August 25, 2019

Archives for December 7, 2016

Colorado Court of Appeals: Design of Manufacturing Part Was Not a Secret, Therefore No Misappropriation Occurred

The Colorado Court of Appeals issued its opinion in Hawg Tools, LLC v. Newsco International Energy Services, Inc. on Thursday, December 1, 2016.

Design—Trade Secret—Conversion—Defense—Waiver—Standing—Breach of Contract.

Hawg Tools, LLC (Hawg) rents mud motors to oil and gas drilling companies. Newsco International Energy Services, Inc. (Newsco) uses mud motors to provide drilling services. Gallagher owned Hawg. Before he formed this company, he operated a similar business called New Venture. In 2008 Gallagher asked a machinist to manufacture sealed bearing packs for use in New Venture’s mud motors. The machinist arranged for a designer, defendant Ficken, to design the sealed bearing packs for the machinist as a favor. The designer assigned his rights in the design to the machinist, who assigned them to Gallagher for compensation. Gallagher later assigned the rights to Hawg. The designer later designed a sealing bearing pack for Newsco. After determining that the Newsco design was similar to the Hawg design, Gallagher filed this lawsuit alleging (1) misappropriation of a trade secret concerning the design of a sealed bearing pack, (2) conversion of a trade secret, and (3) breach of contract. The trial court entered judgment in favor of plaintiff. The trial court denied defendants motions for directed verdict and judgment notwithstanding the verdict.

On appeal, defendants contended that the trial court erred when it denied their motions for directed verdict and judgment notwithstanding the verdict on Hawg’s claim for misappropriation of a trade secret. C.R.S. § 7-74-102(4) defines a trade secret as “the whole or any portion . . . of any . . . design . . . which is secret and of value.” To determine whether a trade secret exists, the fact finder considers (among other thing) the extent to which the information is known outside the business. Here, Hawg did not establish that its design, in whole or in part, was substantially different from designs that were publicly available at the time of its creation. The court of appeals concluded that (1) the record does not support a conclusion that the Hawg design was secret and (2) the record does not contain sufficient evidence to support the trial court’s decision to deny defendants’ motions for a directed verdict and for judgment notwithstanding the verdict.

Defendants also contended that the trial court erred when it denied their motion for judgment notwithstanding the verdict on Hawg’s conversion claim, asserting that the Uniform Trade Secrets Act preempts claims for conversion of trade secrets. This was a preemption defense based on choice of law, which defendants waived because they raised it for the first time in their motion for judgment notwithstanding the verdict.

Ficken appealed the judgment against him on Hawg’s breach of contract claim, contending that the trial court erred when it rejected his assertion that Hawg lacks standing to bring suit against him for breach of contract based on his violation of a confidentiality agreement. Here, the designer and the machinist entered into an assignment agreement with Gallagher. Later, Gallagher fully assigned his rights under this agreement to Hawg. Therefore, Hawg had standing to bring suit for breach of that agreement.

The judgment on Hawg’s claim for misappropriation of a trade secret was reversed and the case was remanded for the trial court to enter judgment in favor of defendants on that claim and to vacate the award of damages on that claim. The judgment on Hawg’s claims for conversion and breach of contract were affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Lengthy Delay in Postconviction Proceedings Did Not Violate Due Process

The Colorado Court of Appeals issued its opinion in People v. Hardin on Thursday, December 1, 2016.

William Hardin was accused of robbing three men and killing two of them. When his 1988 trial concluded, Hardin was convicted of two counts of aggravated robbery, two counts of felony murder, and two counts of murder after deliberation. He was sentenced to two consecutive 16-year sentences for the aggravated robbery convictions and two life sentences for the felony murder convictions. He was not sentenced for the murder after deliberation convictions. Hardin appealed and was also granted a limited remand to pursue a Crim. P. 35(c) ineffective assistance claim. Over the next six years, Hardin was appointed a series of private attorneys for his postconviction claim; Hardin repeatedly filed pro se motions expressing frustration with his legal representation and his appointed attorneys’ lack of action on the postconviction claim.

In 1997, a division of the Colorado Court of Appeals vacated Hardin’s limited remand and decided his direct appeal. It affirmed Hardin’s convictions but remanded for sentencing on the murder after deliberation convictions and vacate one of the felony murder convictions. That division also concluded that Hardin’s ineffective assistance claims should be decided in a postconviction proceeding. Hardin filed a pro se postconviction proceeding in 1999, which the court denied without a hearing. Another division of the court of appeals reversed and remanded with instructions to hold further proceedings on the postconviction claims. After several more years, Hardin’s current attorney was appointed. Eight years after her appointment, the trial court held an evidentiary hearing on Hardin’s postconviction claims. The postconviction court denied Hardin’s motion after the hearing, and he appealed.

The court of appeals analyzed whether the excessively lengthy delay in the postconviction proceedings violated Hardin’s due process rights. Hardin argued that he should have been granted a new trial because the delay impaired his ability to present his claims for postconviction relief, as shown by the witnesses’ faded memories and the unavailability of certain records. The court of appeals disagreed with Hardin, but affirmed the postconviction court’s denial of his motion for relief. The court of appeals found that the length of the delay weighed in Hardin’s favor, the reason for the delay was mixed and therefore neutral, the defendant properly asserted his rights, and the delay did not prejudice Hardin. The court found that although some of the witnesses’ memories were dimmed, it was not so significant as to prejudice Hardin. The court emphasized that although it did not find prejudice, the lengthy delay is unacceptable in a legal system designed to provide speedy resolutions to criminal defendants.

The court of appeals next addressed Hardin’s contention that the postconviction court abused its discretion by not making findings of fact or conclusions of law as to whether his trial counsel was inefficient for failing to object to the trifurcation of the aggravated robbery charges. The court found that although the trial court did not directly address this issue, it made factual findings about Hardin’s lack of prejudice on all issues, therefore the trifurcation issue was presumably covered.

The court of appeals affirmed the postconviction court’s denial of Hardin’s motion for relief.

Tenth Circuit: Unpublished Opinions, 12/6/2016