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Eagle Harbor Holdings, LLC, v. Ford Motor Co.

United States District Court, Western District of Washington, Tacoma

March 5, 2015




This matter comes before the Court on Counterclaim Defendants Eagle Harbor Holdings, LLC, and Dan Preston’s (“Counterclaim Defendants”) motion for clarification of scope and elements of trade secret counterclaim (Dkt. 546). The Court has considered the pleadings filed in support of and in opposition to the motion and the remainder of the file and hereby grants in part and denies in part the motion for the reasons stated herein.


On February 24, 2012, Plaintiffs Eagle Harbor Holdings, LLC, and MediusTech, LLC (“Plaintiffs”) filed a second amended complaint alleging Defendant Ford Motor Company (“Ford”) infringes numerous patents. Dkt. 61. On July 16, 2014, Ford filed an amended answer and asserted numerous counterclaims, including a counterclaim for misappropriation of Ford’s trade secrets and a counterclaim against Counterclaim Defendants for a violation of Washington’s Uniform Trade Secrets Act, RCW Chapter 19.108 (“UTSA”). Dkt. 329, ¶¶ 75-105.

On December 19, 2014, Eagle Harbor filed a motion for summary judgment on Ford’s counterclaim for misappropriation of trade secrets. Dkt. 392. On February 11, 2015, the Court denied the motion. Dkt. 482. On March 2, 2015, The Court held a pretrial conference and Counterclaim Defendants asserted that, despite the order from the Court, the parties disagree as to the scope of Ford’s missappropriation claim. Dkt.544. The Court requested supplemental briefing on the issue. On March 3, 2015, Counterclaim Defendants filed the instant motion. Dkt. 546. On March 4, 2015, Ford responded. Dkt. 551.


As a threshold matter, Ford argues that the Court should reject Counterclaim Defendants’ motion because it “largely rehashes the same arguments that this Court correctly rejected on summary judgment.” Dkt. 551 at 2. Counterclaim Defendants, however, argue that the parties have a genuine disagreement regarding the interpretation of the Court’s order denying summary judgment. Dkt. 546 at 7. The Court agrees with the Counterclaim Defendants that a dispute exists because the disputed instructions, as well as Ford’s requested relief, are beyond the issues that the Court considers to be remaining in this action. Moreover, clarification may assist Ford in properly weighing the benefits of pursuing the counterclaim with the detriments of opening the door to the parties’ past business relationship.

The parties disagree on the scope of damages and the elements of the misappropriation claim. With regard to monetary damages, Ford alleges three types of harm, which are as follows:

Counterclaim Defendants have been unjustly enriched by their misappropriation of Ford’s trade secrets, including, without limitation, receiving $250, 000 from Invotronics, Inc. (“Invotronics”).
Counterclaim Defendants have also been unjustly enriched by receiving a several million dollar interest-free loan from Northwater Intellectual Property Fund L.P. (“Northwater”) to fund Counterclaim Defendants’ patent litigation.
Should Plaintiffs obtain judgment in their favor, despite the absence of sufficient evidence to support a finding of infringement and the presence of substantial evidence of invalidity, such judgment would be harm and damages caused by Plaintiffs’ unlawful misappropriation of Ford’s trade secrets.

Dkt. 551 at 3.

With regard to the Invotronics license, the Court found that a question of fact exists for trial and that Counterclaim Defendants bear the burden of proving “why any particular portion of this license was not based on Ford’s information.” Dkt. 482 at 5. Counterclaim Defendants argue that Ford must prove that the license was obtained “at the expense” of Ford. Dkt. 546 at 10 (citing Young v. Young, 164 Wn. 2d 4 77, 484 (2008)). Counterclaim Defendants initially argued that, even if the license was based on Ford’s information, it was not obtained at the expense of Ford because Ford would never have attempted to obtain this particular license. Dkt. 434 at 9–10. In other words, Ford had no interest in licensing technology to Invotronics. While this is a valid argument, there is another formulation of the rule which provides that Ford is entitled to damages if, as a result of the misappropriation, Counterclaim Defendants received money or benefits that in justice and fairness belong to Ford. 6A Wash. Prac., Pattern Jury Instr. Civ. WPI 351.01 (6th ed.); Bailie Comm’ns, Ltd. v. Trend Bus. Sys., Inc., 61 Wn.App. 151, 160 (1991).

The Court finds that the “justice and fairness” phrase is applicable to this case because, under the other formulation, there would essentially be no harm if there was no foul. In other words, an entity could misappropriate trade secrets at will as long as it was able to show that the other company would never have sought the business that the misappropriating party obtained based in whole or in part on the trade secrets. This seems illogical, and unless the parties find a binding authority factually similar and with a ...

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