At Engine Controls Ltd. v. Goodrich Pump & Engine Control Sys., Inc.

AT ENGINE CONTROLS LTD., Plaintiff, v. GOODRICH PUMP & ENGINE CONTROL SYSTEMS, INC.,¹ Defendant.

No. 3:10-cv-01539 (JAM)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

December 18, 2014

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Doc. #180) AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Doc. #179)

This case concerns a dispute between plaintiff AT Engine Controls Ltd. ("ATEC") and defendant Goodrich Pump & Engine Control Systems, Inc. ("GPECS") regarding technology in a digital electronic control unit ("DECU") that is used in certain military aircraft engines. The companies are longtime business partners, and they worked together decades ago to develop the DECU. But eventually, GPECS developed a new competing digital electronic control unit, the EMC-100. To develop the EMC-100, GPECS used certain DECU design documents.

In this lawsuit, ATEC claims that GPECS's usage of DECU design information to create the EMC-100 constitutes misappropriation and misuse of ATEC's proprietary information in violation of a longstanding agreement between the parties. I conclude that, whatever merit there may or may not be to ATEC's claims, there is no genuine dispute of material fact that all of its claims are barred by the applicable statute of limitations. Accordingly, I grant GPECS's motion for summary judgment and deny ATEC's motion for summary judgment.

BACKGROUND²

1. The DECU

In April of 1979, two entities—a British company named Hawker Siddeley Dynamics Engineering Ltd. ("HSDE") and an American company named Chandler Evans Inc. ("CECO")—signed an agreement to "develop, manufacture and sell fuel control systems for gas turbines." Doc. #257-41 at 3. These two companies are predecessors to plaintiff ATEC and defendant GPECS, respectively.³ Their agreement set forth the basic terms under which the companies would jointly develop a full authority digital engine control ("FADEC") system for any aircraft engine application program that CECO was awarded.

The FADEC system is a fuel control system used in helicopter engines, and it has two components: a hydro-mechanical fuel metering unit and a digital electronic control unit ("DECU"). The metering unit pumps fuel to the helicopter's engine, while the DECU monitors engine performance and controls the distribution of fuel to the engine.

Under the 1979 agreement, CECO (predecessor to defendant GPECS) was responsible for defining the system requirements for the FADEC, determining how the various elements would interact with each other, designing and manufacturing the metering unit, and ultimately marketing and selling the complete FADEC to various aircraft manufacturers, militaries, and other customers. HSDE (predecessor to plaintiff ATEC) was responsible for developing thehardware and software design for the DECU (based on CECO's requirements), which it would then produce and sell to CECO. See Doc. #257-41 (1979 Agreement) at 6-7.

The 1979 agreement contained two provisions concerning confidentiality obligations and restrictions on the use of proprietary information. Paragraph 1 of Section VII of the agreement provided that "CECO and HSDE shall treat as confidential the special knowledge, data and technical information that will be supplied to it pursuant to this Agreement, and shall not knowingly disclose or permit the disclosure of the same, or any part thereof, without the written consent of the other . . . ." Doc. #257-41 at 11. This restriction would "apply both during the period of [the] Agreement and for a period of five years after its termination." Ibid.

Another part of the agreement, Paragraph 3 of Section VII, provided as follows:

Upon expiration or termination of this Agreement, each party shall have the right to use its own proprietary data, but shall not knowingly make use of data proprietary to the other unless such data is in the public domain, otherwise than through a breach of the provisions of this agreement.

Id. at 12. This latter provision was not subject to a time limitation.

By its terms, the agreement was to expire in 1986. The parties, however, extended the agreement for an additional 5-year term, and there is no dispute that the agreement actually expired in 1991, aside from any remaining confidentiality obligations imposed by the aforementioned provisions.

Eventually, CECO was awarded a contract for a particular aircraft engine—the T55 engine—and, pursuant to the terms of the 1979 agreement and a subsequent agreement between the companies executed in 1984, they worked together through much of the 1980s to develop a FADEC system for that engine. The T55 engine was manufactured by Honeywell International, Inc. ("Honeywell") for use on Chinook helicopters manufactured by Boeing for the United StatesArmy ("U.S. Army") and the Royal Air Force ("R.A.F.") of the United Kingdom.⁴

Chinook helicopters are used for heavy lifting with two main rotors and two engines. The FADEC system developed by HSDE and CECO needed to have two DECUs—one for each engine. The dual DECUs on the Chinook operate in tandem—that is, they work together and necessarily communicate with each other.

CECO created—with input from HSDE, Honeywell, and other entities—the control algorithms for the T55 FADEC system that would be used on Chinook helicopters. CECO set forth these T55 FADEC system control algorithms and functional specifications in a document that it authored numbered 111613, the most recent version of which is revision J and is referred to by the parties as the "J Spec." The J Spec describes the functions to be performed by both the metering unit and the DECU, and the algorithms that the DECU must compute to control the flow of fuel to the engine and to record engine data performance.

The parties in this litigation agree that the J Spec was written with input from HSDE and Honeywell, but they also acknowledge that CECO, as system design authority for the T55 FADEC, is the only entity that can revise the J Spec. See Doc. #257-1, ¶¶ 47, 55. The J Spec contains a legend stating: "This document contains information which is the property of [CECO] . . . ." Doc. #198 at 25. HSDE does not have any proprietary markings on the document. Doc. #257-1, ¶ 52.

Pursuant to the 1979 and 1984 agreements, HSDE designed the hardware, software, and operating system of the DECU to meet the requirements set forth in the J Spec. HSDE spent millions of dollars and took many years to develop the DECU. At some point—apparently later in the 1980s—the DECU went through a period of U.S. Army testing and qualification, see Doc.#257-1, ¶ 79, and by 1989 or 1990, HSDE was filling CECO-issued purchase orders for DECUs.⁵ CECO would then mark up the DECUs and sell them to the U.S. Army, the R.A.F., and other customers as part of the complete FADEC system.

This arrangement—HSDE's manufacturing DECUs and selling them to CECO, who then sold them to end users as part of the complete T55 FADEC system—continued for decades and was apparently very profitable for both companies and their successor entities. While there is considerable dispute about whether HSDE and CECO were bound by any contractual provisions after April 1991 (when the 1979 agreement expired), there is no disagreement that the parties continued to do business in this manner.⁶ The U.S. Army has purchased hundreds of DECUs over the years, and HSDE and its successors—the sole manufacturers, suppliers, and repairers of the device—have had a monopoly on what was until quite recently the only digital electronic control device approved for flight on a Chinook helicopter. The DECU business was quite important to HSDE and its successors. At oral argument, ATEC's counsel explained that, at its height, DECU sales and repair accounted for approximately 50% of ATEC's (HSDE's eventual successor's) business.

At times, the DECU software was modified and improved. For example, in the mid-1990s, the R.A.F. requested that HSDE add certain labels or headings to the software documentation for the R.A.F. version of the DECU software. HSDE did so, and this exercise was called the "redocumentation" because it involved HSDE "re-documenting" the already-developed DECU software documentation.

HSDE's work "re-documenting" the R.A.F. version of the DECU software led to an update of the U.S. Army's version of the DECU software. In April of 1996, HSDE issued a proposal to CECO for a so-called "block one change"—essentially, another "redocumentation"— to the U.S. Army's version of the DECU, based on the work that HSDE had recently done for the R.A.F. See Doc. #257-40. Sometime later in 1996, perhaps around November, the relevant entities—the U.S. Army, Honeywell, Boeing, CECO, HSDE, and others—agreed that HSDE would make the "block one changes" to the software, incorporating software modifications with improved design and test documentation. HSDE prepared the "block one changes" to the software and submitted the updated DECU software package to CECO pursuant to purchase orders executed in 1996 and 1997.⁷ CECO then distributed the updated DECU software package to the U.S. Army, Honeywell, and Boeing. The "block one change" package (hereafter referred to as the "redocumentation") that HSDE produced and that CECO distributed consisted of approximately 24 DECU software design documents, some several hundred pages long, that set forth all of the details of the DECU software (other than the source code) for the U.S. Army version of the DECU.

In the years since the "redocumentation," both HSDE and CECO have undergone ownership changes. In 1999, a company called Goodrich Corporation acquired CECO and named this new subsidiary Goodrich Pump and Engine Control Systems, Inc. ("GPECS"). HSDE underwent several ownership changes as well, and by the early 2000s, HSDE's aero/avionics assets (including all DECU-related assets) were placed within VT Engine Controls ("VTEC"), asubsidiary of British corporation Vosper Thornycroft.⁸ Then, in 2004, plaintiff ATEC—a new entity created by...