Source: http://www2.bloomberglaw.com/public/desktop/document/AvidAir_Helicopter_Supply_Inc_v_RollsRoyce_Corp_663_F3d_966_101_U
Timestamp: 2013-05-21 17:45:16
Document Index: 74124184

Matched Legal Cases: ['§ 24', '§ 417', '§ 757', '§ 1', '§ 24', '§ 417', '§ 325', '§ 24', '§ 417', '§ 1']

AvidAir Helicopter Supply, Inc. v. Rolls-Royce Corp., 663 F.3d 966, 101 U.S.P.Q.2d 1069 (8th Cir. 2012), Court Opinion
AvidAir Helicopter Supply, Inc. v. Rolls-Royce Corp., 663 F.3d 966, 101 U.S.P.Q.2d 1069 (8th Cir. 2012) [2011 BL 313788]
AVIDAIR HELICOPTER SUPPLY, INC., Plaintiff-Appellant, v. ROLLS-ROYCE
No. 10-3444.
Submitted: September 20, 2011.
Filed: December 13, 2011.
[*1070] Rehearing and Rehearing En Banc Denied January 18, 2012.
[1] Trade secrets — Elements of trade secret ►400.03 [Show Topic Path]
Trade secrets — State and common law ►400.09 [Show Topic Path]
Compilation of secret and nonsecret information can be protected as trade secret provided compilation affords competitive advantage, and is not readily ascertainable by others; in present case, in which defendant argues that plaintiff's updated documents containing technical information required for overhaul of helicopter engines add only “trivial” amount of information that was not readily available from prior public versions, updated documents are protectable as trade secrets if they have value independent of older publicly available versions, and they need not introduce significant engineering differences.
[2] Trade secrets — Elements of trade secret ►400.03 [Show Topic Path]
Documents containing technical information required for overhaul of helicopter engines qualify for trade-secret protection, since, in order to certify to Federal Aviation Administration that engine overhaul was completed in accordance with FAA-approved procedure, maintenance facility must have updated technical information for engine, since defendant, rather than obtaining FAA approval for overhaul procedure based solely on publicly available information, appropriated documents it knew were claimed to be trade secrets and then certified to FAA that its procedure was in compliance with those updated documents, and this conduct belies defendant's claim that information in documents was readily ascertainable or not independently valuable, since it is undisputed that all documents at issue were labeled with proprietary-rights legends, and there is no evidence that plaintiff distributed them to any party not bound by confidentiality agreements, and since fact that trade secrets were successfully misappropriated does not defeat plaintiff's showing that it established reasonable efforts to maintain their secrecy.
[3] Trade secrets — Disclosure and misappropriation ►400.07 [Show Topic Path]
Granting trade secret protection for documents containing latest technical information required for overhaul of helicopter engines does not remove, from public domain, information in documents that was also available in earlier, publicly available versions of overhaul information; however, fact that some information in documents at issue is still available in prior versions does not give defendant right to misappropriate entirety of latest version containing new technical specifications, which has separate value to competitors in view of Federal Aviation Administration regulations governing procedure for certification of engine overhauls.
Permanent injunctions — Trademarks and unfair trade practices ►505.0709.09 [Show Topic Path]
Entry of permanent injunction is affirmed in action in which defendant was found to have misappropriated trade secrets in documents containing technical information required for overhaul of helicopter engines, since injunction, which requires defendant to return all proprietary information but does not prohibit it from using separate overhaul process developed from publicly available information, is narrow and minimizes hardship imposed on defendant.
[5] Unfair competition — State and common law ►395.03 [Show Topic Path]
Plaintiff's action alleging that defendant misappropriated trade secrets in documents containing technical information required for overhaul of helicopter engines was not “sham” litigation, and therefore did not violate antitrust laws, since plaintiff prevailed on some of its trade secret claims and was awarded $350,000 by jury, and therefore did not bring “objectively baseless” suit, even though it did not prevail on every claim in complaint; plaintiff's success in establishing its trade secrets likewise defeats defendant's claim for tortious interference with business interest, since plaintiff had legal right to protect its trade secrets and did not lack justification for its actions, and plaintiff's success on trade secret claims establishes its good faith in bringing suit.
Western District of Missouri, Ortrie D. Smith, J.
[**967] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN
[**968] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN
[**969] Edward A. McConwell, Sr., argued, Laura McConwell, on the
brief, Mission, KS, for appellant.
Alastair J. Warr, argued, Libby Y. Goodknight, Jason A. Houdek,
on the brief, Indianapolis, IN, for appellee.
[*1071] This appeal comes to us from two consolidated suits brought
under the Uniform Trade Secrets Acts of Indiana and Missouri.
Both suits involve information about the repair and overhaul of
helicopter engines published by Appellee Rolls-Royce Corp.
Rolls-Royce sought damages and injunctive relief for alleged
trade secret violations. Appellant AvidAir Helicopter Supply
Inc. sought a declaration that the information in question was
not protected by trade secret law. AvidAir also alleged that
Rolls-Royce had violated antitrust laws and tortiously
interfered with its business interest. In multiple summary
judgment rulings below, the district court[fn1] held in favor
of Rolls-Royce by finding that some, though not all, of the
information in question was a protected trade secret. The court
ruled against AvidAir on its antitrust and tortious
interference claims. A jury later awarded Rolls-Royce $350,000
in actual damages, and the court issued a permanent injunction
requiring AvidAir to return the protected documents to
Rolls-Royce. AvidAir appeals the rulings. For the reasons
stated below, we affirm.
Rolls-Royce Corp. develops and produces the Model 250 engine
used in civilian and military helicopters. Before 1994,
Rolls-Royce's predecessor, Allison Engine Co., did not exert
tight control over access to the technical information required
in the repair and overhaul market for these engines. This led
to the development of third-party overhaul shops. AvidAir is a
Missouri company that entered the repair and overhaul market in
1994. AvidAir's business focuses on the overhaul of compressor
cases, one of three modules in the Model 250 engine.
Federal regulations require that an overhauled engine be
certified for return to service. In order to certify the return
to service for a Model 250 engine, an over-haul shop must
follow a procedure that has been approved by the Federal
[**970] Administration (FAA). The approved overhaul procedure for
the Model 250 requires, inter alia, details about
processes, procedures, techniques and material specifications
contained in Distributor Overhaul [***2] Information Letters (DOILs)
issued first by Allison, and later by Rolls-Royce.[fn2] DOIL 24
related specifically to the compressor case, and like the other
DOILs, it was periodically updated through numbered revisions.
Because Allison had not restricted the redistribution of
earlier revisions, AvidAir was able to acquire DOIL 24,
Revisions 1 through 7 from various sources sometime in the
In 1994, Allison began to restructure its approach to the
overhaul of Model 250 engines. Allison appointed twenty-five
Authorized Maintenance Centers (AMCs) to whom it would
exclusively issue technical information (such as DOILs and
other overhaul manuals). Allison executed agreements with each
AMC that specified the proprietary nature of this technical
information, prohibited the AMCs from disseminating this
information, and required the AMCs to return all proprietary
documents at the end of their relationship. Allison also began
including a proprietary rights legend on the front page of its
DOILs. All of the documents at issue on appeal contain this
rights legend.
Rolls-Royce, plc. acquired Allison in 1995 and eventually
changed its name in 2002 to Rolls-Royce Corp. Rolls-Royce
issued a cease and desist letter to AvidAir in 2002, demanding
it stop using DOIL 24 in its overhaul of Model 250 engines. In
2003, the FAA responded to a Rolls-Royce complaint by
inspecting AvidAir's overhaul process. The FAA found that
AvidAir was not following the latest approved overhaul
instructions contained in DOIL 24, Revision 13. Because AvidAir
was not an AMC, it had never been authorized to receive a copy
of the latest DOIL. After the FAA inspection, AvidAir
eventually obtained a copy of DOIL 24, Revision 13 without
Rolls-Royce's permission. Though there is a dispute about the
extent to which AvidAir changed its overhaul procedure after
obtaining Revision 13, AvidAir admits that it made adjustments
for new measurements contained within Revision 13, and it
certified to the FAA that it was in compliance with the
document. AvidAir also obtained copies of other DOILs, though
not all are at issue in this appeal.[fn3]
[*1072] On September 29, 2006, AvidAir filed suit in the Western
District of Missouri seeking a declaration that Rolls-Royce's
DOILs were not trade secrets and alleging that Rolls-Royce
violated antitrust laws and tortiously interfered with its
business. According to AvidAir, DOIL 24 Revision 13 was
substantially the same as earlier, publicly available
revisions. On October 2, 2006, Rolls-Royce filed its own suit
against AvidAir in the Southern District of Indiana for
trade-secret violations under the Lanham Act. In 2007, both
cases were consolidated and eventually transferred to the
Western District of Missouri. The issues were bifurcated, and
both parties filed for partial summary judgment as to the
trade-secret status of DOIL 24. This issue was submitted to a
[**971] judge[fn4] for determination. On April 7, 2009, the
magistrate judge issued a report and recommendation that the
district court grant summary judgment in favor [***3] of Rolls-Royce
as to DOIL 24, Revision 13 (finding it was a protected trade
secret) but grant AvidAir summary judgment on Revisions 1-10
(finding they were not trade secrets). On June 23, 2009, the
district court adopted the report in full.[fn5]
On June 20, 2009, AvidAir acquired a full technical library
from Precision Air Power, which was a branch of a Rolls-Royce
AMC. Relying on this acquisition, AvidAir filed a motion to
reconsider the district court's Order of June 23, 2009 and a
motion for leave to amend the complaint. AvidAir argued that
its purchase of Precision's library demonstrated AMCs were not
restricted from distributing information pertaining to the
Model 250 engine and that the information was therefore in the
public domain. The court found that the proprietary-rights
legends on the documents, as well as Rolls-Royce's AMC
Agreement (under which Precision was prohibited from disclosing
confidential materials) contradicted this argument. The
district court concluded that the time for amending the
pleadings was long passed, and on September 23, 2009, it denied
AvidAir's motion in full.
Both parties again filed motions for summary judgment, and the
district court granted motions in favor of Rolls-Royce on
AvidAir's antitrust claim, AvidAir's tortious interference
claim, and Rolls-Royce's trade secret claims involving DOIL 3
and DOIL 8. The issue of damages was submitted to a jury, which
awarded Rolls-Royce $350,000 in actual damages. After the jury
award, the district court granted in part Rolls-Royce's Motion
for Permanent Injunction. Pursuant to the injunction, AvidAir
is required to return all of Rolls-Royce's trade secrets, but
AvidAir is not prevented from continuing to operate in the
Model 250 overhaul market according to procedures developed
from publicly available knowledge.
AvidAir appeals the court's rulings.
AvidAir presents many issues on appeal, though the principal
issue before us is whether the district court erred in granting
Rolls-Royce summary judgment on its trade secret claims. We
review grants of summary judgment de novo, applying the same
standard as the district court. Strategic Directions Grp.,
Inc. v. Bristol-Myers Squibb Co., 293 F.3d 1062, 1064 (8th
Cir. 2002). Summary judgment is appropriate when there is no
genuine issue of material fact and the moving party is entitled
to judgment as a matter of law. Id.
Though the existence of a trade secret is a fact-intensive
inquiry, it is ultimately a question of law determined by the
court. Steve Silveus Ins., Inc. v. Goshert,
873 N.E.2d 165, 179 (Ind.Ct.App. 2007); Lyn-Flex West, Inc. v.
Dieckhaus, 24 S.W.3d 693, 698 (Mo.Ct.App. 1999). Under the
Uniform Trade Secrets Act (UTSA), which has been adopted by
both Indiana and Missouri,[fn6] a trade secret is:
[**972] information, including a formula, pattern,
compilation, program, device, method, technique, or
process, that: (1) derives independent economic value,
to, and [*1073] not being readily ascertainable by proper
means by, other persons who can obtain economic value
from its disclosure or use; and (2) is the subject of
efforts that are reasonable under [***4] the circumstances to
Ind. Code § 24-2-3-2; see also Mo. Rev. Stat.
§ 417.453(4).
The district court found the DOILs[fn7] were compilations of
publicly available information and new proprietary information.
Compilations are specifically contemplated in the UTSA
definition of a trade secret, and the fact that some or even
most of the information was publicly available is not
dispositive of the first factor in the UTSA definition.
Compilations of non-secret and secret information can be
valuable so long as the combination affords a competitive
advantage and is not readily ascertainable. See Amoco Prod.
Co. v. Laird, 622 N.E.2d 912, 919-20 (Ind. 1993).
Compilations are valuable, not because of the quantum of secret
information, but because the expenditure of time, effort, and
expense involved in its compilation gives a business a
competitive advantage. Id.; N. Elec. Co. v. Torma,
819 N.E.2d 417, 426 (Ind.Ct.App. 2004); Lyn-Flex West,
24 S.W.3d at 699. This value is not dependent on how much of the
information is otherwise unavailable because "the effort of
compiling useful information is, of itself, entitled to
protection even if the information is otherwise generally
known." Torma, 819 N.E.2d at 426; see also Penalty
Kick Mgmt. Ltd. v. Coca Cola Co., 318 F.3d 1284, 1291
(11th Cir. 2003) ("[E]ven if all of the information is publicly
available, a unique combination of that information, which adds
value to the information, also may qualify as a trade
secret."). But see Nationwide Mut. Ins. Co. v.
Mortensen, 606 F.3d 22, 29 (2d Cir. 2010) (denying trade
secret protection for information that had merely changed in
form but not substance).
AvidAir argues that the DOILs cannot provide independent
economic value because there is only a trivial amount of
information that was not readily ascertainable from prior
revisions. Such a trivial amount of information, AvidAir
contends, offers no engineering advances from previous
revisions. As the above-cited cases demonstrate, though,
existence of a trade secret is determined by the value of a
secret, not the merit of its technical improvements. Unlike
patent law, which predicates protection on novelty and
non-obviousness, trade secret laws are meant
[**973] to govern commercial ethics. See Kewanee Oil Co. v.
Bicron Corp., 416 U.S. 470, 489-90, 94 S.Ct. 1879,
40 L.Ed.2d 315 (1974) (noting this as the reason why trade secret
protection is weaker than patent protection); Water Servs.,
Inc. v. Tesco Chems., Inc., 410 F.2d 163, 172 (5th Cir.
1969) (`"[Trade Secret] protection is not based on a policy of
rewarding or otherwise encouraging the development of secret
processes or devices. The protection is merely against breach
of faith and reprehensible means of learning another's secret.
For this limited protection it is not appropriate to require
also the kind of novelty and invention which is a requisite of
patentability.'" (quoting Restatement of Torts § 757 cmt. b
(1939))); 1-1 Roger M. Milgrim & Eric E. Bensen, Milgrim
on Trade Secrets § 1.08 (2011). But
see Kewanee Oil, 416 U.S. at 481-82, 94 S.Ct. 1879
(acknowledging that maintaining standards of commercial ethics
and encouraging invention "are the broadly stated policies
behind trade secret law"). Trade secret protection does not
shield an idea from "infringing" other uses of the idea;
instead it protects valuable information from [***5] being
misappropriated despite reasonable efforts to keep it secret.
In the present case, we need not examine whether the documents
introduce significant engineering differences so long as it is
established that the documents have a value independent of
older publicly available versions.
The UTSA states that a trade secret derives its value from not
being readily ascertainable. Ind. Code § 24-2-3-2;
Mo.Rev. Stat. § 417.453(4). The fact that information can be
ultimately discerned by others — whether through
independent investigation, accidental discovery, or reverse
engineering — does not make it unprotectable. See
Laird, 622 N.E.2d at 918 ("Even if information potentially
could [*1074] have been duplicated by other proper means, it is no
defense to claim that one's product could have been developed
independently of plaintiffs, if in fact it was developed by
using plaintiffs proprietary designs.") (internal quotation
marks omitted). Instead, the court must look at whether the
duplication of the information would require a substantial
investment of time, effort, and energy. Id. at 919-20.
AvidAir does not dispute that the revised DOILs were updated as
a result of Rolls-Royce's own research and testing, or that
AvidAir avoided the burdensome expense of reverse engineering
the updated specifications contained in the DOILs by simply
acquiring the documents that Rolls-Royce claimed were
protected. AvidAir instead contends that the changes were too
trivial to create any value.
[2] We disagree. The value of Rolls-Royce's documents is apparent
when a shop is required to certify the return to service for an
overhauled engine. To certify to the FAA that the overhaul was
completed in accordance with an FAA-approved procedure, that
shop must have updated technical information for the engine.
AvidAir claims that it can obtain FAA approval for a procedure
that is based on only publicly available information, and if
this is true, AvidAir may be free to do so. This is, however,
not what AvidAir did. Instead of obtaining FAA approval based
on an independent investigation of changes to the approved
procedure, AvidAir simply appropriated the documents it knew
were claimed to be trade secrets and then certified that its
procedure was in compliance with the updated documents. Indeed,
even after the district court adjudicated the trade secret
status of DOIL 24, Revision 13, AvidAir again misappropriated
it and other documents from Precision, claiming it did so
lawfully in order to benefit from Rolls-Royce's efforts to
update proprietary information. AvidAir's
[**974] repeated attempts to secure the revised DOILs without
Rolls-Royce's approval belies its claim that the information in
the documents was readily ascertainable or not independently
The second factor we must consider is whether Rolls-Royce
established reasonable efforts to maintain the secrecy of its
DOILs. Reasonable efforts to maintain secrecy need not be
overly extravagant, and absolute secrecy is not required.
Torma, 819 N.E.2d at 428; Zemco Mfg., Inc. v.
Navistar Int'l Transp. Corp., 759 N.E.2d 239, 246
(Ind.Ct.App. 2001). The use of proprietary legends [***6] on documents
or the existence of confidentiality agreements are
frequently-considered factors in establishing or denying a
trade secret claim. See, e.g., Wyeth v. Natural Biologics,
Inc., 395 F.3d 897, 899-900 & n. 4 (8th Cir. 2005)
(applying Minnesota UTSA); Diamond Power Int'l, Inc. v.
Davidson, 540 F.Supp.2d 1322, 1334-35 (N.D.Ga. 2007)
(applying Georgia UTSA); Nilssen v. Motorola, Inc.,
963 F.Supp. 664, 679-80 (N.D.Ill. 1997) (applying Illinois
UTSA). Misplaced trust in a third party who breaches a duty of
confidentiality does not necessarily negate efforts to maintain
secrecy. Torma, 819 N.E.2d at 428; see also
Kewanee Oil, 416 U.S. at 475, 94 S.Ct. 1879 ("This
necessary element of secrecy is not lost, however, if the
holder of the trade secret reveals the trade secret to another
in confidence, and under an implied obligation not to use or
disclose it." (internal quotation marks omitted)).
It is undisputed that all of the documents in question were
labeled with proprietary-rights legends. Though AvidAir claims
the documents were "freely available" in the industry, it
failed to present any evidence that Rolls-Royce actually
distributed them to a party not bound by confidentiality
agreements. We agree with the district court that these were
reasonable efforts to maintain secrecy. AvidAir maintains that
the DOILs were possessed "without restriction" by others, but
this argument is unsupported by the record. All the record
reflects is that AvidAir either acquired the documents from
others who were not authorized to provide AvidAir with the
documents, or acquired the documents from others who had
themselves misappropriated the documents. The fact that a trade
secret was successfully misappropriated does not defeat the
fact that there were reasonable efforts to maintain its
secrecy. See Wyeth, 395 F.3d at 900 ("`The existence
of a trade secret is not negated merely because an employee or
other person has acquired the trade secret without express or
specific notice that it is a trade secret if, under all the
circumstances, the employee or other person knows or has reason
to know that the owner intends or expects the secrecy of the
type of information comprising the trade secret to be
maintained.'" (quoting Minn. Stat. § 325C.01, subd. 5)).
AvidAir devotes a great deal of attention to its acquisition of
Precision's technical library, and it argues that Precision was
not bound by the AMC Agreement originally entered into by
Allison. The AMC Agreement noted in ¶ 6.2 that Allison
would provide "general technical data and other Manuals (as
referenced in the Manual List)," and that "[s]uch material may
be Allison proprietary and may bear appropriate [*1075] copyright and
Marks restrictions. No distribution of this material is to be
made outside Authorized Maintenance Center Business
Operation(s) except as provided in each document, the Policy
Manual or as specifically Authorized by Allison." AvidAir
contends that, because the "Manual List" appended to the
agreement does not list the DOILs, this restriction does not
apply to them. Rolls-Royce argues that the "Manual List" is
[**975] and not exhaustive. Viewing the Agreement in the light most
favorable to AvidAir, we conclude that the absence of DOILs on
the "[***7] Manual List" does not support AvidAir's contention. The
Agreement unambiguously applies to "general technical data,"
which covers the DOILs regardless of whether they were or were
not defined as "Manuals." The AMC Agreement does not excuse
AvidAir from misappropriating trade secrets.[fn8]
[3] AvidAir argues that Rolls-Royce is attempting to reclaim and
remove information that was previously available in public. All
of the information in earlier revisions that was already
available to the public, however, is still available to the
public. The district court ruled that DOIL 24, Revisions 1
through 10 were not trade secrets. Giving protection for
Revision 13 does not make it a misappropriation to acquire
Revision 1, which contains some of the same information. But
the fact that some of the information is available in Revision
1 does not give AvidAir the right to misappropriate the
entirety of Revision 13, which has a separate value to
competitors because of FAA regulations. AvidAir is not entitled
to the value of the proprietary revised documents, even if the
new technical specifications are relatively minor in the
context of the overhaul process as a whole.
Having concluded that the documents in question were protected
trade secrets, the district court did not err in granting an
injunction in favor of Rolls-Royce. We review a grant of
permanent injunction for abuse of discretion. Kennedy Bldg.
Assocs, v. CBS Corp., 476 F.3d 530, 533 (8th Cir. 2007). We
will affirm a grant of injunctive relief unless the district
court "`clearly erred in its characterization of the facts,
made a mistake of law, or abused its discretion in considering
the equities.'" South Dakota v. Ubbelohde,
330 F.3d 1014, 1026 (8th Cir. 2003) (quoting Bhd. of Maint, of Way
Emp., Lodge 16 v. BurliTigton N. R.R. Co., 802 F.2d 1016,
1020 (8th Cir. 1986)). Under the UTSA, "[a]ctual or threatened
misappropriation may be enjoined." Ind. Code § 24-2-3-3(a);
Mo.Rev. Stat. § 417.455.1.
[4] AvidAir offers no argument as to how the district court abused
its discretion, other than reiterating that the trade secrets
were obtained lawfully, and thus not misappropriated. The
district court found, and we agree, this argument was not
supported by the record. Furthermore, the injunction granted by
the court was narrow and minimized the hardship imposed on
AvidAir. The injunction requires AvidAir to return all
proprietary information, but did not enjoin AvidAir from using
a separate overhaul process developed from publicly available
information. If, as AvidAir argues, it can obtain FAA approval
for a process that uses only publicly available information, it
may be free to do so. This injunction merely prevents AvidAir
[**976] from enjoying the unfettered benefits of Rolls-Royce's
efforts to update the process.
AvidAir also challenges the district court's grant of summary
judgment for Rolls-Royce on AvidAir's antitrust and tortious
interference claims. The standard of review for summary
judgment determinations is de novo. Strategic Directions
Grp., Inc., 293 F.3d at 1064. We conclude that AvidAir's
claims were both resolved by the district court's determination
that the documents were trade secrets.
[***8] AvidAir's antitrust claim was based on its theory that
Rolls-Royce's trade secret suit was a sham litigation in
violation of Sherman Act §§ 1 and 2. The Supreme Court has
held that those who petition the courts for redress are
generally immune from antitrust liability, unless the lawsuit
"is a mere sham to cover . . . an attempt to interfere directly
with the business relationships of a competitor." E. R.R.
Presidents Conference v. Noerr Motor Freight, Inc.[*1076] ,
365 U.S. 127, 144, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961). In order to
determine whether a lawsuit is a sham, the Court established a
two-part test. "First, the lawsuit must be objectively baseless
in the sense that no reasonable litigant could realistically
expect success on the merits." Prof'l Real Estate
Investors, Inc. v. Columbia Pictures Indus., Inc.,
508 U.S. 49, 60, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993). Only if
the lawsuit is baseless does the court look to the second,
subjective factor of whether the baseless lawsuit was "`an
attempt to interfere directly with the business
relationships of a competitor.'" Id. at 60-61,
113 S.Ct. 1920 (quoting Noerr, 365 U.S. at
144 81 S.Ct. 523).
[5] AvidAir's argument that Rolls-Royce attempted to interfere with
its business by improperly seeking trade secret protection does
not pass the first prong of the sham litigation test. A lawsuit
that leads to a jury award of $350,000 is not objectively
baseless, even if it did not succeed on each claim of the
complaint. See id. at 60 n. 5, 113 S.Ct. 1920 ("A
winning lawsuit is by definition a reasonable effort at
petitioning for redress and therefore not a sham."). Indeed,
AvidAir essentially concedes that this argument must fail if we
do not reverse the district court's trade secret ruling.
Because we affirm the district court's rulings on Rolls-Royce's
trade secrets, we also affirm the dismissal of AvidAir's
antitrust claim.
Rolls-Royce's success in establishing its trade secrets
likewise defeats AvidAir's tortious interference claim. For
AvidAir to succeed under a theory of tortious interference, it
must prove, "(1) a contract or valid business expectancy; (2)
defendant's knowledge of the contract or relationship; (3) a
breach induced or caused by defendant's intentional
interference; (4) absence of justification; and (5) damages."
Rice v. Hodapp, 919 S.W.2d 240, 245 (Mo. 1996) (en
banc). To satisfy the justification element of an interference
claim, AvidAir must demonstrate that Rolls-Royce "lacked a
legal right to justify [its] actions." Horizon Mem'l Grp.,
L.L.C. v. Bailey, 280 S.W.3d 657, 662 (Mo.Ct.App. 2009).
However, not only does ownership of a valid trade secret
justify an attempt to protect a trade secret, good faith
efforts to enforce legal rights are even justified when a court
later decides the claimed rights don't actually exist. See,
e.g., Healthcare Servs. of the Ozarks, Inc. v. Copeland,
198 S.W.3d 604, 614 (Mo. 2006) (en banc). Rolls-Royce had a
legal right to protect its trade secrets and did not lack
justification for its actions. Even though
[**977] Rolls-Royce abandoned its claims about other DOILs, its
success on the claims now on appeal is enough to establish its
good faith in bringing suit. The district court did not err in
concluding that AvidAir had failed to establish tortious
[fn1] The Honorable Ortrie D. Smith, United States District
Judge for the Western District of Missouri.
[fn2] The parties occasionally refer to the letters as OILs, or
AMC-OILs. Following the district court, we will refer to the
documents as DOILs for the sake of clarity.
[fn3] The district court's misappropriation orders involved
DOIL 24, Revisions 12 and 13; DOIL 3, Revision 16, and DOIL 8;
Revision 6. The court's injunction order applied to these four
DOILs, as well as BookFax 97 AMC-059, which was a notice of a
change to DOIL 24, Revision 12 that became part of DOIL 24,
Revision 13. Rolls-Royce withdrew its claims on all other
DOILs.
[fn4] The Honorable William A. Knox, United States Magistrate
[fn5] The district court also adopted the report's finding that
it should deny AvidAir's motion for summary judgment with
respect to Revisions 11 and 12. Though the record supported a
finding that Revision 12 was a trade secret, Rolls-Royce had
not yet asked for summary judgment on that issue. On September
28, 2009, the court granted summary judgment in favor of
Rolls-Royce as to Revision 12.
[fn6] The present appeal is a consolidation of two cases filed
in Indiana and Missouri. The district court determined that
because both states had adopted the UTSA, and because both
states approved of reliance on decisions from other UTSA
jurisdictions, it was unnecessary to determine which state's
law governed the existence of a trade secret and looked to case
law from both states. The parties do not contest this
conclusion, and we will follow the same approach.
[fn7] The Report and Recommendation of April 7, 2009 and the
district court Order of June 23, 2009, both focus exclusively
on DOIL 24. The district court later used the DOIL 24 analysis
as a "framework" for resolving the trade secret status of DOIL
3, Revision 16; DOIL 8, Revision 6; and the BookFax.
See Order of September 9, 2009 at *4. Though the
record is more developed for DOIL 24 than the other documents,
AvidAir did not challenge the district court's use of this
framework for analysis. Instead, AvidAir maintains the same
argument for all of the documents — that the changes were
too small to be valuable, and that the documents were not
protected by confidentiality agreements. We will therefore
consider the analysis as it applies to all of the documents,
even though much of the record specifically refers to DOIL
[fn8] AvidAir's Motion for Leave to Amend was part and parcel
of its argument that Rolls-Royce did not exert reasonable
efforts to maintain the secrecy of its proprietary information.
AvidAir attempted to demonstrate that it lawfully obtained the
documents in question from Precision's technical library after
proceedings had already been underway, and it sought to expand
its claims under this argument. The court reviews a denial of a
motion for leave to amend under an abuse of discretion
standard. Marmo v. Tyson Fresh Meats, Inc.,
457 F.3d 748, 755 (8th Cir. 2006). The district court concluded that
"there is no just reason to continuously amend the pleadings to
encompass events and transactions that occurred after the case
was filed." Order of September 23, 2009. Because AvidAir was
merely trying to reassert arguments that had already been
considered and dismissed by the court, this was not an abuse of