Plаintiff IDX Systems Corporation (“IDX”) commenced this diversity action against defendants Epic Systems Corporation (“Epic”), Mitchell Quade (“Quade”), Michael Rosencrance (“Rosencrance”) and The University of Wisconsin Medical Foundation (“UWMF”) alleging Wisconsin state law causes of action for trade secret misappropriation and tortious interference with prospective advantage. Defendants UWMF and Epic counterclaim for tortious interference with contract and UWMF further counterclaims for declaratory judgment. Defendant intervenor Westfield Insurance Company (“Westfield”) cross claims for a declaration as to its duties toward its insureds, defendants UWMF, Quade and Rosencrance. The action is presently before the Court on motions for summary judgment under Federal Rule of Civil Procedure 56(c). All motions have been briefed and the parties have submitted their proposed findings of fact and conclusions of law (“PFFs”).
UNDISPUTED FACTS
Plaintiff IDX is a Vermont corporation. Defendants Epic and UWMF are Wisconsin corporations. Defendants Quade and Rosencranсe are both Wisconsin residents, current employees of UWMF and former employees of Epic.
Plaintiff IDX and defendant Epic are competing vendors of information management software for physicians groups, hospitals and healthcare delivery systems. This software has various applications in organizing patient registration, physician and hospital billing and scheduling, managed care and clinical practice. Plaintiffs product is known as the IDX Practice Management System.
In December 1986 Affiliated University Physicians (“AUP”) executed a contract with plaintiff IDX’s predecessor-in-interest, Interpretative Data Systems for the provision of information management software (“the 1986 contract”). In June 1989 Physicians’ Plus Medical Group (“P-Plus”) contracted with IDX to utilize the IDX Practice Management System (“the 1989 contract”). Both contracts contain provisions reserving IDX’s proprietary rights and requiring AUP and P-Plus to adhere to certain confidentiality precautions. The then newly-formed UWMF merged with AUP in 1997 and acquired P-Plus in 1998.
1
In May 1998 defendant UWMF sought a vendor to provide it with information management, accounting and billing software. Plaintiff IDX and defendant Epic were two of several vendors competing for the new UWMF contract. Throughout the vendor selection process UWMF continued to use the IDX Practice Management System.
In March 2001 after hearing the recommendations of the various internal task forces conducting the vendor selection process the UWMF Board of Directors voted to approve the purchase of the IDX product and to extend contract negotiations with IDX. Several contract issues remained to be resolved. Plaintiff IDX signed and forwarded a proposed contract in September 2000, but it was never signed by UWMF. Instead, in October 2000 UWMF awarded its contract to defendant Epic. The two parties executed an agreement in December 2000.
In October 2000 IDX’s President, Bob Hueber, states that he was called by a person using the pseudonym “Jack Lut-kens” who apprised him of questionable practices by UWMF during the vendor selectiоn process. IDX subsequently learned that during the vendor selection process defendants UWMF and Epic had engaged in a long series of “design” meetings whereby technical employees from the parties met and discussed improvements to Epic’s product.
In early November 2000, IDX was sent a copy of a memorandum from an anonymous source detailing numerous improprieties during the vendor selection process. Later that month, UWMF employee Cliff Pulver came forward as the anonymous source when he contacted Hueber. Among other things, Pulver told Hueber and IDX attorney David Sellinger that in the design meetings UWMF disclosed detailed information to Epic about the IDX Practice Management System and that a UWMF employee “translated” the IDX product to Epic programmers. Pulver further told IDX that defendants Quade and Rosencrance, who were in charge of the vendor selection process, were biased in favor of their former employer Epic, pressured UWMF employees to favor Epic in the selection process, and directed UWMF employees to assist Epic in improving its software in the design meetings.
Plaintiff filed this suit on January 18, 2001. It alleged causes of action for trade secret misappropriation, tortious interference with contract, tortious interference with prospective advantage, unfair competition, conspiracy and breach of contract. The Court subsequently dismissed plaintiffs claims for tortious interference with contract, unfair competition and conspiracy and limited its claim for tortious interference with prospective advantage pursuant to Federal Rule of Civil Procedure 12(b)(6). Additional facts will be provided as made necessary by the analysis of the parties’ claims.
MEMORANDUM
Summary judgment will be granted where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.Pro. 56(c). Facts are material in a summary judgment analysis if they are outcome influencing under the substantive law governing the action, and any disputes
1. Plaintiff’s Claim for Trade Secret Misappropriation by Defendants Epic, UWMF, Quade and Rosencrance
Defendants move for summary judgment on plaintiffs trade secret misappropriation claim on the ground that plaintiff IDX has failed to identify its alleged trade secrets with the requisite particularity. 2 Plaintiff contends that its Supplemental Answer to Defendant Epic’s Interrogatory No. 1 (“Supplemental Answer”), and the appendices thereto, meet its burden to identify its trade secrets. Exhibits to Pl.’s PFF in Opp’n to Defs.’ Mot. for Summ. J., Ex. 10 (“Exs. to Pl.’s PFF”).
The Wisconsin Uniform Trade Secrets Act (‘WUTSA”), Wis. Stat. § 134.90, defines a trade secret as information, “such as a formula, pattern, compilation, program, device, method, technique or process” that (1) has independent economic value and (2) is thе subject of reasonable efforts to maintain secrecy.
ECT Int’l, Inc. v. Zwerlein,
General allegations of the existence trade secrets will not suffice — a reasonable degree of precision and specificity is necessary. The Seventh Circuit Court of Appeals has held that putative trade secret holders must do more than point to broad areas of technology and claim unspecified trade secrets.
Composite Marine Propellers, Inc. v. Van Der Woude,
This begs the question as to the level of specificity required in identifying trade secrets on summary judgment. At the complaint stage, with its notice pleading requirements under Federal Rule of Civil Procedure 8, plaintiff is not and cannot be expected to plead its trade secrets in detail. Such a public disclosure would amount to an effective surrender of trade secret status. However, once protective
Plaintiff contends that it has met its burden to identify the specific trade secrets that it seeks to protect in this action. It relies exclusively on the Supplemental Answer and its appendices. The Supplemental Answer purports to provide nine summary descriptions of plaintiffs trade secrets. Appendix A contains “specific references” to technical documentation. Pl.’s Br. in Resp. to Def. UWMF’s Mot. for Summ. J. at 18 (“Pl.’s Resp. Br.”). Appendix B is a “forty two page complete description of the trade secrets.” Id. Plaintiff submits that these three documents, read together, create a definitive list of nine trade secrets.
A. Supplemental Interrogatory Answer
Plaintiffs Interrogatory Answer sets forth so-called summary trade secret descriptions. It lists as trade secrets the “concepts, designs, methods and processes that, in combination, provide:” (1) batch charge entry and batch payment posting, (2) heads down charge entry, (3) real time checking of charges, (4) heads down payment posting, (5) invoice level processing, (6) account inquiry, (7) end user remindеr notices, (8) end user defined comments associable with a tickler system and (9) demand statements and statement messages. Exs. to Pl.’s PFF, Ex. 10 at 2-6.
These nine items are not trade secrets themselves, but rather are areas of trade secrets. Each area is a feature, or functionality, of plaintiff IDX’s Practice Management System. The trade secrets are more narrowly said to be the “concepts, designs, methods and processes” underlying each of these nine functionalities. Plaintiff IDX’s position is that the means by which the functionalities are provided in its product are trade secrets. Pl.’s PFF at ¶33. The functionalities themselves are not trade secrets. See PL’s Resp. to Def. UWMF’s PFF ¶¶ 141, 145, 147, 150, 152, 154, 156, 157, 159, 161, 163, 165, 168, 170, 172, 174, 175, and 178. Nor could they be as plaintiff concedes that the software products of defendant Epic and other competitors incorporate these same nine func-tionalities. Id. Because the means used to provide the nine functionalities in the IDX product are the asserted trade secrets at issue these means are those which plaintiff must identify with specificity.
Plaintiffs Supplemental Answеr is silent as to any specific concepts, designs, methods or processes underlying the functional-ities. It designates nine functionalities as
trade secret areas
but fails to identify any trade secrets. The document does not
By specifying its trade secrets only as “concepts, designs, methods and processes” plaintiff is simply regurgitating the statutory definition of trade secrets under WUTSA. See Wis. Stat. § 134.90 (incorporating “methods” and “processes” in the statutory definition). Beyond narrowing the areas of the product in which to look, there is no clue as to the substantive content of trade secret information. It fails to clarify that actual information to be protected or even that number of trade secrets which are at issue. Plaintiff has pointed to nine features of its product, not trade secrets themselves, and asserted that their existence is the result of trade secrets. This is insufficient. The Supplemental Answer, by itself, fails to carry plaintiffs burden of identifying specific trade secrets at risk.
B. Appendix A — Technical Documentation
Plaintiff urges the Court to consider its summary trade secret descriptions in the Supplemental Answer in conjunction with Appendix A. Appendix A purports to be a set of specific references to technical documentation verifying the identity of plaintiffs alleged trade secrets.
Appendix A, however, is merely a list of twenty-one user manuals. Their extensive contents cover far more than the nine trade secret areas identified in the Supplemental Answer, and it cites no pages in reference to any specific trade secrets. Moreover, the list provides no indication as to those trade secrets or trade secret areas documented in any given manual. The only apparent way to search the manuals is through a cover-to-cover reading of all twenty-one volumes.
Appendix A is of no use in identifying the specific trade secrets at issue. Neither defendants nor this Court are required to sift through stacks of technical manuals and speculate as to what amorphous “conсepts, designs, methods and processes” found within that plaintiff may be seeking to protect. Plaintiffs broad-brush documentation stands in sharp contrast to the narrowing and clarifying documentation provided in
Nilssen v. Motorola, Inc.,
Plaintiffs documentation, in contrast, adds nothing. Plaintiff has effectively buried its trade secrets in documentation. After reading plaintiffs Supplemental Answer together with Appendix A the Court faces an unknown number of concepts, designs, methods and processes somewhere documented within twenty-one technical product manuals. This combination can yield no concrete, particularized trade secrets.
C. Appendix B — Forty-two Page Description of Trade Secrets
Plaintiff IDX asserts that Appendix B provides a complete description of the trade secrets it pursues in this litigation. Plaintiff argues that summary judgment can only be granted to defendants under their argument if the Court finds thаt “absolutely nothing in those forty-two pages is a trade secret.” PL’s Resp. Br. at 19.
Appendix B is a forty-two page narrative. Like Appendix A, its subject matter
The Court cannot begin to speculate on the identity of the trade secrets plaintiff is seeking to protect. IDX has produced an unnavigable amount of documentation and instructed the Court and defendants to find its trade secrets themselves. Plaintiffs position that everything in Appendix B is a trade secret until shown otherwise is no different than the approach, repeatedly rejected by the courts, that plaintiff can point to broad areas of technology and vaguely assert that something within is a trade secret.
Composite Marne,
Plaintiff has failed to produce any evidence so as to identify its secret “concepts, designs, methods and processes”. As the Fourth Circuit Court of Appeals held in
Trandes,
without some evidence as to what this information is а jury will be unable to compare it to matters within the general knowledge in the trade.
Trandes,
II. Plaintiff’s Claim for Breach of Contract against Defendant UWMF
Plaintiff IDX claims defendant UWMF breached the 1986 and 1989 contracts by disclosing trade secrets and confidential information to defendant Epic. Pl.’s Amended Compl. ¶¶ 112-113. Paragraph 12 in the 1986 contract and Paragraph 13 in the 1989 contract govern the parties’ obligations as to confidentiality, non-disclosure and proprietary rights. In the 1986 contract Paragraph 12(c) precludes the customer from providing or making available to a third party the Practice Management system or any related materials. Related materials are defined in 12(a) as “manuals, documentation, techniques, procedures, ideas, concepts, output and reports.” The 1989 contract contains a more explicit confidentiality provision. Paragraph 13.2.2(h) prohibits the customer
This Court has previously held that such confidentiality agreements, which contain no geographic or temporal limitations, can be enforced only to protect proprietary information that rises to the level of trade secret.
See
Memorandum and Order of May 4, 2001 at 2-3;
see also
Memorandum and Order of Aрril 11, 2001 at 5-6. An agreement that acts to shield information from the promisee’s competitors acts as a trade restraint under Wisconsin law.
See Tatge v. Chambers & Owen, Inc.,
Plaintiff has legitimate business interests in trade secrets. Confidentiality provisions that protect trade secrets are inherently reasonable and need not include geographic or temporal limitations.
Nalco Chemical Co. v. Hydro Technologies, Inc.,
While both paragraphs are enforceable as to the protection of trade secret information plaintiff cannot show a breach of contract because, as discussed in Part I of this Memorandum and Order, it has failed to identify any trade secrets. The possession of trade secrets is a condition precedent to showing a breach of these provisions. Its failure to identify trade secrets forecloses this claim. Plaintiffs breach of contract claim will be dismissed.
III. Plaintiffs Claim for Tortious Interference with Prospective Advantage against Defendant Epic
In its complaint plaintiff IDX claims that defendant Epic interfered with its prospective economic advantage by inducing UWMF’s breach of confidentiality provisions and by making false statements to UWMF about plaintiff. The Court dismissed plaintiffs claim as it related to- the induced breach of confidentiality provisions on the grounds that it was displaced by WUTSA. See Memorandum and Order of March 23, 2001 at 10-11. Presently, the Court has been apprised that plaintiff IDX is no longer pursuing its tortious interferеnce claim as it relates to Epic’s alleged false statements to UWMF. See Letter of Attorney Mark Camelli of July 11, 2001 (citing insufficient evidence of false statements by Epic). Accordingly, summary judgment will be granted and the claim will be dismissed.
TV. Defendant UWMF and Epic’s Counterclaims for Tortious Interference with Contract
Defendants UWMF and Epic claim that by pursuing its claims plaintiff IDX has imposed heavy legal costs on defendants. These costs have allegedly hindered defendants’ performance under their new contract because of the necessary re-direction
A. The Noerr-Pennington Doctrine
Plaintiff asserts that defendants’ tor-tious interference counterclaims are barred by the
Noerr-Pennington
doctrine. The
Noerr-Pennington
doctrine provides that “parties may petition the government for official action favorable to their interests without fear of suit even if the result of the petition, if granted, might harm the interest of others.”
Tarpley v. Keistler,
Noerr-Pennington’s
underlying First Amendment right to petition the government does not immunize a petitioning party who seeks to use the governmental process, as opposed to the results of that process, to harm a party.
Tarpley,
Defendants argue that plaintiff IDX’s action is completely baseless and was instituted to bully a competitor and former customer in order to gain a market advantage. First, they submit that no reasonable litigant in plaintiffs position would have believed that it had protectable trade secrets. Defendants argue that plaintiff freely disclosed its product in promotional literature, at trade show demonstrations and at on-site customer visits. They cite the large numbers of customer employees and IDX’s own former employees who know of IDX’s trade secrets. They contend that IDX’s product, as used by UWMF, was the result of UWMF’s own tailoring and customization and that this tailoring negated IDX trade secrets. They maintain that plaintiffs purported trade secrets are well known among those in the industry, including Epic. Finally, defendants argue that plaintiff has known that its trade secrets can be found on the Inter
It is not unreasonable to attempt to protect computer software or its components as a trade secret. Software “includes source code, which is the developer’s tool in creating software, object code, and other technical information, including program architecture, design definitions or specifications, flow diagrams and flow charts, data structures, data compilations, formulae and algorithms embodied and used in the software.”
ECT, 597
N.W.2d at 483
(quoting
Robert C. Scheinfeld
&
Gary M. Butter,
Using Trade Secret Law to Protect Computer Software,
17 Rutgers Computer and Tech. L.J., 381, 383 (1991) (footnotes omitted)). As a general proposition computer software can, and often does, qualify for trade secret protection.
E.g. MAI,
Defendants have cited no evidence which would dissuadе a reasonable litigant from believing it had a realistic expectation of possessing trade secrets. While it is undisputed that plaintiff gives potential customers significant access to its product there is no evidence that plaintiffs trade-show demonstrations, on-site visits and promotional literature revealed trade secrets. 6 Trade show disclosure would not ordinarily include the types of information plaintiff eventually pursued as trade secrets. Plaintiff pursued vague concepts, designs, methods and processes that provide or underly features or functionalities of its product. As a practical matter, demonstrations of plaintiffs product are marketing tools and highlight the system’s functionalities and capabilities and not the technical concepts as to how those func-tionalities are provided. This is reiterated by plaintiffs expert, who provides uncon-troverted evidence that the level of information provided at software trade shows generally is not of the type or “level” of information containing trade secrets. See Expert Report of Donald Michaels, June 29, 2001, at 2.
Similarly, the promotional materials cited by defendants are nothing more than marketing materials trumpeting the func-tionalities, features and capabilities of plaintiffs product and their utility to customers. Nowhere does it appear within them that technical information is divulged. Moreover, the record shows that it is an industry-wide practice to attend these trade shows and hold on-site demonstrations and that few, if any, information management software vendors require potential customers to sign non-disclosure agreements. Thus, a reasonable litigant could expect to prevail by showing that such activities are consistent with reasonable efforts to maintain secrecy. A reasonable litigant would not believe that it had surrendered its trade secrets by using demonstrations and promotional literature.
Defendants have offered no evidence that the tailoring donе to the specific IDX product employed by UWMF has extinguished trade secrets. Defendants’ position amounts to a blanket assertion that because some unspecified customization has occurred plaintiff has lost all its trade secrets and should have known as much. Given the vague nature of this customization, a reasonable litigant could expect the possibility that at least some of its trade secrets could be protected.
The evidence that other competitors offer products with functionalities similar to those in the IDX product is insufficient by itself to show that plaintiff could not reasonably expect to protect its trade secrets. Defendants’ argument necessarily assumes that the functionalities themselves are the trade secrets plaintiff seeks to protect. However, as stated previously, plaintiff identified, albeit insufficiently, its trade secrets as the concepts, designs, methods, and processes underlying or providing the functionalities it shared in common with competitors. The complaint identifies areas of technology and not just features and functions of the product. Pl.’s Compl. ¶¶ 52, 54. The fact that plaintiffs product had features in common with those of plaintiffs competitors is not reason for it to lose any expectation that its trade secrets were preserved.
Defendants resurrect their partial summary judgment argument that plaintiffs trade secrets were accessible on the Internet. Defendants have produced no evidence as to the duration of any public accessibility of plaintiffs user manuals on its customers’ websites. It is undisputed that plaintiff knew that its manuals were accessible on the Internet for a brief period on one customer’s website during the fall of 1999 and were again found to be more broadly accessible on multiple sites in May 2001 during the pendency of this litigation. When IDX learned in 1999 that its manuals were inadvertently accessible to the public via the Internet it took immediate action and directed the customer, the University of Virginia, to remove the mate
Finally, defendants maintain that even if plaintiff could reasonably have expected to have preserved its trade secrets it had no basis to believe that any trade secrets were misappropriated by defendants. Plaintiff IDX and defendant Epic were engaged in a long and competitive vendor selection process to win defendant UWMF as a customer. Plaintiff IDX was the tentative winner of this competition when the UWMF board voted to enter negotiations with IDX in March 2000. Defendant UWMF then reversed course and awarded the contract to defendant Epic in October 2000. At that time IDX officials began receiving anonymous correspondence alleging UWMF’s unfairness and unethical behavior during the vendor selection process. Prior to IDX’s filing of its action, in November 2000 UWMF employee Cliff Pulver, no longer anonymous, told IDX President Bob Hueber that UWMF had disclosed to Epic detailed information about the IDX system in a long series of face-to-face meetings between defendants UWMF and Epic. Aff. of Bob Hueber, ¶ 8. Defendant UWMF had substantial access to any trade secrets in IDX’s product, and was under contract not to disclose them. Pulver told Hueber that a UWMF programmer had “translated” the IDX system to Epic programmers and that all of this was done to aid Epic in the vendor selection process. Id. 8 Although in hindsight plaintiff may have no case for trade secret misappropriation, given its state of knowledge prior to commencing suit a reasonable litigant in IDX’s position realistically could have believed that its secrets had been misappropriated or were in jeopardy.
The circumstances surrounding the vendor selection process and the correspondence from at least one source from within UWMF provided probable cause for plaintiff to commence this litigation. This case, therefore, cannot be considered sham litigation. Under the
Noerr-Pennington
doctrine defendants’ tortious interference
B. Substantive Requirements for Tor-tious Interference
Had defendants shown plaintiffs action to constitute sham litigation their tortious interference with contract claim was fatally defective nonetheless. To prevail on a claim of tortious interference with contract, defendants must show, among other things, that plaintiff interfered with thеir contract.
Shank v. William R. Hague, Inc.,
V. Defendant UWMF’s Claim for Declaratory Judgment on the Validity of Plaintiff’s Contract
Defendant UWMF seeks a declaration that the confidentiality provisions in 1986 and the 1989 contracts unreasonably restrain trade contrary to Wis. Stat. § 133.03 and thus are invalid and unenforceable. Said defendant also seeks to recover all monies paid under the contracts pursuant to Wis. Stat. § 133.14.
A Declaratory Judgment — Wis. Stat. § 1SS.0S
For the reasons set forth in Part III herein defendant is entitled to a declaration that Paragraph 12(c) of the 1986 contract and Paragraph 13.2.2(h) of the 1989 contract both violate Wis. Stat. § 133.03 in part and thus cannot be enforced to protect confidential information that does not rise to the level of a trade secret under Wis. Stat. § 134.90. However, the provisions are valid in part and may be enforced to protect any trade secrets plaintiff may have in its product.
B. Contract Payment Recovery — Wis. Stat. § 1SS.U
Section 133.14 of the Wisconsin Statutes states that “[a]ll contracts or agreements made by any person while a member of any combination or conspiracy prohibited by § 133.03 shall be void ...” and that “[a]ny payment made upon, under or pursuant to such contract or agreement may be recovered .... ” Defendant UWMF seeks to recover all payments made to plaintiff IDX under the 1986 and 1989 contracts. Plaintiff has contested defendant UWMF’s reliance on § 133.14, arguing that the statute applies only to contracts or agreements that are the product of a combination or conspiracy. This
The Court is persuaded to reconsider its prior interpretation of Wis. Stat. § 133.14. A more natural reading of the statute is the one proffered by plaintiff — that § 133.14 applies only to contracts that are made as part of a conspiracy or combination. The language “[a]ll contracts or agreements” is inclusive and is meant to cover all forms of pacts whether formal or informal. It is not designed to distinguish between contracts and agreements for the purposes of the statute. Indeed, the statute provides no basis for such a distinction between contracts and agreements. Under defendant’s reading payments may be recovered upon every contract in restraint of trade and upon every agreement made as part of a conspiracy or combination in restraint of trade, but not upon simple agreements in restraint of trade that are not made as part of a combination or conspiracy. The Court finds no support for this result in the language of the statute nor in any decision of a Wisconsin court. 9
There is no allegation or evidence that the 1986 or 1989 contracts or any provisions thereof were the products of a combination or conspiracy. Accordingly, defendant is not entitled to recover any payments it made under the 1986 or 1989 contracts pursuant to Wis. Stat. § 133.14.
Furthermore, even hаd this Court re-affirmed defendant UWMF’s interpretation of Wis. Stat. § 133.14 it could not recover its contract payments made under the contracts. The confidentiality provisions are clearly provisions ancillary to the primary purposes of the 1986 and 1989 contracts. Partially invalidating these provisions will not defeat the primary purposes of the bargains — which were for the licensing of IDX’s Practice Management System. Both contracts contain a sever-ability provision. Wisconsin law provides for the severing of an illegal or invalid provision where the primary purpose of the contract can be enforced.
See Simenstad v. Hagen,
Defendant intervenor Westfield is an insurance company licensed to do business in the State of Wisconsin. It maintains corporate offices in Westfield Center, Ohio. Westfield issued to defendant UWMF policy No. CSP 3 760 125 which provides insurance coverage during the time periods from January 1, 1999 to January 1, 2002. Westfield intervened in this action to resolve the question of its duty to defend and indemnify defendants UWMF, Quade and Rosencrance from IDX’s claims.
The policy рrovides both primary Commercial General Liability (“CGL”) coverage as well as Umbrella liability coverage. Both the CGL and Umbrella coverages provide insurance for “advertising injury,” “personal injury” and “property damage.” The CGL policy defines advertising injury to include the “[mjisappropriation of advertising ideas and style of doing business.” The Umbrella policy includes this language in its definition of personal injury. Personal injury is defined by both the CGL and Umbrella policies to include “wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises.” Property damage in both coverages is defined to include “[l]oss of use of tangible property that is not physically injured.” Such property damage must occur a the result of an “occurrence,” defined as an accident. Under the policy, Westfield has a duty and a right to defend suits that seek damages for “advertising injury,” “personal injury” and “property damage”, but the policy disclaims any such duty and right where the insurance does not apply by its terms.
An insurer’s duty to defend depends on the allegаtions of the complaint, and is unrelated to the merits of the claim.
Newhouse v. Citizens Sec. Mut. Ins. Co.,
Plaintiff IDX’s claims against UWMF, Quade and Rosencrance by all accounts relate solely to theft of confidential information and trade secrets. UWMF employees are alleged to have met with Epic personnel to disclose aspects of the IDX Practice Management System including the product’s design, processes, systems and organization. Defendants’ alleged theft is limited to technical aspects of IDX’s product. These alleged actions form the basis for plaintiffs claims for trade secret misappropriation, conspiracy and breach of contract against defendants.
Defendants UWMF, Quade and Rosencranсe maintain that plaintiff IDX’s complaint alleges conduct that arguably falls within misappropriation of advertising ideas and style of business. Advertising injury clauses are given an “ordinary language” meaning.
Zurich Ins. Co. v. Amcor Sunclipse North America,
There is no allegation in plaintiffs complaint that can be read to allege that defendants misappropriated IDX’s advertising ideas or style of business. Rather, all allegations of misappropriation relate to technical aspects of IDX’s product itself, and not to ideas which call attention to IDX’s product in the markеt or as to the manner in which it operates its business. Plaintiff has not alleged that defendants misappropriated the image of its product or business, or any techniques by which it operates its business. A style of business cannot be said to not include technical aspects of a product that creates functionality. Only such technical aspects are alleged to have been misappropriated. Plaintiffs specific allegations of misappropriation do not obligate Westfield to defend UWMF, Quade and Rosencrance under this part of the insurance contract.
Defendants argue that West-field must defend plaintiffs action because it amounts to a claim that IDX has suffered property damage in the “loss of use of tangible property that is not physically injured.” This argument fails for several reasons. First, under this contractual provision the property damage related to loss of use occurs when the property in question is rendered useless by the insured’s actions.
Wisconsin Label Corp. v. Northbrook Property & Cas. Ins. Co.,
Defendants finally maintain that the wrongful eviction definition of personal injury provides coverage under plaintiffs complaint. They cite a district court case holding that unsolicited e-mails are actionable as trespasses or wrongful entries.
See America Online, Inc. v. LCGM, Inc.,
The Court finds no coverage, whether affirmatively argued by defendants or left buried in the expanse of the insurance contract, that when read in conjunction with the allegations оf IDX’s complaint obligates defendant intervenor Westfield to defend UWMF, Quade and Rosen-crance. Accordingly, Westfield is entitled to a declaration that it has no such duty to defend or to indemnify said defendants under the contract of insurance.
VII. Scheduling of Contempt Hearing
Having resolved the substantive merits of the parties claims the Court schedules a contempt hearing for Attorney David Sel-linger. See Memorandum and Order of July 11, 2001. Said hearing is scheduled in Court at 9:00 A.M. on August 15, 2001. Attorney Sellinger may show good cause at that time why he should not be found in contempt of court and fined for his actions detailed in the July 11 Memorandum.
Accordingly,
ORDER
IT IS ORDERED that defendant UWMF’s motion for summary judgment, in which defendants Epic, Rosencrance and Quade join in part, is GRANTED dismissing with prejudice plaintiffs claims for trade secret misappropriation, tortious interference with contract and breach of contract;
IT IS FURTHER ORDERED that plaintiffs motion for summary judgment on defendant UWMF and defendant Epic’s counterclaims for tortious interference with contract is GRANTED dismissing those counterclaims with prejudice;
IT IS FURTHER ORDERED that plaintiffs motion for summary judgment on defendant UWMF’s counterclaim for declaratory judgment is DENIED, that summary judgment is GRANTED in favor of defendant UWMF and that judgment is ordered in its favor declaring that Paragraph 12(c) of the 1986 contract and Paragraph 13.2.2(ii) of the 1989 contract are invalid in part and unenforceable to protect confidential information not rising to the level of trade secret under Wisconsin law;
IT IS FURTHER ORDERED that plaintiffs motion for summary judgment on defendant UWMF’s counterclaim for contract payment recovery under Wis. Stat. § 133.14 is GRANTED dismissing this counterclaim with prejudice;
IT IS FURTHER ORDERED that defendant intervenor Westfield’s motion for summary judgment is GRANTED, and judgment is entered in its favor declaring that Westfield has no obligation under policy number CSP 3 750 125 to defend or indemnify defendants UWMF, Quade and Rosencrance from the claims of IDX in this action;
IT IS FURTHER ORDERED that a contempt hearing is scheduled in Court at 9:00 A.M. on August 15, 2001 whereby plaintiffs counsel Attorney David Sellinger may show good cause as to why he should not be found in contempt of court and fined;
IT IS FURTHER ORDERED that judgment be entered in favor of defendants dismissing plaintiffs complaint and all claims contained therein with prejudice and costs.
IT IS FURTHER ORDERED that judgment be entered in favor of plaintiff dismissing the counterclaims of defendants UMF and Epic with prejudice and claims except for that declaratory judgment which is entered in favor of defendant UMF declaring that Paragraph 12(c) of the 1986 contract and Paragraph 13.2.2(ii) of the 1989 contract are invalid in part and
Notes
. Defendant UWMF disputes the extent to which it assumed AUP's liabilities and acquired P-Plus' assets. It omits any argument, however, that the 1986 and 1989 contracts
. Only defendant UWMF makes this argument in its brief. The remaining defendants join in UWMF’s argument.
. Both Wisconsin and Illinois have adopted the Uniform Trade Secrets Act ("ITSA”). Compare Wis. Stat. § 134.90 with 765 Ill. Comp. Stat. § 1065. In Composite Marine and AMP the Seventh Circuit construed the ITSA. These interpretations are authoritative. See Wis. Stat. § 134.90(7).
. If the petitioning party’s action fails this objective test courts are to examine next subjective intent.
PRE,
. Defendants also rely on plaintiff’s conduct during the course of the litigation. While plaintiff’s and its counsel’s conduct has been at times obstructionistic such argument is irrelevant to the existence of whether plaintiff had probable cause to institute these proceedings.
. Given that defendants cannot identify the specific trades secrets at issue because of plaintiff's inadequate specification it remains to be seen how defendants can now contend that specific trade secrets were disclosed by plaintiff through its practices. Just as plaintiff does not specify any trade secrets it possesses defendants cannot specify any trade secret plaintiff failed to protect.
. The fact that atypical circumstances may exist where an employee or consultant did not sign such an agreement would not require a reasonable litigant to abandon hope of preserving its trade secrets as defendants argue. Whether isolated cases of employees not signing such agreements is consistent with overall reasonable measures to maintain secrecy is an issue upon which a reasonаble litigant could realistically hope to prevail in court.
. Defendants cite numerous objections to Hueber's affidavit. See Def. UWMF's Resp. to PI. IDX’s PFF in Supp. of IDX’s Mot. for Summ. J., ¶ 37. Although they contend that Hueber’s affidavit is self-serving and inconsistent with Pulver’s deposition testimony, they provide no evidence contradicting Hueber's account of what Pulver said during the pre-filing inteiviews, despite having ample opportunity to do so. What Pulver told Hueber prior to IDX's commencement of litigation is relevant. This, and not what Pulver said subsequently, is what factored into plaintiff’s choice to file suit. Their objection that the affidavit contains hearsay is meritless, as Pul-ver's statements are being offered as a basis for plaintiff’s probable cause to file suit, and not for the truth of the matter asserted that defendants actually engaged in misappropriation. Defendants' remaining objections are similarly without merit.
. Defendant UWMF cannot rely on
Open Pantry Food Marts of Southeastern Wisconsin, Inc. v. Falcone,