Walker Mfg., Inc. v. Hoffmann, Inc.

Page 1054

261 F.Supp.2d 1054

WALKER MANUFACTURING, INC., Plaintiff, v. HOFFMANN, INC., an Iowa corporation, Larry Emmert, Marty Sixt, and J.R. Sales and Machinery, Inc., Defendants.

No. C 00-103-MWB.

United States District Court, N.D. Iowa, Cedar Rapids Division.

May 12, 2003.

COPYRIGHT MATERIAL OMITTED

Kevin J. Caster, Mark L. Zaiger, Shuttleworth & Ingersoll, Cedar Rapids, IA, for Plaintiff.

Michael L. Noyes, Lane & Waterman, Davenport, IA, Gregory M. Lederer, Simmons Perrine Albright Ellwood, Michael McDonough, Moyer & Bergman, PLC, Cedar Rapids, IA, for Defendants.

Marty Sixt, Iowa City, IA, Pro se.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT HOFFMANN'S SECOND MOTION FOR PARTIAL SUMMARY JUDGMENT

BENNETT, Chief Judge.

TABLE OF CONTENTS
I. INTRODUCTION .........................................................1057
A. Procedural Background ...............................................1057
B. Factual Background ..................................................1059
II. LEGAL ANALYSIS ..................1061
A.   Standards For Summary Judgment ...................................1061

B. De Minimis Conduct ..................................................1062
1. Arguments of the parties ...........................................1062
2. The de minimis doctrine in copyright and Lanham Act law ...........1063
3. Was Hoffmann's conduct de minimis? ...............................1065
C. "Reverse Palming Off" ................................................1068
1.  Arguments of the parties ...........................................1068
2. Source and nature of the Lanham Act's prohibition ..................1068
3. "Copying" as "reverse palming off" .................................1070
a. Cognizability in light of elements of the claim ...................1070
b. Cognizability in light of Pioneer Hi-Bred .......................1070
c. Cognizability in light of Waldman Publishing ...................1072
d. Cognizability in light of Montgomery and Roho ..................1075
4. Conclusion .......................................................1077
D. Actual Consumer Confusion ...........................................1077
D.  Arguments of the parties ...........................................1077
2.   Analysis ..........................................................1077
E. Permanent Injunctive Relief ..........................................1078
F. Scope Of Misappropriation Of Trade Secrets Claim ......................1078
1. Arguments of the parties ...........................................1078
2. Analysis ..........................................................1079
a. Elements of misappropriation of "trade secrets" .................1079
b. Definition of a "trade secret" ...................................1079
c. "Reverse engineering" .........................................1080
d. Walker's additional trade secrets ...............................1082
G. Money Damages For Misappropriation Of Trade Secrets .................1084
1. Arguments of the parties ...........................................1084
2. Analysis ..........................................................1085
a. Olson .........................................................1085
b. Winston Research Corp ........................................1087
c. Application of cases ...........................................1087
III. CONCLUSION ...........................................................1088

Renewing its attempts to whittle away at the plaintiffs various claims of interference with the plaintiffs intellectual property rights related to self-propelled crop sprayers and its business of designing and selling such equipment, the principal defendant in this case has filed its second motion for partial summary judgment. In the present motion, the defendant mounts what it claims are new and different challenges to the plaintiffs copyright, unfair competition, and trade secrets claims. The plaintiff, however, contends that the issues presented by the defendant's second motion for partial summary judgment have already been decided by the court, in its disposition of the defendant's first motion for partial summary judgment, or are subject to genuine issues of material fact that can only be resolved by a trial on the merits.

I. INTRODUCTION

A. Procedural Background

In this lawsuit, filed June 28, 2000, plaintiff Walker Manufacturing, Inc., originally asserted numerous claims against only one defendant, Hoffmann, Inc., arising from Hoffmann's alleged interference with Walker's intellectual property rights relating to self-propelled crop sprayers and Walker's business of designing and selling such sprayers. By order dated August 11, 2000, and clarified on August 28, 2000, Judge Melloy, who has since been elevated to the Eighth Circuit Court of Appeals, granted Walker's application for a preliminary injunction and enjoined Hoffmann from selling, marketing, or displaying to any third party Hoffmann's self-propelled, high-clearance agricultural sprayer, which allegedly incorporated trade secrets and intellectual property misappropriated by Hoffmann from Walker.

On November 9, 2000, Walker filed an Amended Complaint adding defendants Larry Emmert, Marty Sixt, and "Jan Rule dba J.R. Sales and Advantage Sprayers." Walker filed a Second Amended Complaint on June 27, 2001, identifying the last defendant as "J.R. Sales and Machinery Service, Inc." The Second Amended Complaint is the one presently before the court. Count I of the Second Amended Complaint asserts claims under the Racketeer Influenced and Corrupt Organizations (RICO) statute, 18 U.S.C. § 1962(c), and the Iowa Ongoing Criminal Conduct Act (IOCCA), IOWA CODE § 706A.2(1)(c) against defendants Hoffmann, Emmert, Sixt, and J.R. Sales; Count II alleges "false designation of origin," elsewhere described as "reverse passing off or "reverse palming off," in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), against defendant Hoffmann only; Count III alleges copyright infringement in violation of 17 U.S.C. § 106 against defendant Hoffmann only; Count IV alleges misappropriation of trade secrets in violation of IOWA CODE § 550 against defendants Hoffmann and Sixt; Count V alleges a state-law correlate of the "reverse palming off claim in Count II, this time identified as "unfair competition," against defendants Hoffmann and J.R. Sales; Count VI alleges breach of contract against defendant Hoffmann; Count VII alleges fraudulent non-disclosure against defendant Hoffmann; Count VIII alleges breach of fiduciary duty against defendant Hoffmann; Count IX alleges interference with prospective business advantage against defendants Hoffmann and J.R. Sales; and Count X alleges breach of a non-competition agreement against defendant Sixt. However, prior to the filing of the Second Amended Complaint, by order dated April 25, 2001, Judge Melloy had already dismissed Count I, the RICO claim, on a motion to dismiss by defendants Hoffmann and Emmert. See Walker Mfg., Inc. v. Hoffmann, Inc., 157 F.Supp.2d 1012 (N.D.Iowa 2001) (Walker I).

Hoffmann filed its first motion for partial summary judgment on February 21, 2002, and this court granted that motion in part and denied it in part by order dated September 13, 2002. See Walker Mfg., Inc. v. Hoffmann, Inc., 220 F.Supp.2d 1024 (N.D.Iowa 2002) (Walker II). Somewhat more specifically, the court granted summary judgment in favor of the defendants on Walker's prayer for statutory damages or a permanent injunction on Walker's copyright infringement claim in Count III, but otherwise denied summary judgment on Counts II and V (reverse palming off/unfair competition), III (copyright infringement), and VIII (breach of fiduciary duty).

This matter comes before the court pursuant to Hoffmann's second Motion For Partial Summary Judgment, filed on January 31, 2003. Hoffman contends that the present motion for partial summary judgment "is not a motion for reconsideration of its previous motion for partial summary judgment," but is instead "based on evidence procured since the filing of the previous motion and presents arguments for partial summary judgment not yet raised." Defendant Hoffmann's Memorandum Supporting [Second] Motion For Partial Summary Judgment, 3 n. 1. The present motion seeks summary judgment in Hoffmann's favor on claims or discrete issues in Counts II and V (reverse palming off/unfair competition), III (copyright infringement), and IV (misappropriation of trade secrets). Walker resisted Hoffmann's second motion for partial summary judgment on February 18, 2003, asserting that at least some of the issues presented by the motion have been previously decided by the court, in its disposition of Hoffmann's first motion for partial summary judgment, and that summary judgment is not appropriate on other issues. Hoffmann filed a reply in further support of its second motion for partial summary judgment on February 26, 2003.

On February 27, 2003, defendant J.R. Sales and Machinery Services, Inc., filed a joinder in the portions of Hoffmann's second motion for partial summary judgment pertaining to the "unfair competition" claim in Count V, which is the only count in dispute in Hoffmann's motion that is also brought against J.R. Sales. J.R. Sales did not separately brief its joinder or supplement in any way Hoffmann's appendix, nor did Walker find it necessary to file a separate response to J.R. Sales's joinder.

The parties did not request oral arguments on Hoffmann's second motion for partial summary judgment and the court has likewise concluded that oral arguments are unnecessary. Therefore, Hoffmann's second motion for partial summary judgment is fully submitted on the parties' written submissions.

B. Factual Background

Whether or not a party is entitled to summary judgment ordinarily turns on whether or not there are genuine issues of material fact for trial. See, e.g., Quick v. Donaldson Co., 90 F.3d 1372, 1376-77 (8th Cir.1996). Neverth...