Judge delivers defense verdict in $72M trade secrets case

 Judge says companies' relationship 'shrouded in significant mutual confusion'

By Nancy Crotti
BridgeTower Media Newswires

 

MINNEAPOLIS, MN — Time wasn’t on either side of a recently decided intellectual property dispute.

A pair of engineering and product development companies and their principals sued Edina window hardware manufacturer Amesbury Group, Inc. in 2015, claiming that Amesbury breached an unsigned 2007 contract and profited from their intellectual property.

The plaintiffs sought $72 million in damages for misappropriation of trade secrets and also punitive damages. They lost on the merits as well as being time-barred.

Washington County District Court Judge Susan Miles threw out five of the plaintiffs’ claims before the two week bench trial began in July 2017. Following the trial, she dismissed the remaining seven, plus their demand for punitive damages. A plaintiffs’ expert witness testified that they lost between $1.4 million and $72.8 million because they were unable to commercialize their product.

Plaintiffs Frank Campbell and John Micinski developed the window hardware product, a “lead screw operator” that they believed would be an improvement over the mechanism commonly used to operate casement windows. Campbell and Micinski are engineers with long experience in the window and door hardware industry, according to court documents. Campbell is president of corporate plaintiff Creative Research & Development, Inc., Lake Elmo, and Micinski is president of Rockford, Illinois-based Omniquest Research and Development Corp., the other corporate plaintiff.

Campbell, Micinski and Amesbury officials held a series of meetings beginning in 2005 to discuss the product, on which the plaintiffs held two patents. Amesbury paid them and their companies nearly $965,000 from 2005 through 2008, but the product was beset with problems, according to court documents.

Amesbury notified the plaintiffs in 2008 that the company was putting the project on hold, and a succession of Amesbury officials declined to sign the 2007 contract. The project remained dormant until 2012, when the parties began to disagree about whether the contract was ever finalized, whether royalties were due, and who had ultimate control and ownership of the intellectual property and patents developed during the project.

A 2015 phone call revealed that Amesbury officials believed that there was no valid contract, according to plaintiffs’ attorney Dwight Rabuse of the Minneapolis office of Dewitt Mackall Crounse & Moore. Shortly thereafter, Campbell and Micinski filed suit claiming breach of contract and declaratory judgment, later adding 10 more claims, including primary and equitable estoppel, and violation of the Minnesota Uniform Trade Secrets Act.

In her overview of the case, Miles wrote that the parties’ situation reminded her of couples who live together with no definite marriage plans.

“In the end, the Court concludes that the relationship was shrouded in significant mutual confusion that neither side adequately clarified in a timely manner,” Miles wrote in her Nov. 27, 2017 order.

Not only were all of the claims made too late, but the plaintiffs were unable to prove that Amesbury “acted with some sinister motive and in some illegally dishonest manner to manipulate or control Plaintiffs’ technology,” Miles wrote. The plaintiffs also unreasonably relied on the unsigned contract, she added.

The decade that transpired between the parties’ initial meetings and the lawsuit made the defense particularly difficult, according to attorney Tom Leach, a partner in the Minneapolis office of Merchant & Gould, which represented Amesbury. Leach worked on the case with two partners and a senior associate from the firm’s Denver office.

“You’re talking about people having to reach back into their memories for a decade,” Leach said. “A lot of the people who were involved at the time had left Amesbury, moved to other companies or retired… We had to find these people and take discovery from them.”

Leach was gratified that the court found that the statute of limitations had run on all of the claims.

“At some point, if you sit on your rights too long, you’re barred from asserting them,” he said.

The plaintiffs and their attorneys were surprised and disappointed by the decision, according to Rabuse, who brought the case with co-counsel Julie Nagorski. They believed that Miles’ decision to allow them to add a claim for punitive damages in July 2016 meant that “the court recognized the strength of the case,” Rabuse said. An appeal is under consideration.

“On the plus side, my clients are obviously gratified that the litigation, including Judge Miles’ decision, makes clear that they are and apparently have always been the owners of the intellectual property which was the subject of the case,” he added. “My clients have resumed efforts to commercialize their technology with others than Amesbury.”

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