IN THE COURT OF APPEALS OF IOWA

No. 13-0259

Filed April 8, 2015

SHI R2 SOLUTIONS, INC., d/b/a DEIMCO FINISHING EQUIPMENT,

Plaintiff-Appellant,

vs.

PELLA CORPORATION,

Defendant-Appellee.

________________________________________________________________

Appeal from the Iowa District Court for Tama County, Marsha M. Beckelman, 

Judge.

A plaintiff company appeals a district court’s grant of summary judgment on all 

claims to the defendant. REVERSED AND REMANDED.

Darrell G. Meyer, Marshalltown, for appellant.

Sharon Soorholtz Greer of Cartwright, Druker & Ryden, Marshalltown, and Terri 

L. Combs and Jesse Linebaugh of Faegre, Baker & Daniels, L.L.P., Des Moines, and 

Randall E. Kahnke and Peter C. Magnuson of Faegre, Baker & Daniels, L.L.P., 

Minneapolis, Minnesota, and Christopher J.L. Diedrich of Faegre, Baker & Daniels, 

L.L.P., Denver, Colorado,for appellee.

Heard by Vaitheswaran, P.J., and Tabor and Mullins, JJ.
2

VAITHESWARAN, P.J.

A company that sued Pella Corporation for misappropriation of trade secrets and 

breach of contract appeals the district court’s grant of summary judgment in favor of 

Pella. 

I. Background Facts and Proceedings

SHI R2 Solutions, Inc. (Deimco) designs and manufactures custom finishing 

equipment. Pella Corporation manufactures windows and doors. Deimco agreed to 

build custom equipment for Pella. Deimco’s president, Kirk Shirar, signed a 

confidentiality agreement prohibiting the disclosure of Pella’s confidential and 

proprietary information. Pella was not asked to sign a similar agreement prohibiting the 

disclosure of Deimco’s confidential and proprietary information. 

In 2004, Pella asked Deimco for a quotation to manufacture an industrial finishing 

machine with conveyers and ovens. The quotation request form stated, “[a]ny 

modifications to standard machine configurations shall be the design responsibility of 

and remain in ownership of the Vendor.” The “vendor” was Deimco.

Deimco prepared a quotation and provided Pella with a drawing depicting the 

equipment, known as an “approval drawing.” Deimco’s engineering manager testified 

the drawing was “an overall system drawing that shows the various views of what we 

are proposing to sell to the customer.” The drawing included the following legend: “This 

drawing contains proprietary information of SHI R2 Solutions, Inc. [Deimco]. 

Possession thereof does not confer any right to reproduce, use or disclose in whole or 

in part any such information without written authorization from SHI R2, Inc. [Deimco].” 

The drawing required the purchaser’s endorsement which, according to the engineering 
3

manager, was an acknowledgment the purchaser understood what Deimco intended to 

build. Dan Bartlett, Pella’s project manager at the time, endorsed the drawing. Deimco 

built the equipment and delivered it to Pella. 

Pella and Deimco continued to do business with each other. During the 

negotiations for another project, Pella tried to change the ownership language contained 

in its original request for quotation. Pella replaced the language with, “The original 

machine design and drawings of custom machine will become property of Pella 

Corporation.” Deimco objected and inserted the following language in its quotation, 

“The machines designs, sub-assembly, and fabrication drawings are the intellectual 

property of Deimco finishing equipment.” Pella acquiesced in this language by 

indicating its purchase order was pursuant to Deimco’s quotation. 

Three years after Deimco and Pella began their business relationship, Pella 

elected to design and produce its own finishing equipment. Under the auspices of 

maintaining the Deimco machines in its possession, an engineer assigned to the project 

asked Deimco to turn over sub-assembly drawings of the spray guns inside the 

machines. Deimco declined the request. In time, Pella disassembled and replicated a 

Deimco machine, notwithstanding concern among some within the company as to

whether the cited proprietary language allowed it to do so.

When Pella informed Deimco the company would not be hired for an upcoming 

project, Deimco began to suspect Pella was reverse engineering its machines.1 Deimco 

 

1 A machine designer at Pella testified “reverse engineering” is the process of “measur[ing] 

something, to see how something functions” and using the measurements as a basis for 

deriving a design. See Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751, 775 n.8 

(Iowa 1999) (“‘Reverse engineering is the process by which a completed process is 

systematically broken down into its component parts to discover the properties of the product 
4

filed suit alleging common law and statutory claims of misappropriation of trade secrets 

and breach of Pella’s contractual obligation not to infringe on its intellectual property.2

Pella moved for summary judgment. The district court granted the motion and 

this appeal followed. 

II. Analysis

Summary judgment is proper only if “the pleadings, depositions, answers to 

interrogatories, and admissions on file, together with the affidavits, if any, show 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.” Iowa R. Civ. P. 1.981(3). A question of fact exists “if 

reasonable minds can differ on how the issue should be resolved.” Walker v. Gribble, 

689 N.W.2d 104, 108 (Iowa 2004). We view the record in the “light most favorable to 

the party opposing the motion for summary judgment.” Kelly v. Iowa Mut. Ins. Co., 620 

N.W.2d 637, 641 (Iowa 2000). These summary judgment standards dictate the 

outcome of the appeal.

A. Misappropriation of Trade Secrets Claim

As noted, Deimco raised common law and statutory misappropriation of trade 

secrets claims. Deimco does not argue its common law claim differs in substance from 

its statutory claim.3 Accordingly, we will focus on its statutory claim. To the extent the 

 

with the goal of gaining the expertise to reproduce the product.’”) (quoting Christianson v. Colt 

Indus. Operating Corp., 870 F.2d 1292, 1295 n.4 (7th Cir. 1989)).

2 Other claims were dismissed before the court’s ruling on the motion for summary judgment.

3

The Iowa Supreme Court set forth the elements of a common law trade secrets claim as 

follows: “(1) existence of a trade secret, (2) acquisition of the secret as a result of a confidential 

relationship, and (3) unauthorized use of the secret.” Basic Chems., Inc. v. Benson, 251 

N.W.2d 220, 226 (Iowa 1977); see also Kendall/Hunt Publ’g Co. v. Rowe, 424 N.W.2d 235, 245-

46 (Iowa 1988). A federal court applying Iowa law stated “[t]he elements of a claim of 

misappropriation of trade secret under the Iowa Uniform Trade Secrets Act and Iowa common 
5

parties import common law trade secret principles, we find it unnecessary to apply those 

principles because the statute is plain and unambiguous. See 205 Corp. v. Brandow, 

517 N.W.2d 548, 550 (Iowa 1994) (“It is suggested that the common-law understanding 

of trade secrets should guide our interpretation of section 550.3(a). We think not; the 

words of the statute are plain and unambiguous.”). But see Cemen Tech, Inc. v. Three 

D Indus., L.L.C., 753 N.W.2d 1, 7 (Iowa 2008) (considering common law factors in 

determining if information is a trade secret). Because Iowa’s statute is based on a 

uniform act, we may “look to the comments and statements of purpose contained in 

Uniform Acts to guide our interpretation of a comparable provision in an Iowa Act” in the 

absence of “instructive Iowa legislative history.” Office of Citizens’ Aide/Ombudsman v. 

Edwards, 825 N.W.2d 8, 15 n.2 (Iowa 2012).

Iowa’s Trade Secrets Act, Iowa Code chapter 550, allows the owner of a trade 

secret to obtain damages for misappropriation of a trade secret. Iowa Code § 550.4(1)

(2013). Iowa Code section 550.2(4) defines “trade secret” as: 

information, including but not limited to a formula, pattern, compilation, 

program, device, method, technique, or process that is both of the 

following:

a. Derives independent economic value, actual or potential, 

from not being generally known to, and not being readily 

ascertainable by proper means by a person able to obtain 

economic value from its disclosure or use.

b. Is the subject of efforts that are reasonable under the 

circumstances to maintain its secrecy.[4]

 

law are practically indistinguishable.” Titan Int’l, Inc. v. Bridgestone Firestone North Am. Tire, 

LLC, 752 F. Supp. 2d 1032, 1039-40 (S.D. Iowa 2010).

4

Iowa Code section 550.2(4) was amended to require satisfaction of “both” requirements rather 

than “either” requirement. See Uncle B’s Bakery, Inc. v. O’Rourke, 920 F. Supp. 1405, 1425 

n.11 (N.D. Iowa 1996) (citing 1991 Iowa Acts ch. 35, § 1 and Brown v. Iowa Legislative Council,

490 N.W.2d 551, 554 n.2 (Iowa 1992)).
6

The parties do not seriously dispute that Deimco’s designs for the Pella machines 

constituted “information” within the meaning of the trade secret definition. They focus 

on other aspects of their relationship and commercial dealings, which largely implicate 

the extent to which Deimco made reasonable efforts to maintain the secrecy of the 

information. See Iowa Code § 550.2(4)(b). On this question, the district court found it 

“undisputed that Deimco publicly disclosed its equipment through public sales and 

without confidentiality agreements or patent protection in place, and thus did not take 

reasonable steps to maintain the secrecy of the device.”

Whether Deimco used “reasonable efforts” to maintain the secrecy of its 

information is an issue of fact normally left to the fact-finder. 205 Corp., 517 N.W.2d at

551; see also Olson v. Nieman’s, Ltd., 579 N.W.2d 299, 314 (Iowa 1998). This issue of 

fact was disputed. Deimco essentially concedes it failed to have Pella execute a formal 

confidentiality agreement and failed to obtain patent protection for the Pella machines. 

But, Deimco proffered affidavits, deposition testimony, documents, and expert opinions 

controverting each of the grounds on which Pella relied to support its assertion that this 

element of the trade secret definition was not satisfied. 

We begin with Pella’s reliance on Deimco’s display of machines at trade shows. 

Deimco responded the displayed equipment materially differed from the products sold to 

Pella. While a Deimco engineering manager acknowledged examining competitors’

machines at trade shows and on websites “to see if it’s got an advantage over ours,” he 

also stated he “never learned anything specific about how they accomplish that.” 

Pella also cites tours of Deimco’s facility given to Pella employees where, 

according to Pella, the employees “carefully studied Deimco’s equipment and performed 
7

testing with no express confidentiality restriction in place.” Deimco countered only nonconfidential information was disclosed to Pella employees during the tour. It supported 

this assertion with an expert opinion stating “Deimco’s trade secrets could not have 

been established based upon viewing the laboratory testing conducted at Deimco in 

November of 2005.” See EFCO Corp. v. Symons Corp., 219 F.3d 734, 741 (8th Cir. 

2000) (noting company “screened tour candidates to ensure that none of its secret 

information would be at risk” and produced testimony that “none of its trade secrets 

would be ascertainable to the naked eye by looking at its products because its 

manufacturing process cloaked the secrets.”); cf. Electro-Craft Corp. v. Controlled 

Motion, Inc., 332 N.W.2d 890, 903 (Minn. 1983) (noting memo warning managerial 

employees to restrict unannounced laboratory tours to protect secrets was never 

enforced).

Pella next points to drawings posted to Deimco’s website. Deimco’s president 

disagreed that anything confidential could be gleaned from them. In his view, the 

drawings simply gave “an overall view of” Deimco’s equipment. Two Deimco experts 

seconded this view. One of the experts opined that the website contained insufficient 

information “to reverse engineer the trade secrets manifested in the design of the 

machine itself.” He continued, “[O]ne of ordinary skill in the art could not take the little 

information available from the website and build the machine.” 

This brings us to the machines themselves. In Pella’s view, “[a]fter buying the 

equipment every customer had full opportunity to study (and to permit others to study) 

the ‘inner workings’ of the Deimco equipment. That is ‘unrestricted public consumption,’

and Deimco did nothing to protect against it.” In our view, the “reverse engineering 
8

argument” goes more to the first prong of the trade secret definition—whether the 

information was “readily ascertainable.” See Iowa Code § 550.2(4)(a); Walker Mfg., Inc. 

v. Hoffmann, Inc., 261 F. Supp. 2d 1054 (N.D. Iowa 2003); Thomas W. Foley, Keeping 

a Company’s Confidences Secret: Trade Secret Enforcement Under Iowa’s Uniform 

Trade Secrets Act, 59 Drake L. Rev. 1, 11-13 (2010). However, we will address it here.

The district court cited the deposition testimony of Deimco’s engineering 

manager indicating the design details were fairly basic and could be gleaned in a short 

amount of time.5 But this evidence was disputed. Deimco pointed to Pella’s own 

documentation, which revealed it would take 2315 hours to design and build a paint 

curing oven like the purchased one. See Cemen Tech, 753 N.W.2d at 9 (“[I]f acquisition 

of the information through an examination of a competitor’s product would be difficult, 

costly, or time-consuming, the trade secret owner retains protection against an improper 

acquisition. . . .”) (citing Restatement § 39 cmt. f). Additionally, one of Deimco’s experts 

opined Pella used improper means to reverse engineer the machine. 

We are left with Deimco’s failure to obtain a confidentiality agreement from Pella. 

Pella asserts “the lack of a confidentiality agreement . . . means that Deimco did not 

take reasonable efforts to maintain secrecy.” Pella relies on section 41 of the 

Restatement (Third) of Unfair Competition (1995), which states:

A person to whom a trade secret has been disclosed owes a duty of 

confidence to the owner of the trade secret for purposes of the rule stated 

in § 40 if:

(a) the person made an express promise of confidentiality prior to 

the disclosure of the trade secret; or

(b) the trade secret was disclosed to the person under 

circumstances in which the relationship between the parties to the 

 

5 The district court noted that this witness attempted to change his testimony via a subsequent 

affidavit. The court declined to consider his efforts to create a “sham issue of fact.” In finding a 

genuine issue of fact on this issue, we have not considered this affidavit.
9

disclosure or the other facts surrounding the disclosure justify the 

conclusions that, at the time of the disclosure,

(1) the person knew or had reason to know that the 

disclosure was intended to be in confidence, and

(2) the other party to the disclosure was reasonable in 

inferring that the person consented to an obligation of 

confidentiality.

(Emphasis added.) Section 40, in turn, relates to the appropriation of trade secrets. 

These sections are inapposite because the preliminary and dispositive issue in this case 

is the definition of a trade secret rather than the appropriation or misappropriation of a 

trade secret. See Electro-Craft, 332 N.W.2d at 903 (stating “[s]ince no trade secrets 

existed to be misappropriated, we technically need not reach the issue of whether 

misappropriation occurred”; but proceeding to address the “interrelated” issue). Iowa’s 

definition of trade secret makes no reference to “an express promise of confidentiality.”

Iowa Code § 550.2(4). For that matter, neither does Iowa’s definition of 

“misappropriation.” See id. § 550.2(3). The Iowa definitions track the definitions in the 

Uniform Trade Secrets Act, which, contrary to Pella’s assertion, do not preclude a trade 

secret claim for the “sale of a product without an explicit confidentiality agreement in 

place.” See Unif. Trade Secrets Act § 1, 14 U.L.A. 437 (1985). Indeed, in construing 

our definition, the Iowa Supreme Court has declined to hold the absence of a 

confidentiality agreement dispositive on the question of whether information constitutes 

a trade secret. See Cemen Tech, 753 N.W.2d at 7-8 (stating a confidentiality 

agreement “‘can be an important although not necessarily conclusive factor in 

determining whether the information qualifies for protection as a trade secret’”) (quoting 

Restatement (Third) of Unfair Competition § 39 cmt. d)). And, the court has interpreted 

section 550.2(4)(b) to place emphasis on the “reasonableness” requirement. See 205 
10

Corp., 517 N.W.2d at 551 (“The key to this second element of the trade secret test is 

found in the words ‘reasonable under the circumstances.’”); see also Olson, 579 N.W.2d 

at 314 (concluding use of word “inventor” on a drawing generated a jury question on 

reasonable-efforts-to-preserve-secrecy requirement). 

As noted, Pella itself included language in its first request for quotation stating 

the information belonged to Deimco. Pella attempted to alter the language at a later 

date, but Deimco objected and inserted language in its quotation emphasizing the 

proprietary nature of the information. Pella proceeded with the purchase, subject to the 

added language. Additionally, Pella endorsed the approval drawings, which also 

contained legends stating the machine designs were proprietary. Cf. Fail-Safe, LLC v. 

A.O. Smith Corp., 674 F.3d 889, 893-94 (7th Cir. 2012) (“None of the information 

provided by FS to AOS was marked confidential, nor did FS make it known that it 

expected this information to remain confidential. . . . Nor did FS take any steps to 

protect its claimed proprietary information, contractually or otherwise.”); Electro-Craft,

332 N.W.2d at 903 (finding reasonable efforts to protect secrecy were not made where 

none of the technical documents were marked “confidential” and “drawings, dimensions 

and parts were sent to customers and vendors without special marking”).

In internal e-mails, Pella acknowledged the quotation language and legends 

raised concerns about Pella’s decision to reverse engineer the machine. Former Pella 

employee Dan Bartlett attested “[t]he language of Pella’s RFQ and Deimco’s Approval 

Drawing make it clear that Pella was prohibited from reverse engineering the Deimcobuilt equipment and also [was] prohibited from using Deimco’s drawings without prior 

written authorization.” Deimco’s experts seconded this view, opining the language 
11

revealed an intent to maintain the confidentiality of the design and manufacturing 

process. Finally, when Pella sought sub-assembly drawings, putatively for maintenance 

purposes, Deimco refused to turn them over. 

We conclude Deimco generated a genuine issue of material fact on whether its 

efforts to maintain the secrecy of its information were reasonable under the 

circumstances. See Wyeth v. Natural Biologics, Inc., 395 F.3d 897, 900 (8th Cir. 2005)

(stating “[a]bsolute secrecy is not required”).

6

In reaching this conclusion, we acknowledge the existence of adverse authority. 

See, e.g., BDT Products, Inc. v. Lexmark Int’l, Inc., 274 F. Supp. 2d 880, 890-93 (E.D. 

Ky. 2003); In re Dippin’ Dots Patent Litig., 249 F. Supp. 2d 1346, 1375-76 (N.D. Ga.

2003); Contacts Materials Processing, Inc. v. Kataleuna GmbH Catalysts, 164 F. Supp.

2d 520, 534 (D. Md. 2001). But the Iowa Supreme Court appears to have charted a 

more fact-intensive course. See EFCO, 219 F.3d at 741 (noting “Iowa’s broad definition 

of trade secrets, together with its liberal construction by Iowa courts”); Interbake Foods, 

L.L.C. v. Tomasiello, 461 F. Supp. 2d 943, 966-68 (N.D. Iowa 2006) (finding significant 

deficiencies in efforts to maintain secrecy but concluding under Iowa law efforts were 

reasonable); S&W Agency, Inc. v. Foremost Ins. Co., 51 F. Supp. 2d 959, 979 (N.D.

Iowa 1998) (noting jury “reasonably could have determined [. . .] that plaintiffs kept the 

information secret to an extent that was reasonable under the circumstances”). On this 

 

6 Pella suggests there was no duty of confidence owing to Deimco and we could affirm as a 

matter of law on this basis. The question of duty bears on the misappropriation element. See 

Iowa Code § 550.2(3)(d) (“Disclosure or use of a trade secret by a person who at the time of 

disclosure or use knows that the trade secret is acquired under circumstances giving rise to a 

duty to maintain its secrecy or limit its use.”). We believe this element raises a mixed question 

of law and fact. The facts relating to this issue are disputed. Because there is a genuine issue 

of material fact, we are unable to affirm the summary judgment ruling on the ground there was 

no duty of confidence as a matter of law.
12

summary judgment record, we are unable to find the “reasonable efforts to maintain 

secrecy” requirement satisfied as a matter of law. 

We briefly turn to the first prong and the “reasonably ascertainable” requirement.7 

The district court found the information readily ascertainable based on the availability of 

the information at trade shows, tours of the Deimco facility, and Deimco’s postings on 

the internet, all addressed above. Additionally, the court relied on the ability to reverse 

engineer a machine, a topic we also addressed above. As with the “reasonable efforts 

to maintain secrecy” prong, we conclude Deimco generated an issue of material fact on 

the “reasonably ascertainable” requirement precluding summary judgment in favor of 

Pella. Accordingly, we reverse the grant of summary judgment to Pella on Deimco’s 

common-law and statutory misappropriation-of-trade-secrets claims.

B. Breach of Contract Claim 

Deimco next challenges the district court’s ruling on its breach-of-contract claim. 

It contends the legend in the approval drawings and the proprietary language in its 

quotations “imposed an obligation on Pella to refrain from using Deimco’s designs, and 

Pella’s development of its own equipment” and the district court erred in concluding 

otherwise. 

As noted at the outset, the legend on each approval drawing read: “This drawing 

contains proprietary information of SHI R2 Solutions, Inc. [Deimco]. Possession thereof 

does not confer any right to reproduce, use or disclose in whole or in part any such 

information without written authorization from SHI R2, Inc. [Deimco].” The pertinent 

portion of the Deimco quotations read: “The machine’s designs, sub-assembly, and 

fabrication drawings are the intellectual property of Deimco Finishing Equipment.” 

 

7 The “economic value” element of the first prong was not contested.
13

Pella contends the language in the quotation “never became part of a contract 

between the parties as a matter of law” and, in any event, neither this language nor the 

legend on the approval drawings prohibited reverse engineering. 

To prevail on its breach-of-contract claim, Deimco must prove the following 

elements: (1) the existence of a contract, (2) the terms and conditions of the contract, 

(3) performance of all the terms and conditions required under the contract (or excuse 

from such performance), (4) the defendant’s breach of the contract in some particular 

way, and (5) damage as a result of the breach. Royal Indem. Co. v. Factory Mut. Ins. 

Co., 786 N.W.2d 839, 846 (Iowa 2010). We conclude as a matter of law that Deimco 

and Pella had contracts for the purchase of machines, reflected in requests for 

quotations, quotations, purchase orders, and approval drawings.

The real question is whether the proprietary language obligated Pella to refrain 

from replicating the Deimco machines without Deimco’s authorization. As a preliminary 

matter, the parties disagree on the rules of construction to be applied. The Iowa 

Supreme Court has clarified that “the meaning of a contact ‘can almost never be plain 

except in a context.’” Pillsbury Co., Inc. v. Wells Dairy, Inc., 752 N.W.2d 430, 436 (Iowa 

2008). Specifically, “‘[a]ny determination of meaning or ambiguity should only be made 

in the light of relevant evidence of the situation and relations of the parties, the subject 

matter of the transaction, preliminary negotiations and statements made therein, usages 

of trade, and the course of dealing between the parties.’” Id.; see also Iowa Code 

§ 554.2202 (allowing supplementation with evidence of “course of performance, course 

of dealing, or usage of trade”); Bartlett Grain Co., LP v. Sheeder, 829 N.W.2d 18, 23 

(Iowa 2013) (noting UCC does not “entirely eliminate the common law of contracts”).
14

“When the interpretation of a contract depends on the credibility of extrinsic 

evidence or on a choice among reasonable inferences that can be drawn from the 

extrinsic evidence, the question of interpretation is determined by the finder of fact.” 

Pillsbury, 752 N.W.2d at 436. Deimco’s exhibits and testimony cited in Subpart A, 

generated a genuine issue of material fact on the question of whether the contract 

language prohibited Pella from reverse engineering the machine. Accordingly, we 

reverse the grant of summary judgment as to Deimco’s breach-of-contract claim.

III. Disposition

We reverse the district court’s grant of summary judgment in favor of Pella and 

remand for further proceedings. We find it unnecessary to address any of the remaining 

arguments raised by the parties.

REVERSED AND REMANDED.