Opinion ID: 2403365
Heading Depth: 1
Heading Rank: 22

Heading: Denial of summary judgment and motion for JMOL

Text: The WideBand defendants argue that the district court erred in denying their motions for summary judgment, as well as their motion for judgment as a matter of law (JMOL). We have clearly held, however, `that a denial of summary judgment based on a genuine dispute of material facts becomes moot and unreviewable after trial since the dispute as to the facts has been resolved.' Snyder v. City of Moab, 354 F.3d 1179, 1184 n. 2 (10th Cir.2003) (quoting 19 Wm. Moore et al., Moore's Federal Practice § 205.8 (3d ed.1999)). Consequently, we will focus exclusively on the denial of the WideBand defendants' motion for JMOL. See id. (noting that where a party is denied summary judgment by the district court on grounds that were genuine issues of material fact, the proper avenue of appeal lies in challenging the denial of [JMOL] rather than the denial of summary judgment.). We review de novo the district court's denial of a motion for JMOL, applying the same standard as the district court. Rocky Mountain Christian Church, 613 F.3d at 1235. A party is entitled to JMOL only if the court concludes that `all of the evidence in the record . . . [reveals] no legally sufficient evidentiary basis for a claim under the controlling law.' Wagner v. Live Nation Motor Sports, Inc., 586 F.3d 1237, 1244 (10th Cir.2009) (quoting Hysten v. Burlington N. Santa Fe Ry. Co., 530 F.3d 1260, 1269 (10th Cir.2008)). Drawing all reasonable inferences in favor of the nonmoving party, . . . we thus will reverse the district court's denial of the motion for JMOL if the evidence points but one way and is susceptible to no reasonable inferences supporting the party opposing the motion. Id. (internal quotation marks omitted). On October 28, 2008, at the conclusion of ClearOne's evidence at trial, the WideBand defendants filed a motion for JMOL addressing ClearOne's misappropriation of trade secrets claims. JA at D12019. In that motion, the WideBand defendants argued that, because Old ClearOne disclosed the Honeybee Code in its entirety to [ClearOne's chief technology officer Tracy Bathurst] and to his engineering team [prior to ClearOne acquiring Old ClearOne's assets and] without requiring him or anyone else to sign a nondisclosure agreement, the secrecy of the Honeybee Code was not adequately maintained and thus it could not qualify as a trade secret under Utah law. Id. at D12024. The WideBand defendants also joined in Biamp's motion for judgment as a matter of law. Id. at D12020. Biamp argued that it was entitled to judgment as a matter of law on ClearOne's misappropriation claim because there [wa]s no evidence that any claimed trade secret: (i) was in fact a trade secret [or] (ii) was misappropriated. Id. at D12117. In support, Biamp argued that (a) there was no evidence that the Honeybee development documentation or the Honeybee sub-algorithms had actual or potential value, or were ever misappropriated by any of the defendants, (b) there was no evidence that the Honeybee Code, as a whole, was valuable or had been misappropriated by any of the defendants, and (c) there was no evidence that Biamp knew or had reason to know of any misappropriation on the part of the WideBand defendants. The district court summarily denied the motions on the record at trial that same day (October 28, 2008). Id. at T2917 (I think the evidence is sufficient under the standards you submit to [go to] the jury.). On appeal, the WideBand defendants argue that, contrary to the district court's ruling, the evidence presented at trial clearly showed . . . that ClearOne took little or no steps during the development of the Honeybee Code to maintain its secrecy. Aplt. Br. at 57. Obviously, however, this argument is not framed in terms relevant to a motion for JMOL. As our standard of review makes clear, the question is not which view of the evidence is most compelling or believable, but rather whether the evidence presented at trial was sufficient to allow the jury to find in ClearOne's favor on this point. A review of the trial transcript establishes that ClearOne presented a variety of evidence relevant to this issue. To begin with, in the asset purchase agreement between Gentner/ClearOne and Old ClearOne, Old ClearOne expressly warranted that it had taken all reasonable steps to maintain the secrecy of the intellectual property it was selling to Gentner/ClearOne, including the Honeybee Code. Likewise, Chiang, in his capacity as the president of Old ClearOne, signed a separate document warranting that the representations made by Old ClearOne in the asset purchase agreement were true. In light of these documents, it appears that, notwithstanding the fact that Old ClearOne was willing to show the Honeybee Code (as it then existed) to Gentner's/ClearOne's technology staff prior to the asset purchase, nothing about those actions destroyed the secrecy of the Honeybee Code. Second, the evidence presented at trial indicated that, even though Old ClearOne allowed Gentner/ClearOne's technology staff to view portions of the Honeybee Code (as it then existed; at that point, it had not been completed), Old ClearOne did so under relatively strict conditions. Specifically, Old ClearOne required Gentner's/ClearOne's employees to travel to Old ClearOne's Massachusetts office to view the Honeybee Code, allowed Gentner's/ClearOne's employees to view the Honeybee Code only with Old Clear-One employees present and observing, and was unwilling to send the Honeybee Code or portions thereof to Gentner/ClearOne. Third, Old ClearOne did not deliver the Honeybee Code to Gentner/ClearOne until after the asset purchase agreement was executed. Fourth, following completion of the asset purchase agreement, Gentner/ClearOne placed the Honeybee Code in its document control system where it remained, at all times relevant to this litigation, secure. Fifth, ClearOne's expert witness, Makovicka, testified that he was unable to find either the Honeybee algorithm as a whole, or its key components, in the public domain. Considered together, we conclude that this evidence was sufficient to allow the jury to reasonably find that both Old ClearOne and Gentner/ClearOne took reasonable steps to maintain the secrecy of the Honeybee Code. The WideBand defendants also argue that the district court erred in finding that the Honeybee Code had independent economic value, . . . since ClearOne abandoned the Code by ceasing to produce products containing the Code. Id. at 58. In turn, the WideBand defendants argue that, [c]ontrary to the [district court's] belief, the `continuous use' doctrine is a well-established component of Massachusetts trade secret law. . . . Id. at 58-59. There are two fatal problems with these arguments. First, these were not raised in any of the defendants' motions for JMOL. Second, as we have already discussed, the WideBand defendants intentionally relinquished the choice-of-law issue that is central to their non-use arguments. Thus, in sum, the non-use arguments are waived.