Opinion ID: 855433
Heading Depth: 2
Heading Rank: 2

Heading: pmaa’s cross appeal

Text: PMAA cross appeals the grant of summary judgment dismissing its trade secrets claim for untimeliness and the denial of its motion for attorney fees under 38 U.S.C. § 285.
JUDGMENT DISMISSING PMAA’S TRADE SECRETS CLAIM FOR UNTIMELINESS This court reviews the grant of a motion for summary judgment under the law of the regional circuit. The Tenth Circuit subjects the grant of summary judgment to de novo review. Lundstrom v. Romero, 616 F.3d 1108, 1118 (10th Cir. 2010). Summary judgment is appropriate only if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). ed Winbond a retroactive license covering Winbond-made chips. ASUS contends this settlement releases ASUS, as a customer of Winbond Super I/O chips, from all liability to PMAA relating to ASUS’s purchase of Winbond products. PMAA, however, maintains that ASUS’s infringing testing was not limited to Winbond products, and that the Winbond settlement would not release ASUS for ASUS’s independent liability. Even assuming PMAA’s argument is correct, PMAA has failed to present substantial evidence to support a finding of any such independent infringement by ASUS in the United States during the relevant time period. ADAMS & ASSOC v. DELL COMPUTER 15 The Utah Uniform Trade Secrets Act (“Trade Secrets Act”) provides that “[a]n action for [trade secret] misappropriation shall be brought within three years after the misappropriation is discovered or, by the exercise of reasonable diligence, should have been discovered.” Utah Code Ann. § 13-24-7 (LexisNexis 2012). The Utah Supreme Court has interpreted such language to establish a “statutory discovery rule,” under which a statute of limitations is triggered “when a plaintiff first has actual or constructive knowledge of the relevant facts forming the basis of the cause of action.” Russell Packard Dev., Inc. v. Carson, 108 P.3d 741, 746 (Utah 2005). The district court found that PMAA had constructive knowledge of its trade secrets claim against ASUS by March 4, 2004—over three years before PMAA filed its cross claim against ASUS on May 3, 2007—when PMAA’s lawyer sent an email to Winbond implicating both Winbond and ASUS in “potential theft” of PMAA’s patented programs (“the March 4th email”). J.A.3174. The March 4th email stated: [W]e discovered this past week that Gateway somehow obtained an unauthorized copy of Dr. Adams’ Detector from Quanta in 2000-2001. We believe that Winbond also obtained or had posses- sion of a copy of Dr. Adams’ Detector and related programs. . . . [W]e have also learned that Gateway claims that Winbond’s detector (test utility) was actually obtained from ASUS, who developed the test utility from an IBM supplied design. These two files, ifdc.exe and w2sec.exe, constitute the Winbond test utility. Due to the legal ramifications and potential theft involved, we would appreciate a copy of these files immediately so that we can exoner- ate your client. 16 ADAMS & ASSOC v. DELL COMPUTER J.A.3174 (emphases added). The district court determined that this email reflected PMAA’s knowledge “that ASUS had developed a utility that was a ‘potential theft’ of what [PMAA] claims to be trade secrets.” Summary Judgment Op. at 5. Accordingly, the district court found the statute of limitations was triggered on March 4, 2004, and had expired by May 3, 2007, when PMAA filed its claim against ASUS. Id. at 5-6. PMAA argues the district court erred in granting summary judgment because at the time of the email “there was no evidence . . . that ASUS (1) had used PMAA’s trade secrets, and (2) knew or had reason to know that it was not in rightful possession of the information.” 12 PMAA’s Opening Br. at 64. However, consideration of the elements of a trade secrets claim confirms the district court’s conclusion that the March 4th email shows constructive knowledge sufficient to trigger the statute of limitations. The Trade Secret Act provides that “a complainant is entitled to recover damages for misappropriation.” Utah Code Ann. § 13-24-4 (LexisNexis 2012). Misappropriation is defined as follows:
person who knows or has reason to know that the trade secret was acquired by improper means; or 12 In arguing that its trade secrets claim was not untimely, PMAA focuses on the district court’s earlier cautioning that “‘reliance on third-hand information is inappropriate.’” PMAA’s Opening Br. at 63 (quoting J.A.3886.275). However, the district court’s statement regarding third-hand information was chastising another party for nonproduction of requested evidence in discovery, not cautioning PMAA about when to file its trade secrets claim. ADAMS & ASSOC v. DELL COMPUTER 17
without express or implied consent by a person who:
of the trade secret; or
had reason to know that his knowledge of the trade secret was: (A) derived from or through a person who had utilized improper means to acquire it; (B) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (C) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use. . . . Utah Code Ann. § 13-24-2(2) (LexisNexis 2012). The March 4th email reflects PMAA’s knowledge that ASUS obtained or developed a copy of Dr. Adams’s Detector from IBM and provided it to Winbond. See March 4th email at J.A.3174 (alleging Winbond had a “copy of Dr. Adams’[s] Detector” and that it had obtained such detector from ASUS, “who developed the test utility from an IBM supplied design.”). This is adequate to show constructive knowledge of misappropriation pursuant to the Trade Secrets Act. That is, if IBM was authorized to have the detector, ASUS’s disclosure to Winbond would constitute “disclosure” of a trade secret that was “derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use.” Utah Code Ann. § 13-24-2(2)(b)(ii)(C) (LexisNexis 2012). If, on the other hand, IBM was not authorized to have the programs, ASUS’s acquisition was prohibited misappropriation, and its disclosure to Winbond was “derived from or through a person who had utilized improper means to 18 ADAMS & ASSOC v. DELL COMPUTER acquire it.” Id. § 13-24-2(2)(a),(b)(ii)(A) (LexisNexis 2012). PMAA’s contention that it did not know whether ASUS “used” the misappropriated detector program is thus inapposite, because the March 4th email reflects sufficient knowledge to meet the elements of misappropriation in a variety of ways. Additionally, PMAA’s argument that it had no information of ASUS’s state of mind does not defeat PMAA’s constructive knowledge of facts sufficient to make up its trade secrets claim. The statutory discovery rule “does not allow plaintiffs to delay filing suit until they have ascertained every last detail of their claims.” McCollin v. Synthes Inc., 50 F. Supp. 2d 1119, 1124 (D. Utah 1999); see also id. (quoting United Park City Mines Co. v. Greater Park City Co., 870 P.2d 880, 889 (Utah 1993)) (“‘All that is required [to trigger the statute of limitations] is . . . sufficient information to apprise [the plaintiff of the underlying cause of action] so as to put them on notice to make further inquiry if they harbor doubts or questions’ about the defendant’s actions.”) (alterations in McCollin). 13 Additionally, the fact that ASUS did not admit it had stolen PMAA’s trade secrets when questioned, PMAA’s Opening Br. at 69, does not defeat PMAA’s “constructive knowledge” of facts sufficient to make up its trade secrets claim. Statutes of limitations would be rendered meaningless if claims did not accrue until the potential defendant admitted wrongdoing. In sum, there is no genuine issue of material fact that PMAA had constructive knowledge of its trade secrets 13 With respect to state of mind, the Utah Su- preme Court has held that constructive notice of a fraud claim was shown as a matter of law by a letter in which plaintiffs accused defendant of the underlying fraudulent conduct, even though the letter did not make allegations regarding defendant’s state of mind. Allred ex rel. Jensen v. Allred, 182 P.3d 337, 345 (Utah 2008). ADAMS & ASSOC v. DELL COMPUTER 19 claim by March 4, 2004, more than three years before it brought its claim against ASUS on May 3, 2007. The district court’s grant of summary judgment is thus affirmed. 2. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN DENYING ATTORNEY FEES The district court found that ASUS’s litigation misconduct relating to its spoliation of the IFDC.exe source code made the case “exceptional” under 35 U.S.C. § 285. Attorney Fees Op. at 5. However, the court declined to grant attorney fees to penalize such spoliation, having already imposed an adverse inference sanction for the same conduct. Id. On appeal, PMAA argues this denial of attorney fees was an abuse of discretion. “A district court abuses its discretion when ‘its decision is based on clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is clearly unreasonable, arbitrary or fanciful.’” Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1328 (Fed. Cir. 2003) (quoting Cybor Corp. v. FAS Techs., 138 F.3d 1338, 1460 (Fed. Cir. 1998)). None of these situations is present here. To the contrary, it was reasonable for the district court to decide against imposing two different penalties for the same conduct. Furthermore, this court’s determination with respect to ASUS’s motion for JMOL of noninfringement means that PMAA is no longer a “prevailing party” in the case, making attorney fees under § 285 inappropriate. 35 U.S.C. § 285 (“The court in exceptional cases may award reasonable attorney fees to the prevailing party.”) (emphasis added).