Unpublished Disposition, 857 F.2d 1478 (9th Cir. 1987)

MEMORANDUM^* 

Mason appeals the district court's order granting summary judgment in favor of defendants Sybron Corp. and Ormco in this action for breach of a confidentiality agreement and misappropriation of a trade secret. We reverse and remand.

* We first consider whether we have jurisdiction. Judgment has not been granted to defendant American, which did not join in Sybron's motion for summary judgment. However, the district court entered final judgment in favor of Sybron and Ormco pursuant to Fed. R. Civ. P. 54(b). Although neither party contests jurisdiction, we have a duty to address the issue sua sponte. Sheehan v. Atlanta Int'l Ins. Co., 812 F.2d 465, 468 (9th Cir. 1987).

A judgment pursuant to Rule 54(b) is appealable as a final order unless the district court abused its discretion in granting certification under the Rule. Id. In reviewing a 54(b) order, we must scrutinize the interrelationship of claims in order to prevent piecemeal appeals, but we should defer to the district court's determination that delay was not justified unless it is clearly unreasonable. Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 10-12 (1980).

The policy against piecemeal review is not implicated here. American's only relation to this case is that Ormco was formerly a division of American. However, Sybron admits that Ormco is now an unincorporated division of Sybron. American's relationship to Ormco is separable from the issues raised by this appeal. We hold that the district court did not abuse its discretion, and that we therefore have jurisdiction.

II

Mason challenges the district court's reliance on Rule 220-1 of the Rules of Procedure for the District of Montana in granting summary judgment. Local Rule 220-1, which applies to all motions, provides that "failure to file a brief by the adverse party shall be deemed an admission that, in the opinion of counsel, the motion is well taken." Mason contends that this rule conflicts with Fed. R. Civ. P. 56.

We disagree with Mason's contention that the district court was required to hold a hearing. In Dredge Corp. v. Penny, 338 F.2d 456, 461-62 (9th Cir. 1964), we held that "Rules 56(c), 78 and 83, read together, authorize district courts to provide by rule that a party desiring oral argument on a motion for summary judgment must apply therefor, in the absence of which oral argument will have been deemed to be waived." Although the district may not deny a hearing when requested by the party opposing the motion, id. at 462, it is clear that Rule 56(c) does not require a hearing where the opposing party does not request it. See, e.g., Demarest v. United States, 718 F.2d 964, 968 (9th Cir. 1983), cert. denied, 466 U.S. 950 (1984). Mason never requested a hearing until after summary judgment was entered, more than 6 months after the motion for summary judgment was filed. We therefore agree with the district judge that the motion for reconsideration, on the ground that Mason expected a hearing to be scheduled, was properly denied.

Nonetheless, we must examine the merits of the summary judgment motion. Under Rule 56, the opposing party is not required to file any contravening affidavits or other material and is still entitled to a denial of the motion for summary judgment where the movant's papers are insufficient on their face or themselves demonstrate the existence of a material issue of fact. Hamilton v. Keystone Tankship Corp., 539 F.2d 684, 686 (9th Cir. 1976). In Hamilton, we concluded that a local rule governing the filing of opposing affidavits did not justify entry of summary judgment where the moving papers showed the motion to be insufficient on the merits. Id. We also strongly suggested a contrary interpretation of the local rule would conflict with Rule 56. Id. at 686 n. 1. See also Mutual Fund Investors, Inc. v. Putnam Mgmt. Co., 553 F.2d 620, 625 (9th Cir. 1977).

In this case, the district court did not apply Local Rule 220-1 in a manner inconsistent with Rule 56; it recognized that it was obligated to examine the merits of the motion as well. In its order of April 6, 1987, the court stated: " [f]rom a review of the file and having considered the brief and other supporting documentation submitted by the moving defendants, it is evident that defendants have met their preliminary burden of showing the absence of a genuine issue of material fact." We review this conclusion de novo, examining the moving papers before the district court in the light most favorable to the nonmoving party to determine whether summary judgment was appropriate. Ashton v. Cory, 780 F.2d 816, 818 (9th Cir. 1986).

III

In the absence of Montana law on the subject of trade secrets, we apply the general law of trade secrets as developed under section 757 of the Restatement of Torts. Tri-Tron Int'l v. Velto, 525 F.2d 432, 436 (9th Cir. 1975) (construing Montana law). Whether or not the requisite degree of secrecy exists is a question of fact. Id.; K-2 Ski Co. v. Head Ski Co., 506 F.2d 471, 474 (9th Cir. 1974). Thus, in order to prevail, Sybron must demonstrate that there is no genuine issue concerning the relative secrecy of Mason's idea.

Sybron argued three grounds below for granting summary judgment. We will address each in turn.

That which is public or of general knowledge in an industry cannot be appropriated by one as his secret. Clark v. Bunker, 453 F.2d 1006, 1009 (9th Cir. 1972); Bowser, Inc. v. Filters, Inc., 398 F.2d 7, 9 (9th Cir. 1968). Sybron argues that the undisputed facts show that J hooks attached to cuspid and bicuspid brackets and ball hooks attached to molar and lingual brackets were widely used in the industry by early 1982, and that because suppliers offered special order appliances with ball hooks substituted for J hooks, "there is nothing secret or novel" in the idea that cuspid and bicuspid brackets should be manufactured with ball hooks integrated into the bracket.

However, several statements in Mason's deposition tend to contradict Sybron's argument. For example, Mason deposed that although J-hooks were available on edgewise brackets, they were welded to the base of the bracket, rather than to the wing, as he suggested. Mason also stated that he had never previously seen a Lewis (bicuspid) or Lang (cuspid) bracket with any type of hook on it. Furthermore, Sybron admits that it never offered cuspid or bicuspid brackets with integrated ball hooks prior to Mason's submission.¹  Thus, there is a genuine issue as to the state of general industry knowledge at the time of Mason's submission, and summary judgment was therefore inappropriate.

Sybron argues that Walker v. University Books, Inc., 602 F.2d 859 (9th Cir. 1979), is controlling here. We disagree. In Walker, the plaintiff claimed a trade secret in her ideas for improving the appearance and format of "I Ching" cards. The proposed improvements consisted of: "use of a higher quality stock for the cards, brighter colors, rounded corners, wide red borders, larger hexagrams on the face of the cards and a higher quality box in which the cards would be packaged for sale." 602 F.2d at 865. We held that these improvements were both vague and obvious and unprotectable as a matter of law. Id. In Walker, however, the alleged improvements were all simple modifications which could occur to any layman. By contrast, orthodontics is a technical and specialized field, and Mason has pointed out specific technical differences between his submission and Sybron's then-existing products. Although it may eventually be determined after trial that Mason's idea was obvious to any orthodontist, we cannot say that the evidence before the district court established that it was obvious as a matter of law.

The law of trade secrets affords no protection against subsequent independent discovery. Droeger v. Welsh Sporting Goods Corp., 541 F.2d 790, 792 (9th Cir. 1976); Bowser, 398 F.2d at 9-10 (defendant's device was the product of independent research). Sybron contends that its prior development and use of ball hooks on molar and lingual brackets negates the secrecy required for trade secret status. However, this argument assumes implicitly that Mason's alleged improvements (use of integrated ball hooks on cuspid and bicuspid brackets) are legally insufficient to constitute trade secrets in themselves, which is, of course, the question at issue. We therefore reject this argument.

Finally, Sybron contends that plaintiff's prior disclosures to other orthodontists negated the requisite secrecy. Sybron cites a case with remarkably similar facts, Schumann v. IPCO Hospital Supply Corp., 93 Ill.App.3d 1053, 418 N.E.2d 161 (1981), in which the plaintiff had developed a hinge post for a dental appliance and disclosed the idea to defendants pursuant to an oral agreement. In affirming summary judgment for the defendants, the court stated: "a trade secret implies novelty and where the process or method is disclosed to other persons it cannot be claimed to remain a trade secret by the alleged owner." 418 N.E.2d at 165.

Sybron is incorrect, however, in asserting that this principle is separable from the question of general industry knowledge. The quote from Schumann directly follows a statement that matters "in the general domain of information in an industry cannot be a secret." Id. (citations omitted). The court in Schumann discussed a variety of prior disclosures made by the plaintiff, the plaintiff's former brother-in-law and two orthodontists with no connection to the plaintiff, and concluded that "defendants have produced a mass of evidence showing the general disclosure of the device here in question." Id. at 166 (emphasis added). By contrast, the evidence of prior disclosures here is vague and incomplete. It is unclear from Mason's deposition whether any of the admitted disclosures were made in confidence, whether the content of those disclosures was general or specific, or whether they were numerous or detailed enough to render the idea part of the general knowledge in the industry. Thus, this ground is, by itself, insufficient to support summary judgment here.

IV

In summary, Sybron's unopposed moving papers were insufficient to demonstrate the absence of a genuine issue of material fact. We therefore reverse the district court's order granting summary judgment and remand for further proceedings.

REVERSED AND REMANDED.