it please the court press council good morning i am mike weston a lawyer from cedar rapids iowa and i represent c m i in this case on august twenty second of two thousand and sixteen within three weeks after discovering that i were parts had misappropriated engineering documents containing trade secret materials and it hired a vendor named climate engineer to build two silos for asphalt plants all discovered on february fourth of two thousand and sixteen this suit was filed three weeks after that was discovered that's the big stuff right that's the big stuff ok i know about the little stuff for years i's predecessor terex corporation had some isolated incidents where they they learned in the record in there's about five specific facts which which i can get to now or i can get to later but each of those were disconnected facts and what's important is in their argument i would parts has conflated knowing about competition with misappropriating trade secrets there were points for example after j king left the company in february of two thousand and two and they came a porton member and i were parts terror acts send him a letter and said remember you are employee you made certain promises don't break those promises and obeidi the way we saw your business card where it uses the word skeeter rapids like the community where i live that's kind of close to the name cedar rapids so watch that but even the tr court in looking that letter said that could be characterized as a routine letter and and importantly if there would have been investigation at that point j king himself testified that he had misappropriated no engineering documents that any of the work they were doing was to build small parts that could either be bought on the market generically in reverse engineered so yes the flagship event the time when c m i really knew what was going on and knew that they had possession of engineering documents was in february of two thousand and sixteen and what else or what else did they know at that time they knew that these engineering documents contained trade secrets they knew that because jake king and worked with them for years they knew they had no right to them they knew that when terror acts had sent to vendors when they went from manufacturing products to use to sending the vendors they said confidentiality agreements on the masthead or label of every engineering document was a label that said this is the property of terror x or cedar rapids or standard havens and can't be used without her permission in writing they knew that they also they also knew that as of two thousand and sixteen for approximately six years i would parts had been relabeling these engineering documents putting their own label on them as if they were there so if an investigation would have been done say between two thousand and ten with mr frank told us he started doing that to two thousand and sixteen we very well could have seen a drawing on the face of it that said it was from iowa parks and what and they also knew at that time that these engineering documents and their access to them was the basis of their business and they wanted to continue the future so that they had difficulty so what they set out to do in their rule fifty six motion was exactly what the court is asking that said look at all the points along the way the exit ramps to the interstate of knowledge where c m i or its predecessor should have stuck on it they conflated their activities as if from very early on they have been using engineering documents and that we should have known or rather through the testimony of some of the people of our parts they said how easy it was to reverse engineer and compete for some for some of the parts and as i indicated earlier they completed the notion of competition our knowledge of their competition as if this was a non compete case as opposed to a theft of illogic actual property case they conflate that in their arguments we respond to the rule fifty six motion with the allegation fact of when we first made our discovery in february of two thousand and sixteen and also pointed out that in each of the five or six fact issues which i'm going to turn to next in each each of those instances have a different interpretation and interpretation that should be viewed by a jury and i would suggest that when the court retires to look at these five or six facts it will in fact be acting as a jury should weighing the inferences that can be made weighing what was known at the time and that when the court does that it must do it in the light most favorable to see a mine thank you what were those facts the first is a letter to j k which we've talked about and these are the facts that the court  relied on when she when it ruled that no reasonable jury could find that c m i she could not have discovered the theft of intellectual property the second was testimony from a woman named cindy ledford and cindy  over the park sales role after mr cain left terror acts in two thousand and two what's interesting is that this was a new job for her the cedar rapids line that was the subject of the questions that she had was new acts it had new parts numbering systems new products and she had a difficult time and said so in a deposition dealing with it and while i will parts spencer testimony of one as over time but another important question for the court is what would the investigation have been at that time it's enough to say you should have found out but what do you find out if you contact the customer because this this came about with regard to a quote from a customer who want to buy cedar rapids part is a is a cuss is there evidence of the record that the customer would know what the vendor who was selling the part was using to make part how would the customer know that how would the customer know whether the engineering documents were being used how would the customer know if the part was reverse engineered and so at each of these points of departure the court has to think if there would have been an investigation what could have been learned and it's easy today to suggest that when you file suit you have all of the power of discovery and subpoena all available to you you can flip over the stones but when you write a letter like tear x did to j king in two thousand and two and say hey remember your remember your role remember what you're supposed to do remember your obligations that person to just say ok thanks the next one was a testimony of joe musical the court i think the misconstrued his testimony there was discussion about information about parts parts list what are called grey books which is kind of like the owner's manual for an asphalt plant or rock crushing equipment he testified that those were not specific enough for a person to build a part and and he also testified that he didn't think that many of these parts could be reversed engineers a point documents the fourth were trade journals there's no evidence in the record that anyone from terror acts ever saw any ads from iowa parts during the time that they were advertising the truck coordinates order on page ten you said that they implied it but it's not in the record and again if if there was if there was a trade journal ad for iowa parts it alerted c m i if they were competing and there was there was no non compete agreement there was nothing that c m are its predecessor could do to stop the competition especially in generic and parts you could be reverse engineered the notion the fifth fact the website july of two thousand and eleven there is no evidence that terror acts or c m i sought and if and only if the court believes that the website in the creation of a website by all parts in the summer of the six fact is is how parts are built all parts are not the same so when when the when the when the court looked at it in considering the rule fifty six motion when the court looked at the facts that were alleged as the to investigate why c m i should have discovered the misappropriation of these engineering documents there's an explanation for each and most suggest that we were advised or knew that they were competing but not necessarily about engineering drawings and the primary issue is when did c m i know that there was a problem or potential problem with those drawings the undisputed evidence shows that they knew right from the very beginning one point is turned the facts on the other side taken favorable to them yes and of course your defense is we're so bad we're good we were so bad on this so  outrageous and so in your face we didn't even have to go on the on ramp he just had to dodge the rock in the middle of the interstate only that your defense only now tell me tell me what's undisputed that binge your way well first of all we only took that position for the purposes of the smoke watch them but go ahead but there was one fact that he didn't mention and in fact they haven't even contested it and is that in two thousand and two they knew that employees were leaving c m i terex and going to work for a direct competitor and it wasn't just any employee it was jake king and jake king had ben the head of their parts department he had been the person handling confidential engineering drawings and recently and rapidly he had been sending those engineering drawings to vendors for the purpose of quoting parts and making parts how to what what the record tells us that what in the record he'd been sending them to people there is testimony from j king the record refers to his deposition where he talked about that how i would know that how did iowa know that  terex to go to work for iowa parts in two thousand and two and so they knew that that is what he had done for them and now he'd gone to work for a direct competitor and the fact based on his past experience in going to work for a direct competitor we contend alone supports knowledge that there was a problem or at the very least a potential problem that he would use confidential information to help direct competitor which triggered the statute of limitations and required to duty to investigate but there are only one way to eat all of it if i have a person who is working for  my company and there they go to work for a direct competitor are you saying that at that point every single time if the person is a key person in my organization i have some duty of investigation that arises and that the statute of limitation triggers at the very least you have a duty to pay attention to watch what he's doing to see what happens so any time anybody leaves our indian goes to another company and works in r and d the duty arises when it direct competitor doing the same thing that you are yes it raises that potential that he would take especially when he's handling when he's in charge of handling these confidential documents it raises in fact there's a the texas supreme court has a case that suspicions about when that fact scenario occurs the i was standards a reasonable person right standard would would investigate and i say i take it you mean a reasonable company would investigate people within that reasonable people within that yes this this man was doing exactly for the m r i what he did when he moved to your company yes exactly the same they actually have a higher position and now get my party's right and i will party had a higher position there than it c m i then the actually have a little higher position  well it was different i was parts was a smaller company so you can have a supervisor but that's the main difference now even if that weren't enough shortly after that within a couple weeks e m i sends him a letter and they claim this letter was sent as a matter of course that it doesn't indicate that he was misappropriating but that's not the standard in iowa the standard is whether he had they had sufficient knowledge of a problem or a potential problem and the letter identifies three problems first problem is there's a potential you're going to use our confidential information and we don't want you to this is a letter a second problem and the third problem in the district court recognized this as the most important problem is that he had been contacting their customers and the vendors that he had been sending these confidential documents to so again we contend that those undisputed facts triggered a positive duty for c m i to investigate and there's a record reflect how many competitors c m i had they have a lot of are you main main competitor i don't know if it's in the record i do recall cindy left her testified as to who their main competitors were at the time and she did read reference that i was parts was one of their biggest competitors at the time now mr weston talked about you know how do you investigate this and there's a couple different things they could have done they could have asked for confirmation from i will parts that you're not going to do this anymore and if i will parts came back and said we're not going to do it then they would have a concealment defense as to why you know they didn't know that they were doing the dr they also could have called their vendors and say are you making parts for i will parts are used in our drawings but there's nothing in the record to suggest that they even tried to do that now in addition to the letter is the testimony of cindy ledford and she was the head of c m i terex as parts department after j king left can you quote the most damning statement from her in your view that basically she learned of i will parts from her customers because they had been receiving quotes for the same parts more quickly than she had been able to give them to them and she was complete concerned by this and even though she was the head of her department she was so concerned that she went to her supervisor now i understand that they infer that  this that all she was concerned about was that she couldn't do it as fast as i were parts but the undisputed part about this statement is that she knew that i will parts was selling the same parts to their customers just shortly after they had told him not to do that and that again how long sure shortly after well she says right from the beginning well yeah but that still than help me on  in may of two thousand and two so sometime after that so again this well i there's really been no good point to ask this question but it's something that came through my brain when i was reading the briefs and i just had had this issue and it keeps kicking around in my in my head so i want to ask it and it may be a complete red herring and tell me if i'm crazy i'm fine with that but it goes like this if we were to take this  is these trade secrets and we were just to treat them to imagine a hypothetical where you're looking at patents and say i've got a patent for the snowblower and i've got a patent for a lawnmower and they're different right and so i come to realize that your my former employee has appropriated my one more parts and he's doing stuff for a competitor to help him build one more and i just kind of walk away from that now six months later they decide to make snow blowers are six years later it's a different pattern it's a different idea it's a different secret should the statute of limitations be different or is it just that if you know the guy's deal and something you have you have to assume we steal everything well i mean in your example you know there are a lot of hypotheticals as to what you know the differences are in this technology we don't have that here we just have small parts big parts surely that's a disputed fact they make that i mean they make that distinction but this isn't a case about parts it's a case about drawings and at no point in time have they come forward with any evidence that there is a distinction in the drawings between large parts and small parts engineering drawings or engineering drawings and they are used to make parts and all of that in fact you know at the time back in two thousand and two this is that statement is inconsistent with c m i terraces conduct c m i terex did not distinguish in their andy a's which drawings were for big parts which were for little which were ok to use which weren't in their letter to mr king they don't distinguish between which drawings are ok and which aren't and also in this case in their complaint they don't distinguish between the drawings they don't and discovery they never distinguish between the drawings and even in their appeal brief they didn't distinguish does the record indicate how many employees your brief saved many times many employees both of you but how many employees do you know a number to work for i will parts early to mid two thousand and six in the early decade in the early part there were two at least two maybe three and before two thousand and ten he mentioned mr frank i think came about two thousand and ten so it could be three to four three or four is a fair estimate ok if that now my mind that i really heard what that judge erickson said mind i thought the whole time is and he  and mr weston indicated this at the end surely they got some kind of claim for unjust enrichment or something for some period of time some claim right at the summary judgment stage of this case unjust enrichment you cannot recover when other adequate remedies are available and c m a i makes no argument that the remedies under the d t s say and the i would trade secret act  inadequate they simply argue that if they lose on those claims the unjust enrichment claim is there as a safety net but that's not the way the statute is written  it's not a reward for losing the whole purpose of on just enrichment is when there is no other legal basis to bring a claim or when the remedy of a legal claim is not adequate it's not there for when you lose and he mentioned that they didn't see them but that doesn't matter because if they were on an inquiry notice they have a duty to investigate and they are charged with all knowledge that they would have found out prior to or are based on a reasonable and diligent investigation i would parts wasn't trying to hide what they were doing they placed advertisements in the exact same publications o specifications called on the same customers and they were calling on the same customers yes well my recollection and may have my timing a little off but terex purchased cedar rapids i believe in two thousand and at the time they had two thousand employees and within two years they'd reduce the work force to two hundred and i will parts was and still is a small company maybe five six employees and c m i terex i don't know the exact number but is much larger than that and you are correct that was referenced in your briefs and i forgot about see my time is up i would ask the court that they affirm the lower court's decision ok thank you for your argument we're back to you mr west started the end i will parts was open about what they were doing that's why they remarked the engineering documents with their label and their proprietary information as if they were their own that's not open the court ask a very specific question about timing what was mr king doing when he left terror acts when did he acquire these engineering documents in the appendix at page eighty is it the one hundred eighty excuse me is an excerpt from his deposition where he said at the time that he received the letter advising him of his obligations as a former acts he had taken and had acquired no engineering documents so at that point in fact he responded to the lottery hired an attorney and responded to the letter and said i've done nothing wrong so investigation at that point would yielded nothing when did you get it when did they get a well the that that was answered in a vague way what he said his deposition was at some point along the way we call the vendor and said would you build this part for us we think you have the drawings and they said yes and so that's how they operate got them to a third party early and so it was as though we were going to the out of parts headquarters for a period of time when they found anything and another question is this notion of small parts string line we could we could reverse engineer these parts many of these parts were variable generically chains guards rollers they were they were probably up charged because they came from our motion for summary judgment because we didn't think we had to but we certainly did in response of there and there's an absolutely different situation when a company like iowa parts goes out and sells small parts versus parts that can only be built only be built using hundreds and thousands of complex engineering documents now the court asked this question and it's a good one isn't there some claim that c m i can make well the record is that they continue to get new engineering documents as late as two thousand and seventeen and that they were able to and there's testimony from mr king that they use them so so there are in fact separate misappropriations every time an engineering document is acquired and used to build a new product the equitable claims made by c m i are safety nets that's what they're designed for for example under the d and we don't know what the jury instructions will be because we have another trial although you've heard a jury argument today about what facts mean the court might say jury you can only award and i'm out of time if i can finish this thought you do jury you can only award damages under the defense of trade secret act or the i would trade secret act for specifically proven misappropriation unjust enrichment and conversion says to the jury if they derive x amount of profits from the venture their inappropriate use of these engineering documents you can work that percentage thank you for your time attention today thank you very much the case number eighteen day seventy five is submitted for decision by the court