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CATALYST & CHEMICAL SERVICES v. GLOBAL GROUND SUPPORT

December 14, 2004.

CATALYST & CHEMICAL SERVICES, INC., et al., Plaintiffs,
v.
GLOBAL GROUND SUPPORT, et al., Defendants.



The opinion of the court was delivered by: HENRY KENNEDY, District Judge

MEMORANDUM OPINION

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.

  II. ANALYSIS

  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.

  A. Standard of Review

  1. Summary Judgment

  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).

  2. Motion to Dismiss

  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 omitted)).

  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 process, that:
(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 its secrecy.
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. ...


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