The opinion of the court was delivered by: HENRY KENNEDY, District Judge
Plaintiffs, Catalyst Chemical Services, Inc., John R. Gaughan,
and Whisper Wash Development Corp., bring this action against
defendants, Global Ground Support and William Dempsey, for
misappropriation of trade secret, breach of contract, and patent
infringement. Presently before this court are plaintiffs' motions
for summary judgment [#37, 38, 44, 53, 54], defendants' motion
for summary judgment [#39], and defendants' motion to dismiss
[#73]. Upon consideration of the parties' motions, the
oppositions thereto, and the record of this case, the court
concludes that plaintiffs' motions for summary judgment must be
denied, defendants' motion for summary judgment must be granted
in part and denied in part, and defendants' motion to dismiss
must be granted.
I. BACKGROUND INFORMATION
John R. Gaughan ("Gaughan") is the owner of Catalyst Chemical
Services, Inc. ("Catalyst") and owns 90% of the stock of Whisper
Wash Development Corp. ("Whisper Wash"), and is Whisper Wash's
sole officer and director. Second Am. Compl. ¶ 2. Gaughan and his
companies obtained U.S. Patent No. 5,104,068 (issued April 14,
1992) (hereinafter '068 patent) for the development of a process and apparatus for
de-icing commercial aircraft to be used prior to take off. Defs.'
Statement of Material Facts ¶¶ 1-2. William H. Dempsey
("Dempsey") is currently president of Global Ground Support
("Global"), the successor in interest of Terex Aviation Ground
Equipment ("Terex") where Dempsey was Director of Operations in
1997. Id. ¶ 21; Second Am. Compl. ¶ 4. Through his work for
Global, Dempsey sells and markets aircraft de-icing equipment.
Second Am. Compl. ¶ 5.
On or about July 28, 1997, Dempsey, acting as Director of
Operations for Terex, signed a confidentiality agreement with
Catalyst in an effort to establish a business relationship.
Second Am. Compl. ¶¶ 14-15; see Confidentiality Agreement (Ex.
A to Second Am. Compl.). Operating under the aegis of the
confidentiality agreement, plaintiffs disclosed to defendants the
information regarding the operation of plaintiffs' de-icing
equipment. Ex. 2 to Pls.' Opp'n (Gaughan Decl. ¶¶ 6, 11). The
business relationship never materialized, however. Id. ¶ 13.
On August 26-27, 2001, at the 10th Annual Aircraft and Airfield
Deicing Conference & Exposition held in Washington, D.C.,
defendant Dempsey, as president of Global, gave an oral and video
presentation describing the operation of his company's Ice Wolf
de-icing equipment in which plaintiffs allege he disclosed their
trade secrets. Second Am. Compl. ¶ 17; see Videotape Tr. (Ex.
2C to Pls.' Mot. for Supp. Summ. J. for Literal Infringement).
Plaintiffs also allege that defendants are infringing their
patent by selling their Ice Wolf de-icing equipment within the
United States so that third parties can practice methods within
the scope of the '068 patent. Id. ¶¶ 37-38. On August 26, 2002,
at the 11th Annual Aircraft and Airfield Deicing Conference &
Exposition held in Washington, D.C., Gaughan distributed to
industry representatives a flyer re-asserting the trade secret and patent infringement allegations he made
against defendants in district court. "Global Compl." (NC
Complaint) ¶ 9.
Catalyst, Gaughan, and Whisper Wash then filed an action in
this court alleging misappropriation of trade secret, breach of
contract, and patent infringement. Global and Air T, Inc. ("Air
T"), which owns 100% of Global's capital stock, filed a complaint
in the Superior Court of North Carolina, Catawba County, Civ. No.
02-52794, alleging defamation and unfair and deceptive trade
practices, which was removed to federal court and transferred to
this judicial district. These two actions were consolidated on
September 5, 2003.
Plaintiffs seek summary judgment on their claims for literal
infringement, willful infringement, defamation and unfair
competition, patent validity,*fn1 and on the enforceability
of the '068 patent.*fn2 Defendants move for summary judgment
on all claims but make specific arguments only with respect to
the misappropriation of trade secrets claim and patent
infringement claim and move to dismiss Catalyst and Whisper
Wash for lack of standing.
Under Rule 56, a motion for summary judgment should be granted
only if it is shown "that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). The moving
party's "initial responsibility" consists of "informing the
[trial] court of the basis for its motion, and identifying those
portions of the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, which it believes demonstrate the absence of
a genuine issue of material fact." Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986) (internal quotation marks omitted).
If the moving party meets its burden, the burden then shifts to
the non-moving party to establish that a genuine issue as to any
material fact actually exists. See Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To meet its
burden, the non-moving party must show that "`the evidence is
such that a reasonable jury could return a verdict'" in its
favor. Laningham v. United States Navy, 813 F.2d 1236, 1241
(D.C. Cir. 1987) (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)). Such evidence must consist of more than
mere unsupported allegations or denials and must set forth
specific facts showing that there is a genuine issue for trial.
FED. R. CIV. P. 56(e); Celotex, 477 U.S. at 322 n. 3. If the
evidence is "merely colorable" or "not significantly probative,"
summary judgment may be granted. Anderson, 477 U.S. at 249-50.
Summary judgment is as appropriate for a patent infringement
claim as for any other claim. See, e.g., Barmag Barmer
Maschinenfabrik AG v. Murata Mach., Ltd., 731 F.2d 831, 835-36
(Fed. Cir. 1984) (patent infringement).
A motion to dismiss for lack of subject matter jurisdiction
based on a party's lack of standing is analyzed under Rule
12(b)(1). The court must accept as true all factual allegations
contained in the complaint. Leatherman v. Tarrant County
Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164
(1993). At the same time, the plaintiff bears the burden of establishing the court's jurisdiction. Grand Lodge of the
Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13
(D.D.C. 2001) (citation omitted). "A motion to dismiss under Rule
12(b)(1) for lack of standing . . . involves an examination of
the face of the complaint . . .," Haase v. Sessions,
835 F.2d 902, 908 (D.C. Cir. 1987), and the plaintiff's allegations
therein require "closer scrutiny" than they would under the Rule
12(b)(6) motion to dismiss standard. Bates v. Rumsfeld,
271 F. Supp. 2d 54, 59-60 (D.D.C. 2002) (quoting Grand Lodge,
185 F. Supp. 2d at 13-14 (citations omitted)). Additionally, "where
necessary, the court may consider the complaint supplemented by
undisputed facts evidenced in the record, or the complaint
supplemented by undisputed facts plus the court's resolution of
disputed facts." Coalition for Underground Expansion v. Mineta,
333 F.3d 193, 198 (D.C. Cir. 2003) (quoting Herbert v. Nat'l
Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992) (citations
B. Misappropriation of Trade Secret
Plaintiffs' misappropriation of trade secrets claim is premised
on defendants' alleged disclosure of parameters of temperature,
pressure, angle and distance useful in operating de-icing
equipment. Plaintiffs seek damages pursuant to D.C. Code § 36-401
et seq. ("Trade Secrets Act"). "Misappropriation" is defined by
the statute as:
(B) Disclosure or use of a trade secret of another
without express or implied consent by a person who:
. . . .
(ii) At the time of disclosure or use, knew or had
reason to know that the trade secret was:
. . . .
(II) Acquired under circumstances giving rise to a
duty to maintain its secrecy or limit its use. . . .
D.C. Code § 36-401(2).*fn3
Thus, the three elements required
to make out a claim for trade secret misappropriation are:
(1) "existence of a trade secret";
(2) "acquisition of the trade secret as a result of a
confidential relationship"; and
(3) "unauthorized use [or disclosure] of the secret"
resulting in loss or damages.
Leggett & Platt, Inc. v. Hickory Spring Mfg. Co.,
285 F.3d 1353
, 1360 (Fed. Cir. 2002); see also Computer Mgmt. Assistance
Co. v. Robert DeCastro, Inc., 220 F.3d 396
, 403 (5th Cir. 2000);
Lemmon v. Hendrickson, 559 N.W.2d 278
, 279 (Iowa 1997).
1. Existence of a Trade Secret
The "threshold inquiry" in every trade secret case is "whether
or not there [is] a trade secret to be misappropriated."
Fireworks Spectacular, Inc. v. Premier Pyrotechnics, Inc.,
147 F. Supp. 2d 1057, 1065 (D. Kan. 2001) (citations omitted);
accord Jensen v. Redev. Agency of Sandy City, 998 F.2d 1550
1556 (10th Cir. 1993); Reinforced Molding Corp. v. Gen. Elec.
Co., 592 F. Supp. 1083, 1087 (W.D. Pa. 1984); Carolina Chem.
Equip. Co. v. Muckenfuss, 471 S.E.2d 721
, 724 (S.C.Ct.App. 1996). Under the D.C. statute, a
"trade secret" is defined as follows:
[I]nformation, including a formula, pattern,
compilation, program, device, method, technique, or
(A) Derives actual or potential independent economic
value, from not being generally known to, and not
being readily ascertainable by, proper means by
another who can obtain economic value from its
disclosure or use; and
(B) Is the subject of reasonable efforts to maintain
D.C. Code § 36-401(4). Interpreting this language, courts have
imposed the following requirements before information will be
protected as a trade secret:
(a) the "information must be secret";
(b) "its value must derive from the secrecy"; and
(c) "the owner . . . must use reasonable efforts to safeguard
the confidentiality" of the information.
Motor City Bagels, LLC v. Am. Bagel Co., 50 F. Supp. 2d 460,
478 (D. Md. 1999); accord IDX Sys. Corp. v. Epic Sys. Corp.,
285 F.3d 581, 583 (7th Cir. 2002); Standard Register Co. v.
Cleaver, 30 F. Supp. 2d 1084, 1094 (N.D. Ind. 1998); APAC
Teleservices, Inc. v. McRae, 985 F. Supp. 852, 864 (N.D. ...