Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...
Oct. 27 — There was no basis to reverse summary judgment rejecting claims by a designer of tablet computer casings against the manufacturer it hired to build the product, when the defendant manufacturer instead put out a competing product, the U.S. Court of Appeals for the Seventh Circuit ruled Oct. 22.
Affirming summary judgment in favor of the manufacturer, the court also affirmed the lower court's rejection of a motion for attorneys' fees by the defendant. There was no basis for a finding that the lower court had abused its discretion in finding no bad faith in the plaintiff's complaint.
NClosures Inc. of Traverse City, Mich., which was founded in 2011, designs metal cases for Apple iPads and other tablet computers for use in business settings.
Block & Co. of Wheeling, Ill., was founded in 1934, and makes products related to the handling of money, fraud prevention and security, such as cash drawers, safes, vaults and counterfeit detectors.
In 2011, NClosures engaged Block to manufacture tablet computer enclosures. In October 2011, Block began producing the NClosures Rhino Elite enclosure device.
The parties also executed a confidentiality agreement. A few months later, however, Block began making its own tablet enclosure, under the name Atrio.
(Click on image to enlarge.)
In August 2012, Block terminated its relationship with NClosures and soon afterward, NClosures sued Block, alleging misappropriation of trade secrets and other claims.
Judge Samuel Der-Yeghiayan of the U.S. District Court for the Northern District of Illinois granted summary judgment in favor of Block. NClosures appealed.
On appeal, the court first affirmed summary judgment in favor of Block on NClosures' claim of breach of the confidentiality agreement.
The appeals court agreed with the findings that NClosures had failed to take reasonable steps to label and otherwise take steps to identify and protect information or documents that it was asserting was protected by the agreement.
The court also rejected NClosures' claim of breach of a fiduciary duty, after affirming the trial court's finding that there was no partnership between NClosures and Block that would give rise to any such duty under Illinois state law.
The court then turned to Block's motion for an award of attorneys' fees pursuant to the Illinois Trade Secrets Act, 765 Ill. Comp. Stat. §1065/5(i), as well as under federal law, 28 U.S.C. §1927.
The trade secrets law provides for recovery of reasonable attorneys' fees upon a finding that a claim was made in bad faith. The federal statute provides for an imposition upon counsel to pay the opposing party's legal costs if he or she has “multiplie[d] the proceedings … unreasonably and vexatiously.”
The trial court found no basis for a finding of bad faith. But Block cited IDS Life Ins. Co. v. Royals Alliance Assocs., Inc., 266 F.3d 645 (7th Cir. 2001), which found an abuse of discretion on the part of a district court that had failed to issue sanctions when a party's argument was “dubious and disingenuous.” The district court in that case had also expressed a “personal hostility to sanctions.”
However, the court distinguished the facts in IDS from the instant facts. There was no personal hostility at issue and there was a simple finding that there was no evidence of bad faith and thus no evidence of abuse of discretion on the part of the lower court.
The appeals court thus affirmed the grant of summary judgment and denial of Block's motion for attorneys' fees.
The court's opinion was authored by Judge Joel M. Flaum and joined by Judges Michael S. Kanne and Diane S. Sykes. NClosures was represented by the Law Office of Matthew M. Wawrzyn, Chicago. Block & Co. was represented by Husch Blackwell LLP, Chicago.
To contact the reporter on this story: Anandashankar Mazumdar in Washington at email@example.com
To contact the editor responsible for this story: Tom Taylor at firstname.lastname@example.org
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)