot. for Summ. J. on Statutes of Limitations, Ex. 12 at ¶ 3.
Mot. for Summ. J. on Statutes of Limitations, Ex. 21 at 21.
Heraeus contends that its discovery into whether Esschem misappropriated its trade secrets continued until December 2011, when it completed discovery in a similar § 1782 discovery action against Esschem that it had filed in Indiana.
Fed. R. Civ. P. 56(a), (c)(1)(A).
Miller v. Ind. Hosp. ,
See Anderson v. Liberty Lobby, Inc. ,
Hugh v. Butler Cty. Family YMCA ,
Boyle v. Cty. of Allegheny ,
Celotex Corp. v. Catrett ,
Anderson ,
Walden v. Saint Gobain Corp. ,
Celotex ,
Bimbo Bakeries USA, Inc. v. Botticella ,
12 Pa. Cons. Stat. Ann. § 5307.
See 1-A Trade Secrets: Lаw and Practice [18] (2014) ("The Pennsylvania UTSA provides the standard three-year statute of limitations subject to the discovery rule.") (citing 12 Pa. Const. Stat. Ann. § 5307 ).
See Danysh v. Eli Lilly and Co. ,
Oshiver v. Levin, Fishbein, Sedran & Berman ,
Blanyar v. Genova Prods., Inc. ,
Compl. at ¶ 60.
Mot. for Summ. J. on Statutes of Limitations, Ex. 5 at 19 (translated from German to English).
Oshiver ,
In addition, Heraeus' argument is unpersuasive because it had received substantial discovery pursuant to the § 1782 actions before September 8, 2011. Heraeus has not identified any discovery received after that date as providing a basis for asserting its claims that did not previously exist.
Resp. to Mot. for Summ. J. on Statutes of Limitations at 9 (citing 1-1 Milgrim on Trade Secrets § 1.01).
See
See WebDiet, Inc. v. NutriSystem, Inc. ,
42 Pa. Cons. Stat. Ann. §§ 5525(a)(4), 5524.
Neither party contends that the "separate accrual" or "continuing wrong" approach applies to the unjust enrichment, unfair competition, tortious interference with economic advantage, and conversion claims. The Court is also not aware of precedent applying such an approach to these claims, particularly where the underlying actionable conduct giving rise to an alleged misappropriation has been time barred.
