JACOBS VEHICLE SYSTEMS, INC. v. YANG, No. 1:2012cv00181 - Document 116 (M.D.N.C. 2015)

Court Description: MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE JOE L. WEBSTER on 7/31/2015; RECOMMENDED that Defendant's motion for summary judgment (Docket Entry 46 ) be GRANTED in part and DENIED in part. More specifically, it is recommended that the motion be granted as to the civil conspiracy claim and the motion be denied as to all other claims. (Sheets, Jamie)

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JACOBS VEHICLE SYSTEMS, INC. v. YANG Doc. 116 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA JACOBS VEHICLE SYSTEMS, INC., Plaintiff, V ZHOU YANG, Defendant. ) ) ) ) ) ) ) ) ) "I:1,2CY1,81 MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE This mattet is before the court upon Defendant Zhou Yang's ("Defendant" or 'Tang") motion fot summary judgment (Docket Entry 46) as to all of Plaintiff Jacobs Vehicle Systems, Inc.'s ("Plaintiff' ot'JVS") claims against him. The motion has been fully bdefed and is ripe fot disposition. For the teasons that follow, the coutt will recommend that the motion be gtanted in pat and denied in pat. STATEMENT OF THE CASE Plaintiff filed suit in this court on February 22,201,2. (Docket E,ntry amended complaint was filed on May 1,5,201,2. (Docket Entty dismiss the amended complaint was granted September 10, 2013. (Docket Entty 1.) fkst 9.) Defendant's motion to rn part and dismissed in part by order dated 20.) By consent of the parties, a second amended complaint was filed on Match 3,201,5. (Docket Entry 89.) \)Øhile the motion for summary judgment was akeady pending at the time the second amended complaint was filed, the court will assume that the motion goes to the latest filed complaint. Dockets.Justia.com Plaintiff asserts six claims for relief based upon Defendant's allegedly impropet use of confidential information and trade secrets: (1) breach of contract not to proprietary and confidential information, (2) misappropdation use Plaintiffs of trade secrets, (3) conversion, (4) unfair and deceptive tade pnctices, (5) civil conspiracy, and (6) unjust enrichment. Plaintiff seeks damages and injunctive relief. Defendant filed the instant motion for summary judgment on January 19, 2015, assertiflg that thete are no genuine issues as ^ matter of of matertal fact and that he is entitled to judgment law. (Docket F,ntry 46.) At the same time, Defendant filed a motion to seal the exhibits to the motion fot summary iudgment and bdef in support theteof. (Docket Entry 48.)1 STATEMENT OF MATERIAL FACTS Viewing the evidence in the light most favorable to Plaintiff, the material facts may be summarized as follows. Plaintiff JVS is a Delaware corporation with its principal place business in Connecticut. It is also a wholly-owned ("Danaher"), a global conglomerate with subsidiary its headquarters in of of Danahet Cotpotation 'V7ashington, D.C. JVS primadly manufactutes engine btakes, engine retatdets, and engine retarding systems fot use on hear,y-duty diesel-poweted vehicles. Defendant Yang, a United States cittzen, began working as a seniot engineer atJVS in ,\pril 1998 in Connecticut.2 On July 6, 1,998, Defendant signed an Employee Confidential ' Alto pending are three motions to seal. pocket Entries 48,91 and 101.) These motions are addressed in a separate Order filed this same day. 2 DefendantYangcurrently resides in North Carolina. 2 and Ptoptietary Information Agreement with JVS and its entities.3 This Agteement contained a ,tivo-ye r non-compete clause. (Agreement, S I, Pl.'s Mem. Opp. SJ., Ex. Docket Entry 90-5.) In Section B of the Agteement, Defendant acknowledged that innovations ot inventions conceived by him would "be the exclusive property of Company or its nominees whether or not patented or copyrighted." (1/. S B ) 5, any the Àdditionally, in Section E of the Agreement, Defendant agreed not to publish or otherwise disclose (except as þs JVS] duties may require) either dudng ot subsequent to þs] employment, or to use tn any manner, arry information, knowledge or data of [VS] or its customers which þe] may receive or develop during the course of tl"r] employment relating to inventions, discovedes proprietary information or other[] mattets which arc of a secret ot confìdential nature; [th]his included but is not limited to þs] own business entetprises, subsequent to his employment . . . (1/. S E.) Anothet section of the gteement tequires Defendant to keep confìdential the proptietary information and ffade secrets ofJVS. (1/. $ G.) Defendant was the inventot ot co-inventor of twenty-one patents owned by JVS While employed by JVS, Defendant developed sevetal novel engine btake designs which ate descdbed in JVS Innovation Disclosute Fotms, identified with a <(DP" designation and numbet. (Jae Pl.'s Mem., Ex. 6, Yang Dep. 65, Docket Entty 90-6.). Each Innovation Disclosure Fotm submitted to JVS by Defendant resulted him, above his salary. Qd. ^t 67 .) h in additional compensation for 2004, Defendant submitted Innovation Disclosure Form DP-564, which described and illustrated a toggle-based engine btake 3 The heading at the top of the Agreement lists Jacobs Vehicle Equipment Company ('JVEC") as the employer. The hrst paragraph of the '\greement references Jacobs lVlanufacturing Company, and a footnote states that "[a]ll teferences to the Jacobs Manufacturing Company also refer to its divisions, one of which is Jacobs Vehicle Equipment Company." (Agreement at 1, Docket Entry 90-5.) Defendant in tris deposition admitted that he sþed the Ägreement knowing that his employer was JVS and that he abided by the '\gteement. Gl." Mem., Ex. 6, Yang Dep. at 58-60;62, Docket Entty 90-6.) 3 Defendant worked atJVS as a seniot engineer through -A.pril 2006. From April 2006 until June 2008, Defendant was employed at Gilbarco, Inc., another wholly-owned subsidiary of Danaher Corpotation. OnJune L0, 2008, Defendant resigned from Gilbarco. Aftet leaving Gilbatco, Defendant began working for Shanghai Universoon Autoparts, Ltd. ("Universoon"), a direct competitor of JVS' sister company in China. Pdor to Defendant's employment at univetsoon, that company was not engaged in the manufactute of engine btakes, and indeed, once Defendant began working there, he was the only employee with engine btaking expedence. Ëurg. Dep. 96; 98-99, Docket E.rt y 90-6.) Soon aftet Defendant's employmerft ^t Univetsoon, Universoon began manufactunng a toggle-based engine btake which placed the company in direct competition with JVS in the Chinese engine braking market. JVS btought this action alleging that Defendant filed or caused to be fìled sixteen Chinese patents under Universoon's name but which use or are derived ftom protected JVS trade sectet infotmatior:, ^ violation of the Notth Caroltna Trade Secrets Protection Act ("NCTSPA"), N.C. Gen. Stat. S 66-152 et xq. JVS also alleges that Defendant's actions bteached the agteement between the paties and amounted practices in violation oFN.C. Gen. Stat. 75-1..1. ('NCUDTPA"). Plaintiff also brings claims fot convetsion, civil conspiracy and unjust endchment. 4 to unfait and deceptive trade DISCUSSION A. Motion fot SummaryJudgment l. Standard of Review Summary judgment is appropdate where "the movant shows that thete is no genuine dispute as to any material fact and the movant is entitled to judgment as ^ mattet of law." Fed. R. Civ. P. 56(a). The patty seeking summary judgment beats the initial burden of demonstrating the absence of any genuine issue of m^tetial f^ct. Celotex Corp. u. CatreÍt, 477 U.S. 317, 323 (1,986). Once the movingpalty has met its butden, the nonmoving party then afî:nma:.jvely must demonsttate mateÅal fact requiring with specific evidence that thete exists a genuine issue of trial. Maßø¡hita Elec. Iadal Co. Ltd. u. Zenith Radio Corþ.,475 U.S. 574, 586-87 (1986). Only disputes benveen the paties over facts that might affect the outcome of the case properly preclude the entry of summary judgment. Ander¡on u. Libe@ I-,obb1,Inc., 477 U.S. 242, 247 -48 (1986). "[]t the summary judgment stage, the [coutt's] function is not [itselfJ to weigh the evidence and determine the truth of the mattet but to determine whether there is a genuine issue those fot trial." Id. at249. Similady, "[c]redibility determinations ... ate jury functions, not of a judge." Id. at 255. In determining whether there is a genuine issue for tÀal, "evidence of the non-movant is to be believed, and alI justifiable inferences in [non-movant's] f^vor." Id.; see Unind summary judgment the inferences Stutes u. Diebold, ^re to be dtawn [nc.,369 U.S. 654, 655 (1,962) to be drawn from the undetlying facts ("Ot contained in [affidavits, attached exhibits, and depositions] must be viewed in the light most favorable to the party opposing the motion."). 5 Nevetheless, "pemissible infetences must still be within the range of teasonable probablility,. . . and necessary infetence I-.ouelace u. it is the duty of the court to withdraw the case ftom the jury when the is so tenuous that it rests metely upon speculation and conjecture." Sherwin-Il/illiams Co., 681, F.2d 230, 241 (4th Ctr. 1982) (quotations omitted). Thus, judgment as a matter of law is watranted "whete a reasonable ¡ury could teach only one conclusion based on the evidence," ot when "the verdict in favot of the non-moving party would necessatily be based on speculation and conjectute." Aþrick u. Prime Ins. Slndicate, Inc., 395 tr.3d 485,489 (4th Cir. 2005). However, when "the evidence as a whole is susceptible of more than one reasonable inference, a jury issue is created," and judgment as a mattet of law should be denied. Id. at 489-90. 2. Analysis a. Statute of Limitations Before addtessing the substantive arguments of the parties, it is necessary to address Defendant's atgument that PlaintifPs claims are barted by the statutes of limitations. "North Catoltna law conüols procedural matters such as determining the statute Bardes a. Ma¡s. of Limitations." Mat. Ltfe Ins. Cn,932F. Srrpp. 2d 636,642 ç\,'1..D.N.C. 2013). ",{.n action fot misapptopriation of a tade secret must be commenced within thtee years after the misappropriation complained of is or reasonably should have been discovered." N.C. Gen. Stat. $ 66-1,57. Defendant claims Plaintiff should have discovered the alleged misappropdation in 2008 when Defendant notified Plaintiff, through telephone calls and e-mails, that he was working on new engine brake designs, or at the very latest in January 2009 when the Chinese Patent application fot the bddge brake design was published. 6 (Jee Def.'s NIem. ^t 26-27, Docket E.rtty 47.) Howeyer, at the very least, the facts, viewed in the light most favorable to Plaintiff, demonstrate a genuine issue of material fact as to when Plaintiff should have, or could have discoveted that Defendant had misappropdated alleged trade sectets of JVS and that he was specifìcally working on toggle-based brake technology on behalf of Universoon. -ds noted by Plaintiff, the single Chinese patent application which Defendant asserts should have put Plaintiff on notice misapptoptiation claim because it of the claim is irrelevant to concerns a "bddge brake," not the toggle-based engine btake which is the subject of the misappropriation claim. (Jee Pl.'s Mem. at Ettt y 93.) The e-mail the correspondence telied upon 27 , n.12, Docket by Defendant metely discusses Defendant "working on" new designs and does not provide specifics of his new work nor specifically mention a toggle-based btake design. Defendant's reliance on Seatrax, Inc'. u. Sonbeck Intem'l, Inc., 200 tr.3d 358 (5th Cit. 2000) to support its atgument that JVS should have been aware that Defendant was using JVS trade secrets in 2008 or 2009 is misplaced. The court in Seatrax was addressing the genetal statute of limitation in Texas, and the court determined that the discovery rule did not apply to misappropriation claims under the genetal statute. Hete, there is a specific statute of limitations for claims under the NCTSP-{, and the statute itself incotporates a discovery Court, there ate matedal issues of de. Based upon the evidence before the fact with respect to the application of the discovery rule that must be determined by aiury. Plaintiffs breach of contract claim is likewise governed by a three year statute of limitations. N.C. Gen. Stat. 1-52('I). Generally speaking, al¡reach of contract claim accrues at the time of the breach. Jewell u. Price,264 N.C. 459,1,42 S.E.2d 1 (1965). The issue 7 of whether a cause of action is bared by the statute of limitations should be submitted to a jury "when the evidence is suffìcient to support an infetence that the ümitations pedod has not expired." Piles u. Allstate Ins. C0.,187 N.C. App. 399, 653 S.E.2d 181, 183 (2007). Defendant relies on the "filing [of] patent applications for the toggle and other engine brake designs in the Summet and Fall Mem. at 27, Docket F,ntry 49.) of 2008" as the date of the breach, or injury. (Def.'s Indeed, Plaintiff alleges that Defendant breached the ,\gteement by "claiming owner.hip" ovet inventions owned by JVS in various patent applications. However, there is evidence in the record which shows that many, if not most, of the patent applications relied upon by Defendant were published and filed after February 22,2009 (thtee years pdot to the filing of the odginal complaint in this matter). Certainly thete is suffìcient evidence to permit the inference that the limitations period had not expired at the time this action was filed. Ä.s such, the court fìnds the statute of limitations issue should be submitted to the jury and that the motion for summary judgment on this ground should be denied.a b. Breach of Contract Claim The greement at issue here was formed in Connecticut; the panies bteach of contract claim is governed by Connecticut E.ttty 49; Pl.'s Mem. are "the fotmation ^t 1.8, law. (Jee Def.'s Mem. ^gtee ^t that the 20, Docket Docket Entry 93.) Thus, the elements for a breach of contract of an agreement, perfotmance by one party, bteach of the agreement by o The same analysis applies to Defendant's statute of limitations argument as to the conversion and unjust enrichment claims. Those state law claims also have a three year statute of limitations. N.C. Gen. Stat. $$ 1-52-(1), (5). Defendant does not argue that the NCUDTPA claim is time-batred. 8 the othet party and damages." Kelleru. Becken¡tein,1.1.7 Conn App. 550, 558, 979 A.2d 1055, 1060 (200e). Defendant argues that summary judgment is apptopriate on the breach of contract claim for sevetal reasons. Fitst, Defendant asserts that there was no valid agreement between him andJVS because JVEC, the party named in the agreement, was not an "existing legal entity" at the time Defendant signed in the tecord it. This argument is without medt. The evidence clearly shows that Defendant understood, believed and agreed that the greement he entered into was between him and intetest. The offet Defendant sþed of employment, dated and accepted the offer. dditionally, the offer cleatly stated that JVS. JVEC pdl 28, (Sec. it was JVS' predecessor-in- 1998, was on JVS letterhead and Am. Compl., Ex. D, Docket E.rtty 89-4.) was contingent upon Defendant signing a "Confidential & Ptoprietary gteement," the document which Defendant signed and which is the subject of this claim. (Id.) In his deposition, Defendant acknowledged that he signed the Agreement knowing that his employer was JVS, not JVEC and that the company representative who sþed the .,{gteement worked for JVS. Ëurg Dep. at 58-60, Docket Etttty 90-6.) Additionally, thete is evidence in the tecotd that Defendant himself relied on the Agreement on at least one occasion to obtain payment for work done on behalf of JVS. (See 11./26/08 Email ftom Yang to.A,. Stravelle-Schmidt, 8x.7, quoting greement S E, Docket E.ttty 90-7.) Accotdingly, Defendant cannot claim now that no valid agreement existed between him andJVS. 9 Defendant futhet argues that even if the Agreement is enforceable, he did not breach the terms of the Agreement. However, the record teveals disputed issues of material fact as to this issue, making sufiìmary judgment inappropdate. The main invention at issue here is the toggle-based engine btake described and illustrated in Innovation Disclosure Form DP-564.s Defendant submitted the disclosute form to JVS, and in his deposition he testified that the innovations in DP-564 were the sole and exclusive property of JVS and were not to be disclosed to outside patties. Plaintiff contends that by latet submitting patent apptcations (Yang Patent Nos. 7,789,065 and 7,909,017) which included illustrations design neady identical of and submissions to the device descdbed in of a toggle-based engine brake DP-564, Defendant breached the Agreement which ptovided that ptoptietary information was not to be disclosed to anyone outside ofJVS. Defendant argues that the United States Patents identified above (the '065 and'017 patents) wete only meant to cover the specifìc 3D toggle embodiments contained in illustrations and thus should not be construed the to cover the JVS inventions. There is competing expert testimony on this point. Dr.John Schwoerer, an engineer atJVS, testified that Defendant's 3D toggle is a new invention compated to the DP-564 toggle design. (Schwoeter Dep. at1,42-1,43, Docket Ent y 50 at26-27.) Howevet, Defendant's own expert, Dr. Chades I(. Salter, testified in his deposition that the Yang patented toggle-based engine brake includes essentially evelT functional element of the toggle-based engine brake of DP- 564. (Jae Salter Dep. at 1,21-27, Pl.'s Mem., E*. 8, Docket Entty 90-8.) Dt. Chatlton's t Pluintiffhas abandoned any claim with regard to another invention, DP-434. Docket Entry 90.) 10 (Jea Pl.'s Mem. at 1, expert testimony v/as that Defendant's patent claims are not limited to the specific 3D toggle embodiments. (See Chatlton Rebuttal at 8-1,2, Pl.'s Mem. , Ex. 1.7 , Docket Entry 90-17 .) Dr Chatlton also stated that "it is clear that the invention being protected by [the] Yang patent . . is exactly that disclosed by Yang in DP-564." (Id. at9.) Accordingly, because thete ate genuine issues of material facts, summary judgment is not proper on this claim. Finally, Defendant contends that Plaintiffs bteach of contract claim is pteempted by federal patent law. This argument is without medt. Genetally, a under the Suptemacy Clause of the Constitution "where it state law is pteempted tegulates conduct in a field that Congress intended the Federal Government to occupy exclusively." Engli:h a. Cen. Elec. Co., 496 U.S. 72,78-79 (1990). While patent law is a matter of federal law, hete Plaintiff is not bringing a claln for patent infringement. Rather, Plaintiff alleges that Defendant breached the contract between the panies by claiming ownership over infotmation and designs which zte the exclusive property of JVS. The state law claims brought by Plaintiff ate not inconsistent with fedetal law, nor do they endanger any Congressional objectives with tegard to patent laws. See Dow Chem. Co. u. Exxon Corþ.,1,39 F.3d 1410,1,473 (4th Cir. 1998) (coutt held that that state court adjudication of claim for intentional intetfererlce with contta'ct*a,I telations that implicated patent law issues was riot preempted, noting that ptotecting contractual telations was pdmarily the realm of state law.) Thete may be a question as to whether Defendant's actions constituted a brcach, but the claim is not simply because Defendant later obtained patents over the design. See Kewanee of fact preempted Oil Co. u. Bitron Corþ.,416 U.S. 470,493 (1,974) ftolding that an Ohio ttade sectet law was not preempted by federal patent law) 11 The court recofiünends that surnmary judgment be denied as to the breach of contract claim. c. Misappropriation of Trade Secrets Claim Undet the Noth Caroltna Trade Secrets Protection Act, misapptoptiation of tade secrets claim, ^ to prevail on a claim for p^rty must show that "(1) fthe defendant] knows or should have known of the trade secret; and Q) fthe defendant] has had a specific opportunity to acquire it for disclosure of use ot has acquired, disclosed, or used it without the exptess or implied consent or authority of the owner." N.C. Gen. Stat. S 66-155. A trade secret is defined as business ot technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique or process that: Derives independent actual or potential commercial value from not being ^. genetally known ot readily ascettainable thtough independent development or reverse engineedng by persons who can obtain economic value from its disclosure or use; and b. Is the subject of efforts that arc reasonable under the circumstances to maintain its secrecy. Id. S 66-1,52Q). Misappropdation is the "acquisition, disclosure, or use of a tnde secret of another without express or implied authority or consent, unless such trade secret was arrived at by independent development, reverse engineeting, or was obtained from another person with a right to disclose the trade secret." Id. S 66-1,52(1). The thteshold question in any trade secrets case is whether the information obtained constitutes a tade secret. Comb¡ dz Assot's., Int. u. Kennedlt, 147 N.C. App. 362, 369, 555 S.E.2d 634, 639 (2001). In making this determination, courts consider (1) the extent to 1,2 which infotmation is known outside the business; (2) the extent to which it is known to employees and others inside the business; (3) the measures taken to guard secrecy of the infotmation; (4) the value of information to business and its competitors; (5) the effort or money expended in developing the infotmation; and (6) the ease or difficulty others would have in ptopedy acquidng the informaion. Byd's L¿wn dz L,andscaping Inc. u. Smith,142 N.C. ,{.pp. 371, 375,542 S.E.2d 689,692 Q001). To survive a motion fot summary judgment, a plaintiff must show facts that would allow a teasonable finder of fact to conclude that the information at issue was not "generally known ot readily ascertainable" and that the plaintiff made reasonable efforts to maintain the infotmation's secrecy. Area L^andscapircg Cløxo-Wellt'ome, 1nc.,160 N.C. .{pp. 520, 525, 586 S.E.2d 507 -t 't C u. ,511 Q003). The panies disagree as to the natute of the ttade sectet claimed by JVS. In its response to interrogatodes, Plaintiff identifies the embodiment of the toggle-based engine btake illustrated in DP-564 as a JVS trade secret. flVS Resp. to Fi-tst Set of Interogatodes at 4, Docket Entty 90-15 (redacted version), Docket Entry 96 (undet seal).) Defendant contends that DP-564 only shows the components which carinot be a Úade secret because it of a generic toggle fot engine braking has been used for valve actuation for over 100 years. Defendant contends that Plaintifls idea for the toggle was not, and could not be, a secret because all of the components of the design wete already known. "fl]he hallmatk ol a tade secret is not its novelty but its sectecy." Autec S1tss., Inc. u. Peffir,21, tr.3d 568, 575 (4th Cir. 1994) (interpteting Virginia statute similat to the NCTSP-,\). "Although the subject of a ttade sectet may be novel in the sense that it is something generally unknown in the ttade or business, novelty, in the patent law sense, is not required l3 for a tade secret." Decision 2009) (unpublished); rce al¡o Kewanee Inights, Inc'. u. Sentia Grp., 1nc.,31,1 F. Äpp'* 586, 592 (4th Cir. Oi/, 416 U.S. at 476 ("Novelty, in the patent law sense, is not reqL ired fot a ttade secret."). 'lX/hether or not a ttade secret exists is a fact-intensive question to be tesolved at tdal." Dedsion Insigltts,3l1 F. App'* at 592. Here, a genuine issue of matenal fact exists as to whether the toggle-based engine brake concept embodied in DP-564 was a trade secret. that the toggle sketch in DP-564 is just a genedc toggle In spite of Defendant's contention ^ct.)ator sketch, "i.e., tsÁro links, the hinge, the input fotce, the output fotce, [and] possible teturn spting force," there is evidence in the recotd, ftom Defendant's own deposition testimony, that he considered the design to be novel and patentable at the time he submitted it. (SeeYangDep at 167-'1,68 186, Docket E.rtty 90-6). Indeed, in the DP-564 innovation disclosure form, Defendant represented to JVS that the bleeder brake devices contained in the submission wete inventions and uade secrets. @ocket E.rtty 90-9 (tedacted version), Docket Entry 94 (undet seal).) Thete is evidence that JVS took measutes, through the Employee Confidential and Propdetary ,\gteement, to guard the sectecy of such inventions. This Agreement specifically states that Defendant may not publish or disclose any proprietary information obtained duting the course of his employment to third panies and tequires Defendant to keep such information confidential. Defendant admitted that he was salary compensated over and above his regular for each innovation disclosure form he submitted to JVS. Ëurg Dep. 67, Ex. 6, Docket Entry 90-6.) Defendant further asserts that two years after he ceased working atJVS he designed a new, unique toggle mechanism to actuate an engine btake, representing a new invention. 1,4 Defendant contends that the improvements he added to the DP-564 concept include a (1) 3D toggle with spherically nested links; Q) a toggle which is not pinned to a fixed upper sutface; (3) a toggle actuated with a cam;' (4) a toggle with a lash adjuster; (5) a toggle integrated into a tocket atm; (6) a toggle with a larger contact area; and (7) a toggle used for comptession telease engine braking r^ther than for bleeder brakes. (Jea Def.'s Mem. ^t 8-9, Docket E.ttty 49.) The court finds, however, that there is a genuine issue of matedal fact as to whethet these "imptovements" constitute a new invention so as to preclude a clakn for misappropriation of trade secrets. Dt. Schwoeter testified that Defendant's new 3D toggle invention. (Schwoerer Dep. ^t "1,42-43, specifically mentioned the pinless linkage Docket Entry 50 in the 3D improvement over the three-pin toggle of DP-564. ^t design represented a new 26-27.) Dr. Schwoetet design which he viewed to be an (Id.) However, anothet expert, Dr. Saltet, testified that all of the essential elements of the patented toggle design wete included in the DP-564 design. Indeed, to a layman's eye, the illustrations of the two designs appear very similar. (See e.g., Fig. 15-{, Pl.'s Mem. at2,Docket Entry 90 (tedacted vetsion), Docket Entry 93 (under seal).) Moreover, testimony of Plaintiffs expert indicates that the patents themselves do not include any which all the experts ^gree of the asserted improvements other than a lash adjuster, is a requirement for every engine btake. (See 12, Docket Entry 90-10.) -Îe¿B-11ü Medical, Inc. u. ParkerMedicalA¡¡ot. I 201Jl WL 5509030 ñ x1,6 Charkon Repot at I C, No.3:09cv15, CIí.D.N.C. Nov. 17, 201.1) (finding genuine issue of fact as to whether ptocess used by defendant was dedvative of the process plaintiff claimed as a ttade secfet). 15 dditionally, should a jvy fìnd that the brake design in DP-564 was a ttade secret, it will be up to the jury to determine whether Defendant misappropriated the design undet the NCTSP,{. The coutt finds that, when reviewing the evidence in the light most favotable to Plaintiff, Plaintiff has presented enough evidence to withstand Defendant's summry judgment motion on this claim. Accordingly, the court tecommends that summary judgment on this claim be denied. d. Conversion Claim Plaintiff asserts a clakn under state law for conversion based on Defendant's alleged continued possession of tangible property belonging to JVS, in the form of PlaintifPs "Innovation Disclosure Forms, formulas, product specifications, corì.tracts, customet or potential customer lists." (Sec. .,\m. Comp. fl 63, Docket Entry 89.) Under North Carclt¡a law, convetsion is defined ^s "aî unauthotized assumption and exercise of the tþht of ownership over goods or personal chattels belonging to another, to the altetation of their condition or the exclusion of an owner's dghts." GriÍÍith u. Glen IYood Co., Inc., 184 N.C. App. 206, 213, 646 S.E.2d 550, 556 (2007). Where the party alleged to have wtongfully converted property obtained the propetty pursuant to a contract, conversion tequires more than mere possession: fD]emand and refusal are necessary to the existence of the tort. When demand is made, an absolute, unqualified refusal to sutrendet, which puts the plaintiff to the necessity of fotce ot a lawsuit to recover his ov/n property, is ofcourse a conversion. TSC Research, f I C u. Hoch u. Yoang 63 N.C. BEer Chem¡. Corþ., 552 F. S.tpp. 2d 534, 542 M.D.N.C. 2008) (citing pp. 480, 483, 305 S.E.2d 201,203 (1983)). 1,6 Defendant argues that he is entitled to summary judgment on this claim because (1) only goods and personal propefty, not "intangible interests," are propedy the subject of conversion claim (Def.'s Mem. ^t 24, Docket E.rtry Defendant converted are "genetal, publicly known subject to a\; a Q) the inventions Plaintiff claims concepts . and thus not propedy conversion claims (id.); and (3) PlaintifFs non-toggle property dghts are fully coveted by its patents and thus its convetsion claim is preempted (id. at 24-25). Defendant contends that the property which is subject to this conversion claim constitutes intangible interests. However, United States District Judge Thomas Schroeder, in previously denying Defendant's motion to dismiss, noted that JVS' conversion claim based on Defendant's continued possession of "tangible paper items legally belonging JVS, including Innovation Disclosure Forms, which he refuses to return to JVS." (Order is to at 25, Docket Entry 20.) Defendantis correct "thatintangible business assets such as business expectancies and good will may not be the proper subject North Catolina's cofiunon law." Edmond¡on u. Am. of a clakn for convetsion under Motorrycle A$'u, Inc.,7 F. App'x 136,1,48 (4th Cit. 2001). Here though, Plaintiff clearly alleges that Defendant possesses tangible property belonging to Plaintiff, not just intangible interests. (Jee Sec. -{m. Compl. nn $-64, Docket Entry 89.) There is evidence in the recotd, in the form of coffespondence between counsel for JVS and Defendant prior to the filing of the lawsuit, showing that counsel tequested that Defendant return to Plaintiff "aIl of [PlaintifPs] confìdential information in whatever form may be tecorded . . 7.) ." it (I-ettet dated Jan. 4,20L2, Sec. Am. Compl., 8x.7, Docket Entry 89- The language of the letter cleaÃy identifies "business papers," including drawings, 17 bluepdnts, manuals, and notes, which constitute tangible property. In his response to lettet, Defendant did not deny that he has such information in his possession. dated Jan. 13, 201.2, Sec. Am. Compl., Ex. 8, Docket Entty 89-8.) It is cleat that (See as the Letter to such tangible property, there are genuine issues of material fact as to whether Defendant still has such ptoperty in his possession. Plaintiff clearly demanded teturn of the property prior to filing the lawsuit, and Defendant did not deny that he had such material. In discovery, Defendant did not deny that he took the matetials, only that he currently "has no such documents within his possession, custody or control." (Jee Responses to JVS Fi-tst Document Request, Req. No. 2,8x.20.) Defendant also telies on his declaration submitted in support of summary judgment. In the declatation, he states that he "did not take any JVS innovation disclosure fotms when þe] left JVS [and] did not tetain any copies of any [such] forms or ^Íry notes tegarding any JVS innovation disclosure forms from þs] employment with JVS." Furg Decl., Def.'s Reply, Ex. 4, Docket Entty 100-4.) Although Defendant unequivocally states that he did not take the innovation disclosure forms or notes pertaining to the forms, the Declaration does not addtess any other confìdential information which Plaintiff alleges Defendant has or had in the past. While this is a closer question than the other claims (except for the conspiracy claim which the coutt is recommending be dismissed), genuine issue in the coutt's view, thete is still a of matenal fact as to whether Defendant took copies of the design, along with any notes, diagrams or other papers, with him when he left his employment atJVS.6 ó Defendant also argues that the conversion claim is without merit because the concepts aÍe genetally known and not trade secrets ot the claim is preempted undet patent law. These atguments are without merit. The court has already recommended that sufiìmary judgment be denied on the 18 e. Conspiracy Claim Plaintiff contends that Defendant conspired with Univetsoon to commit an unlawful act, i.e., to convett PlaintifPs proptietary information and use it fot the benefìt of Defendant and Universoon. Under Nonh Catoltna law, to succeed on a civil conspiracy clurr', a plaintiff must show (1) an agreement between two ot more persons; Q) to do an unlawful act or to a lawful act iî an unlawful way that results in damage to the claimant See Dalton u. Camp,138 N.C. Àpp.201,213,531, S.E.2d 258,266 (2000). In this case, Plaintiff fails to offet proo I that ^î ^gteement Defendant and Universoon that would support a civil conspiracy existed between claim. While Plaintiff claims that Universoon and Defendant entered into an employment agreement and a technical cooperation agreement, that Defendant designed a competing engine brake for Univetsoon, that Defendant has assisted Universoon in filing patent applications and that Universoon paid Defendant, thete is no evidence that there was a common scheme ot agreement between Univetsoon and Defendant to cause harm to Plaintiff. Plaintifls evidence, not its mere allegations, only shows that Defendant entered into an employment telationship with Universoon. The evidence is simply insufficient to raise more than "suspicion ot conjecture" of a civil conspiracy. See Swain u. a Elfland,145 N.C. App. 383,388, 550 S.E.2d 530, 534 (2001) ("Although an action fot civil conspitacy may be established by circumstantial evidence, suffìcient evidence of the agreement must exist to create more than a suspicion or conjectute in ordet to justi$r submission of the issue to the jury.") (citations ttade sectet claim because thete is a genuine issue of material fact as to whether 'tn fact there wete trade secrets and if so whether Defendant wrongfully misappropriated them. See, sapra at 71-1.6. Additionally, the coutt has found that preemption does not apply undet the facts of this case. Saþra at 11.. 19 omitted). The coutt therefore recommends that summary judgment be gtanted to Defendant on Plaintiffs civil conspiracy claim. f. Unfait and Deceptive Trade Practices Act and Uniust Enrichment Claims "To succeed on a clakn for pnfair and Deceptive Trade Ptactices], prove: (1) defendant committed an ullfur or deceptive act ot practice; Q) a plaintiff must t ot affecting conìrnerce; and (3) that plaintiff was injured thereby." Griflth,184 N.C. App. at 217, 646 S.E.2d at 558 (intetnal quotation marks omitted); N.C. Gen. Stat. $ 75-1..1.. As to the claim fot unjust endchment, under North Caroltna la:w, a plaintiff assetting such a claim must show that it conferred a benefìt on anothet, the other p^fty consciously accepted the benefit, and the benefit was not confetted gtatuitously. SE Shelter Corp. u. BTU, Inc., 1.54 N.C. '\pp. 321,330, 572 S.F^2d 200,206 Q002) Defendant argues that summary judgment is proper on these claims because "[a]ll JVS's inventions at issue of in this case are publicly known fand Defendant's] use of public informatiori cannot form the basis fot any state law claim." @ef.'s Mem. at 25, Docket E,ntry 49.) Essentially, Defendant argues that state law claims must also if a ttade secrets claim fails, the derivative fail. Id., ùtirugFenton Golf TrwÍ 1998 U.S. Dist. LEXIS 8452, at x23-24 OJ. u. Cobra Golf, Inc., D. Ill. May 28, 1998). No. 97 C 247, Because this court has found that a genuine issue of material fact exists as to the misappropdation of ttade secrets claim, however, the state law claims may go forward. ,A.ccotdingly, the coutt recommends that summary judgment be denied as to the NCUDTP and unjust enrichment claims.T 7 Defendant briefly argues that these claims are pre-empted because they are based on Defendant's patents. (Jaa Def.'s Mem. at25,Docket Entry 49.) The court has previously found that the claims ate not pteempted. (See saþra at 1,1). Defendant's preemption argument is without merit. 20 g. Damages Defendant argues that Plaintiff has not demonstrated any evidence to support an award of damages onJVS'misappropriation of trade secrets claim. The Court disagrees. The NCTSPA ptovides that actual damages may be tecovered for misapptopriation of a tade secret. the Noth J¿¿ N.C. Gen. Stat. S 66-154 þ). the Actual damages under Caroltna statute are measured by the economic loss or the unjust enrichment caused by the misappropriation, whichevet is greater. See id. Plaintiff contends, and thete is record evidence to support the contention, that once Universoon began manufactuting and selling at a lower pnce a competing brake based on the JVS design, JVS was fotced to lower the sales price on its brake. ,{.dditionally, sales of the JVS brake have significantly decteased since Universoon enteted the market. (Jee Pl.'s Mem., F,x. 2, Petkins Tr. 283; 297-298; 335; 409, Docket Entry 90-2 (redacted version), Docket E.ttty 98 (undet seal).) Dr. Robert Fenili, Plaintiff's expert on damages, has opined that Defendant's misapptopriaton of theJVS trade secret technology has causedJVS at least fi1.,467,111 in economic losses. (SeePl.'s VIem., 8x.22, Expert Report 90-22 (tedacted version), Docket Entty 97 (under seal).) Thus, for Defendant's misapptopriation, Universoon would if ^t11., Docket Entty aiury were to find that but not be selling an engine brake containing JVS technology and in direct competition with JVS, thete is evidence from which the jury could find that JVS has suffered damages. Accotdingly, the coutt recofiünends that summaly judgment on this ground be denied. 21, CONCLUSION For the reasons stated herein, IT IS RECOMMENDED that Defendant's motion fot summary fudgment (Docket Entry 46) be GRÄNTED in patt and DENIED in part. More specifically, it is recommended that the motion be gtanted as to the civil conspiracy claim and the motion be denied as to ll other claims. L litqgictrÅ"Judge Duham, Notth Catolina July 37,2075 22

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