Court Opinion

ID: 1004309
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:39:08.987235+00
Date Added: 2024-06-11T09:09:43.352982
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

SYSTEMS 4, INCORPORATED,                
                 Plaintiff-Appellant,
                 v.                            No. 00-1987
LANDIS & GYR, INCORPORATED,
               Defendant-Appellee.
                                        
           Appeal from the United States District Court
            for the District of Maryland, at Greenbelt.
                Catherine C. Blake, District Judge.
                        (CA-97-2117-CCB)

                       Argued: April 5, 2001

                      Decided: April 30, 2001

  Before WILKINSON, Chief Judge, MOTZ, Circuit Judge, and
  Patrick Michael DUFFY, United States District Judge for the
        District of South Carolina, sitting by designation.

Affirmed by unpublished per curiam opinion.

                            COUNSEL

ARGUED: Lenard Barrett Boss, ASBILL, JUNKIN, MOFFIT &
BOSS, Washington, D.C., for Appellant. Jan Feldman, CAHILL,
CHRISTIAN & KUNKLE, LTD., Chicago, Illinois, for Appellee. ON
BRIEF: Timothy D. Junkin, ASBILL, JUNKIN, MOFFIT & BOSS,
Washington, D.C., for Appellant. Robert E. Scott, Jr., Thomas V.
McCarron, SEMMES, BOWEN & SEMMES, Baltimore, Maryland,
for Appellee.
2               SYSTEMS 4, INC. v. LANDIS & GYR, INC.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

PER CURIAM:

   Systems 4 appeals from the district court’s grant of summary judg-
ment in Systems 4’s suit against Landis & Gyr under the Maryland
Uniform Trade Secrets Act (MUPTA), Md. Code Ann., Comm. Law
§ 11-1201 et seq. (1990). For the following reasons, we affirm.

                                   I.

   Systems 4 is a Maryland corporation in the business of engineering
and installing building automation systems to control heating, ventila-
tion, air conditioning, lighting and access systems to improve effi-
ciency in the operation and maintenance of buildings. Systems 4 also
offers facilities management contracts under which it manages a facil-
ity for the facility’s owner. Systems 4 often bids on this work under
performance specification contracts.

   Landis & Gyr, now known as Siemens Building Technologies, is
the U.S. subsidiary of a foreign corporation and is in the business of
designing, manufacturing, installing and servicing digital controls for
regulating heating, ventilation and air conditioning systems in build-
ings, as well as controls for regulating building access, safety, light-
ing, and security.

   In 1993, the National Gallery of Art in Washington D.C. solicited
proposals for a new building automation system and performance
specification contract. The solicitation required bidders to submit a
great deal of specific information, such as a technical proposal that
fully explained and documented the proposed automation techniques
and processes. The National Gallery emphasized that the proposals
should clearly define the "approach that will be used to meet the
requirements of this contract" and stated that the "technical approach
should be specific, detailed and clearly demonstrate the offeror’s
                SYSTEMS 4, INC. v. LANDIS & GYR, INC.                   3
understanding of the requirements and inherent problems associated
with the objectives of this procurement." Consequently, a proposal
submitted to the National Gallery pursuant to this solicitation was
likely to contain confidential and proprietary information. Perhaps for
this reason, the National Gallery announced at a pre-bid meeting that
the solicitation would be closed, meaning that bidders would not be
permitted to review one another’s proposals. Systems 4 contends that
the National Gallery also promised to keep the proposals confidential,
but Systems 4’s proposal was not stamped "Confidential," nor did it
bear any other marks indicating that it was not for public consump-
tion.

   Both Systems 4 and Landis submitted proposals to the National
Gallery. Systems 4 asserts that its proposal contained a number of
trade secrets, including the manner in which the proposal itself was
presented, the unique installation and scheduling techniques the com-
pany had developed in order to "phase in" the building automation
system on a module-by-module basis, customized software architec-
tural system design and Systems 4’s client, reference, and project list.
In the spring of 1994, Systems 4’s proposal was selected as one of the
finalists, meaning it was given an opportunity to submit a "best and
final" offer. Landis’s proposal was not so selected.

   In July 1995, the National Gallery announced that it was withdraw-
ing its solicitation and would reissue the solicitation after making
revisions. Bidders were told that they could come and pick up their
original proposals. On July 13, Scott Wallick, a sales engineer for
Landis who was responsible for preparing Landis’s proposal to the
National Gallery, arrived at the Gallery to pick up the proposal. A
National Gallery employee, however, inadvertently gave Wallick Sys-
tems 4’s proposal instead of Landis’s. Wallick did not realize that he
had Systems 4’s proposal until he returned to his office and opened
the box containing the proposal.1
  1
    Systems 4 disputes this, arguing that the notebooks containing the
proposal were oversized, so that the flaps of the box in which they were
stored could not be closed, and, as a result, one could see instantly that
the box contained Systems 4’s proposal. In support of this contention,
Mary Kirgan, the president of Systems 4, testified that when the box con-
taining the proposal was given to her, after Wallick returned it to the
National Gallery, the box was open and she could identify the proposal.
Systems 4 has pointed to no evidence, however, that the proposal was in
this same box when Wallick obtained it.
4               SYSTEMS 4, INC. v. LANDIS & GYR, INC.
   Wallick admitted that when he realized that he had been given Sys-
tems 4’s proposal, he did not inform Systems 4 or the National Gal-
lery. Rather, Wallick "thumbed through" the proposal. He asserted
that he was not interested in the substance of the proposal, but rather
how it was presented. Wallick also claimed that he did not expect the
proposal to contain any trade secrets. Wallick stated that he then
returned Systems 4’s proposal to Landis’s warehouse where it
remained until it was returned to the National Gallery.

   On July 26, 1995, Wallick attended a meeting at the National Gal-
lery regarding the Gallery’s second solicitation for proposals. During
the meeting, a representative from the National Gallery asked Wallick
if he had Systems 4’s proposal and he acknowledged that he did. The
following day, at the National Gallery’s request, Wallick returned the
proposal to the Gallery. After an investigation into the incident, the
National Gallery decided to exclude Landis from competing in the
second round of bidding on the contract because it was possible that
Landis obtained a competitive advantage as a result of Wallick’s
viewing of Systems 4’s proposal.

   In June 1997, Systems 4 brought the instant action against Landis
alleging misappropriation of trade secrets and unjust enrichment. Sys-
tems 4 sought damages for unjust enrichment and lost profits. In
March 1998, Landis moved for summary judgment on the ground that
Systems 4 could not demonstrate any actual use of its trade secrets by
Landis and no actual injury. In September 1998, Systems 4 filed a
motion to compel discovery, which sought inter alia Landis’s devel-
opment and strategy plans, all negotiated documents, proposals, and
drafts thereof, that Landis had produced since 1995, information
about Landis’s revenues and commissions, all documents showing
market share for all of Landis’s competitors, and all marketing and
strategy documents produced since 1993. Landis asserted that these
requests were overly broad and burdensome and that Systems 4 had
failed to prove its need for these documents.

   The district court granted in part and denied in part Landis’s
motion for summary judgment. See Systems 4, Inc. v. Landis & Gyr,
Inc., Civ. No. CCB 97-2117 (D. Md. March 31, 1999). The district
court concluded that, as Systems 4 had not competed with Landis
directly since the National Gallery solicitation, the only damages Sys-
                 SYSTEMS 4, INC. v. LANDIS & GYR, INC.                   5
tems 4 could seek were those for unjust enrichment, or a reasonable
royalty, not lost profits. Id. at 3. As to Systems 4’s motion to compel,
the district court granted it in part and denied it in part, requiring Lan-
dis to produce proposals submitted to companies in the Washington
D.C. metropolitan area from July 1995 to December 1997 in which
Landis sought a contract as an energy services company or was hired
to design energy controls systems. See id. at 5-8.

   In February 2000, Landis filed its second motion for summary
judgment, arguing that Systems 4 had failed to show that Landis had
used any of its alleged trade secrets. The district court granted Lan-
dis’s motion, holding that any similarities between Systems 4’s
National Gallery proposal and subsequent Landis proposals were
"minor," meaning that "no reasonable juror could find that Landis has
used a Systems 4 trade secret." Systems 4, Inc. v. Landis & Gyr, Inc.,
Civ. No. CCB 97-2117, at 5 (D. Md. June 26, 2000). Systems 4 now
appeals the district court’s summary judgment ruling and its denial of
Systems 4’s discovery motions.

                                    II.

   We have reviewed the record, the briefs, the applicable law and
considered the parties’ oral arguments and we are persuaded that the
district court reached the correct result. We therefore affirm the dis-
trict court’s holding that there was no evidence that Landis used any
of the trade secrets contained in Systems 4’s National Gallery pro-
posal. See Systems 4, Inc. v. Landis & Gyr, Inc., Civ. No. CCB 97-
2117 (D. Md. June 26, 2000).2

   Systems 4 claims that, under the Maryland Uniform Trade Secrets
Act (MUTSA), it can prevail on its misappropriation claim, regardless
of whether Landis actually used its trade secrets, if the trade secrets
were acquired through "improper means." See Trandes Corp. v. Guy
F. Atkinson Co., 996 F.2d 655, 664 (4th Cir. 1993). MUTSA defines
misappropriation of trade secrets as: "(1) Acquisition of a trade secret
of another by a person who knows or has reason to know that the
  2
   The district court assumed for the purposes of summary judgment that
Systems 4’s proposal contained trade secrets. For the purposes of this
appeal, we too assume that the proposal contained trade secrets.
6               SYSTEMS 4, INC. v. LANDIS & GYR, INC.
trade secret was acquired by improper means; or (2) Disclosure or use
of a trade secret of another without express or implied consent . . . ."
Md. Code Ann., Comm. Law § 11-1201(c). Thus, a plaintiff can state
a claim for misappropriation simply by demonstrating that the defen-
dant acquired its trade secret by improper means, even if the plaintiff
cannot show use of that trade secret. See, e.g., Nora Beverages, Inc.
v. Perrier Group of Am., Inc., 164 F.3d 736, 750 (2d Cir. 1998)
("Thus, a violation of [the Connecticut Uniform Trade Secrets Act]
occurs if the defendant either wrongfully acquired plaintiff’s trade
secret or used or disclosed the trade secret.") (emphasis added);
Smithfield Ham and Prods. Co. v. Portion Pac, Inc., 905 F. Supp.
346, 350 (E.D. Va. 1995).

   If Systems 4 could demonstrate that Wallick acquired its proposal
through improper means, it would be entitled to proceed on its misap-
propriation claim regardless of whether Landis actually used any of
the trade secrets contained in the proposal. However, Systems 4 has
not forecast evidence sufficient to support a finding that Wallick
acquired the proposal through improper means.

   MUTSA defines "improper means" as including "theft, bribery,
misrepresentation, breach or inducement of breach of a duty to main-
tain secrecy, or espionage through electronic or other means." Md.
Code Ann., Comm. Law § 11-1201(b). To be sure, this list is not
exhaustive. See Reingold v. Swiftships, Inc., 126 F.3d 645, 648 (5th
Cir. 1997); E.I. duPont deNemours & Co. v. Christopher, 431 F.2d
1012, 1016 (5th Cir. 1970) ("A complete catalogue of improper
means is not possible. In general, they are means which fall below the
generally accepted standards of commercial morality and reasonable
conduct."). But from this list, one can derive some common character-
istics of improper means. All of the examples listed in the MUTSA
constitute intentional conduct involving some sort of stealth, decep-
tion or trickery. Cf. Hurst v. Hughes Tool Co., 634 F.2d 895, 897 (5th
Cir. 1981) (asking questions of an inventor and requesting a prototype
of his invention does not constitute stealth or other improper means).

   In this case, Systems 4 points to no evidence that Wallick inten-
tionally acquired Systems 4’s proposal, using deception, trickery or
any other dishonest means. Wallick affirmed that he was given the
box containing Systems 4’s proposal by a National Gallery employee,
                SYSTEMS 4, INC. v. LANDIS & GYR, INC.                  7
and that, when he received the box, it was closed so that he could not
see the proposal contained therein. Wallick did not realize that the
box did not contain the Landis proposal until he opened the box in his
office. Thus, Wallick took possession of Systems 4’s proposal inad-
vertently, without use of deception, trickery or stealth. While Wallick
probably should not have looked at the proposal once he realized it
was not his company’s, merely looking at information acquired inad-
vertently does not constitute improper means. This is particularly true
in light of the fact that the proposal did not bear any marks indicating
that its contents were confidential. In these circumstances, we cannot
conclude that Landis acquired the proposal through "improper means"
for purposes of the MUTSA. As a result, to prevail on its misappro-
priation claim, Systems 4 was required to demonstrate use of its trade
secrets by Landis. This Systems 4 failed to do, and therefore, the dis-
trict court’s grant of summary judgment in favor of Landis must be
affirmed.3

                                                            AFFIRMED
  3
   Systems 4 also argues that the district court erred in denying Systems
4’s Motion to Compel, and thereby limiting the discovery which Systems
4 could seek. We have reviewed the record and conclude that the district
court did not abuse its discretion nor was Systems 4 unfairly prejudiced
by the district court’s discovery rulings.