Trade Secrets
Defend Trade Secrets Act of 2016 (DTSA), 18
U.S.C. § 1836
Iowa Trade Secrets Law, Iowa Uniform Trade
Secrets Act (UTSA), Iowa Code § 550
Statute of Limitations
Discovery Rule
Conversion ("Civil Equivalent" to Theft)
Unjust Enrichment
In Equity v. at Law
Equitable Claim
Iowa Law
The DTSA creates a private right of action for
an owner of a trade secret when that secret has been misappropriated, if the
secret relates to a product used in interstate commerce. 18 U.S.C. § 1836.
Trade secrets include, as relevant here, "scientific, technical . . .
engineering information, including patterns, plans, . . . designs." Id. §
1839(3). However such information only qualifies as a trade secret if the owner
has "taken reasonable measures to keep such information secret" and
the information has economic value. Id. § 1839(3). "Misappropriation"
essentially means to acquire the trade secret of another by improper means and
without the owner's consent. Id. § 1839(5)-(6). The UTSA is similar and both
statutes have a three-year statute of limitations for bringing a claim for
trade secret misappropriation. See 18 U.S.C. § 1836(d); Iowa Code § 550.8.
The discovery rule tolls the statute of
limitations until such time as the injured person knows or in the exercise of
reasonable care should know, the fact and cause of the injury. Woodroffe v.
Hasenclever, 540 N.W.2d 45, 47 (Iowa 1995). The rule extends when the plaintiff
"first becomes aware of facts that would prompt a reasonably prudent
person to begin seeking information as to the problem and its cause."
Estate of Montag v. T H Agric. & Nutrition Co., 509 N.W.2d 469, 470 (Iowa
1993). The ultimate focus is whether the plaintiff was aware a problem existed.
Franzen v. Deere & Co., 377 N.W.2d 660, 662 (Iowa 1985). Once a plaintiff
is on inquiry notice, he is charged with knowledge that a reasonably diligent
investigation would have disclosed, and has a duty to do such an investigation,
regardless of the plaintiff's exact knowledge. Woodroffe, 540 N.W.2d at 48-49.
The plaintiff need only know a problem exists. Id. While this can be an issue
for the factfinder, it is not always so. See, e.g., Shams v. Hassan, 905 N.W.2d
158, 163 (Iowa 2017) (holding that this inquiry can be one for the factfinder
"unless the issue is so clear it can be resolved as a matter of
law"). While Iowa Parts has the burden of proving the statute of
limitations bars the action, CMI Roadbuilding has the burden of proving the
discovery rule tolls application of the statutory bar. John Q. Hammons Hotels,
Inc. v. Acorn Window Sys., Inc., 394 F.3d 607, 610 (8th Cir. 2005).
(…) Application of the inquiry notice portion of
the discovery rule. As stated above, the ultimate focus is whether the
plaintiff was aware a problem existed. Franzen, 377 N.W.2d at 662.
(…) At the point it was on notice there was a
possible problem, it had a duty to investigate, regardless of its exact
knowledge. Woodroffe, 540 N.W.2d at 48-49.
Unjust Enrichment
Equitable Claim
Even if the unjust enrichment claim was not
time-barred, which it likely was, see Iowa Code § 614.1(4), Iowa Parts was
entitled to summary judgment because an equitable claim fails when there is an
adequate remedy at law. Where a party seeks damages pursuant to both a
statutory and an equitable claim, the very existence of the statutory claims
bars recovery on the equitable claim, "even if recovery under the statutes
is time-barred." United States v. Bame, 721 F.3d 1025, 1031 (8th Cir.
2013).
(…) Indeed, Iowa law recognizes that
"equity generally will not provide relief where an adequate remedy at law
existed and defendant was denied that relief for appropriate legal
reasons." Mosebach v. Blythe, 282 N.W.2d 755, 761 (Iowa Ct. App. 1979).
See also State ex rel. Palmer v. Unisys Corp., 637 N.W.2d 142, 154 n.2 (Iowa
2001) ("The adequacy of a legal remedy is a general limitation on the
exercise of equity jurisdiction . . . .").
(U.S. Court of Appeals for the Eight Circuit,
April 4, 2019, CMI Roadbuilding, Inc. v. Iowa Parts, Inc., Docket No. 18-1075)
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