Adcor Industries, Inc. v. Bevcorp, LLC, 2007 WL 3104796, No. 06-4260 (6th Cir. Oct. 23, 2007).

Last month, the United States Court of Appeals for the Sixth Circuit affirmed an Ohio federal d istrict court’s grant of summary judgment in a trade secrets misappropriation case. Adcor Industries, Inc. sued Bevcorp, LLC, among other defendants, in the Northern District of Ohio for allegedly misappropriating Adcor’s trade secrets and violating a consent decree entered in 1988.

The consent decree was issued against Baron Haag and Chester Romp, individual defendants in the Adcor case, arising out of a scheme in which Haag and Romp, who owned Brau Manufacturing, Bevcorp’s predecessor corporation, illegally obtained drawings to manufacture replacement parts for beverage fillers created by Crown, the predecessor to Adcor. The main thrust of the decree was that it prohibited Haag and Romp from manufacturing Crown parts. Furthermore, the decree applied to their successors, among others.

In 2003, Adcor sued Bevcorp and the other defendants, claiming that Bevcorp, as successors to Brau, had violated the consent decree and misappropriated Adcor’s trade secrets by using the drawings obtained by Haag and Romp. The district court granted summary judgment on the breach of consent decree claim, finding that Adcor had failed to prove to a reasonable certainty that the owners of Bevcorp had acquired the drawings directly from Haag and Romp. The court also granted summary judgment in the trade secrets misappropriation claim, ruling that the claim was time-barred.

In affirming the district court’s decision, the Sixth Circuit pointed to Ohio’s Uniform Trade Secrets Act, which provided that a trade secret misappropriation claim must be brought within four years of the discovery of the misappropriation, or when the plaintiff should have reasonably discovered it. The statute further provided that a continuing misappropriate constituted a single claim. The court found that there was undisputed evidence that Adcor had inquiry notice of the misappropriation more than four years before the suit was commenced. Furthermore, the court noted that there was evidence in the record that Adcor’s delay in commencing the lawsuit was a “strategy deadlock.”

Finally, the court ruled that Adcor had failed to prove by clear and convincing evidence that the defendants had violated the consent decree, agreeing with the district court that there was not sufficient evidence to conclude that the owners of Bevcorp had obtained the drawings from Romp and Haag.

Judge Karen Nelson Moore concurred in part and dissented in part, arguing that Adcor had presented evidence that there were genuine issues of material fact as to when Adcor should have known that the defendants misappropriated the drawings.