Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—E.D. Wis.: Marine lift manufacturer’s claims against former distributor for misappropriation of trade secrets lacked specificity, (Dec 9, 2013)

By Linda O’Brien, J.D., LL.M.

A marine lift manufacturer’s claims against a former distributor for misappropriation of trade secrets and proprietary information, among other claims, could not proceed absent evidence of the specific trade secrets and proprietary information that were allegedly disclosed, a federal district court in Green Bay, Wisconsin, has ruled (Marine Travelift, Inc. v. Marine Lift Systems, Inc., December 3, 2013, Griesbach, W.). The former distributor’s motion for summary judgment was granted.

Marine Travelift, Inc. (MTI) is a leading international manufacturer of marine and industrial lift products that enjoys significant market share globally and in the U.S. Marine Lift Systems, Inc. (MLS) is a Florida-based company that distributes marine lift products. MLS is owned by Gary Mansell who also owns two businesses that sell non-marine lift products . In 2007, MTI and Mansell, as president of MLS, executed a distributor agreement which granted MLS the non-exclusive right to purchase and sell MTI’s marine lift equipment in Florida and Georgia. Under the agreement, MLS was prohibited from servicing competing manufacturers’ products and required to maintain the confidentiality of MTI’s trade secrets and proprietary business information. The agreement also contained forum-selection and choice of law provisions that subjected MLS to the jurisdiction of Wisconsin.

While a distributor for MTI, Mansell pursued business opportunities with two other companies to enter the marine lift market. Upon learning of Mansell’s activities, MTI ceased doing business with MLS and notified its customers that MLS was no longer its distributor. MTI filed suit against MLS asserting (1) breach of contract, (2) misappropriation of trade secrets, (3) misappropriation of confidential and proprietary information, (4) unfair competition, (5) tortious interference with contractual relationships, and (6) unjust enrichment. Specifically, MTI alleged that MLS breached the distributor agreement by disclosing trade secrets and proprietary information to MTI competitors to develop another source of marine lifts that MLS could sell on more favorable terms. As a result of the MLS’ breach, MTI was economically harmed by a reduction in its overall value by as much as 15 percent. MLS filed a motion for summary judgment on all claims.

Wisconsin’s Uniform Trade Secrets Act defines a trade secret as “ information, including a formula, pattern, compilation, program, device, method, technique, or process” which (1) has independent economic value, (2) is not generally known to other persons who can profit from its disclosure or use, and (3) has been subjected to reasonable efforts to maintain its secrecy.

The court found that MTI failed to identify the specific trade secrets that it alleged MLS misappropriated and it was insufficient to assert that MLS had access to various trade secrets without identifying which information was disclosed. The court also found that, although MTI’s claim for misappropriation of confidential and proprietary information may be actionable under another theory of liability, state (Wisconsin) law did not provide a separate tort cause of action for the misappropriation of non-trade secret information. Additionally, MTI failed to specify what non-trade secret confidential and proprietary information MLS allegedly disclosed.

MTI’s breach of contract claim was also vague and unsupported by specific evidence, according to the court. MTI’s submission of hearsay statements was insufficient to find that MLS breached the confidentiality provision of the distributor agreement. MTI also presented no evidence that MLS did not use its best efforts to sell and promote MTI equipment during the term of the agreement. Finally, MTI failed to provide admissible evidence of any lost business opportunities, actual damages sustained, or loss of future profits as a result of MLS’ alleged wrongful actions. The court concluded that MTI was not entitled to relief from MLS beyond the termination of the distributor agreement and granted MLS’ motion for summary judgment on all claims.

The case is No. 10-C-1046.

Attorneys: Grant C. Killoran (O’Neil Cannon Hollman DeJong & Laing SC) for Marine Travelift Inc. Thomas A. Cabush (Kasdorf Lewis & Swietlik SC) for Marine Lift Systems Inc.

Companies: Marine Travelift, Inc.; Marine Lift Systems, Inc.

Cases: FranchisingDistribution WisconsinNews