Allied Erecting & Dismantling Co. v. Genesis Equip. & Mfg.

The U.S. Court of Appeals for the Sixth Circuit affirmed the district court decision holding that a plaintiff is precluded from filing a claim based on alleged ongoing misbehavior when an allegation of trade secrets misappropriation has been resolved, and the plaintiff’s prior attempt to get an injunction or forward-looking relief was rejected. Allied Erecting & Dismantling Co. v. Genesis Equip. & Mfg., Case No. 14-3563 (6th Cir., Nov. 3, 2015) (Norris, J.).(concurrence, White, J)

Allied Erecting & Dismantling (Allied), founded in 1973 by John Ramun, is in the field of industrial dismantling and scrap processing, including the design, development, and manufacture of related specialized equipment. Allied is a direct competitor of Genesis Equip & Mfg. (“Genesis”). While John Ramun’s son Mark worked at Allied, they developed innovative multi-use demolition machine attachments, called the Allied MT. Various sizes and types of jawsets, including a steel beam cutter and a concrete crusher were available, allowing the Allied MT operator to perform different tasks with just one tool. Mark had detailed information relating to the Allied MT and the related trade secrets. When Mark left the company, he took a laptop with him that contained 15,000 pages of documents. Two years later, Mark joined Allied’s competitor Genesis. Sometime thereafter, Genesis released its own multiuse tool called the LXP and the Versi Pro. Allied filed a lawsuit based on the misappropriation of the Allied MT trade secrets by Genesis and Mark Ramun.

The district court held Genesis and Mark Ramun jointly and severally liable for misappropriation of Allied’s trade secrets under the Ohio Uniform Trade Secrets Act and awarded damages based on unjust enrichment. The jury did not award damages for Allied’s lost profits or any punitive damages against Genesis. The court further refused to grant Allied’s motion for a permanent injunction against Genesis. On appeal, 6th Circuit affirmed the district court’s refusal to grant Allied an injunction or royalties going forward.

Allied then brought a new action against Genesis, alleging that Genesis continued to sell equipment that was based on the misappropriated Allied MT technology and trade secrets. Allied also alleged that Genesis’s use of the Allied MT after the verdict triggered a new claim and triggered a new statute of limitations start date. The district court disagreed, concluding that the use of Allied’s trade secrets by Genesis constituted a continuing misappropriation that related back to a single claim, namely the wrongful acquisition of the Allied MT secrets in 2003 that was discovered in 2005, and that therefore the new lawsuit was time-barred. Allied appealed.

The 6th Circuit affirmed dismissal of the subsequent suit under the Ohio Uniform Trade Secrets Act, finding that the “single claim approach” of the uniform trade secrets statute means that once a trade secrets owner is denied forward-looking relief, like an injunction or ongoing royalties, the misappropriator cannot be sued again for using the secrets that it has now effectively paid for.