F I L E D
United States Court of Appeals
Tenth Circuit
AUG 6 2003
PUBLISH
UNITED STATES COURT OF APPEALS PATRICK FISHER
Clerk
TENTH CIRCUIT
HARVEY BARNETT, INC., a Florida
corporation; INFANT SWIMMING
RESEARCH, INC., a Florida
corporation,
Plaintiffs-Appellants,
v.
No. 02-1047
ANN SHIDLER, individually and
d/b/a Infant Aquatic Survival; JUDY
HEUMANN, individually and d/b/a
Infant Aquatic Survival; ALISON
GEERDES, individually and d/b/a
Infant Aquatic Survival,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 00-B-731 (OES))
Douglas Jaffe of San Diego, California, for the Plaintiffs-Appellants.
Mark W. Fischer (Kristin M. Berdan with him on the brief), Faegre & Benson,
LLP, Boulder, Colorado for the Defendants-Appellees.
Before SEYMOUR, McKAY, and LUCERO, Circuit Judges.
LUCERO, Circuit Judge.
Plaintiffs Harvey Barnett, Inc. and Infant Swimming Research, Inc.
(collectively, “ISR”) filed a complaint against three former employees, alleging
state-law claims of misappropriation of trade secrets, breach of contract, and
unjust enrichment, as well as claims of unfair competition and deceptive trade
practices under the Colorado Consumer Protection Act (“CCPA”), Colo. Rev.
Stat. § 6-1-105. ISR further alleged federal claims of trademark infringement and
misleading trade practices in violation of the Lanham Act, 15 U.S.C. §§ 1114
and 1125. Finding that ISR failed to produce sufficient evidence with respect to
any of its claims, the district court granted summary judgment to the defendants.
Exercising jurisdiction under 28 U.S.C. § 1291, we affirm in part and reverse in
part.
I
In 1966, Dr. Harvey Barnett, the founder and president of ISR, began to
develop the Infant Swimming Research program (“ISR program”), which plaintiffs
describe as a “scientific, behavioral approach to pediatric drowning prevention.”
(Appellants’ Br. at 4.) ISR’s program utilizes a method known as “swim, float,
swim,” and contains nearly two-thousand “prompts and procedures” for teaching
infants as young as six-months old how to survive in the water. (Id.) In addition,
the ISR program maintains safety protocols to keep children safe during
-2-
instruction and provides a “BUDS” Record Sheet allowing parents to monitor
children’s bodily functions, diet, and sleep in order to evaluate physical responses
to the ISR program.
In a five-week course, ISR trains and certifies instructors. ISR-certified
instructors teach survival skills to infants in private lessons, ten minutes a day,
five days a week for three to four weeks. Instructors receive a videotape entitled
“Prompts and Procedures,” which illustrates how to use behavioral conditioning in
teaching infants and covers other water-safety issues. ISR’s program also includes
the ISR Master Instructor System, in which individuals become certified as Master
Instructors to train other potential ISR instructors.
Dr. Barnett has written various books detailing some of the techniques and
methods used in ISR’s aquatic-survival program, including Precision Strokes for
Little Folks, published in 1974. More than ten years later, he wrote, but never
published, a manual entitled The Science of Infant Swimming, which is used to
help instructors understand “the psychology of infants and young children, their
anatomy, and the physics involved as their small bodies move through the water.”
(Appellants’ Br. at 5.) In 1989, ISR began publishing the “Parent Resource Book,”
now in its ninth edition, an educational book distributed to parents regarding the
dangers of infant drowning and the theory and processes used by ISR.
-3-
Judy Heumann, Ann Shidler, and Alison Geerdes, defendants in the instant
case, are former ISR instructors who left the company in early 2000. ISR trained
Heumann as an instructor and Master Instructor in 1984 and 1987, respectively.
Shidler was trained as an instructor in 1990, and as a Master Instructor in 1993, and
Geerdes was trained as an ISR instructor and worked for less than a year before
leaving ISR. She is not a Master Instructor. Defendants paid fees ranging from
$5,000 to $10,000 for the instruction.
While employed by ISR, Heumann, Shidler, and Geerdes each signed a “Non-
disclosure and Confidentiality Agreement” and a license agreement containing a
further “Confidentiality of Information” provision as well as a “Covenant Not to
Compete.” 1 (1 Appellants’ App. at 60, 77–80, 81–85.) Notwithstanding these
agreements, on leaving ISR in 2000, the three former employees started Infant
Aquatic Survival (“IAS”), a new company devoted to teaching infant and child
swimming in Colorado. It is this conduct that is the subject of this litigation.
Defendants’ program is allegedly similar to the ISR program in that it utilizes the
same “swim, float, swim” method, implements some of the same safety protocols,
uses a Daily Health Data Sheet similar to the BUDS sheet, uses a comparable
registration form, and distributes a comparable parent resource book to parents of
1
Beginning in 1986, ISR required its instructors to sign license agreements
every two years.
-4-
children enrolled in the IAS program. It is uncontested that defendant Shidler’s
husband sought to reserve the names Harvey Barnett, Inc. and Infant Swimming
Research, Inc. with the Colorado Secretary of State. On more than one occasion,
defendants falsely advertised that their program, IAS, had been in business since
1990.
ISR filed in district court a complaint against the defendants, alleging state-
law claims of misappropriation of trade secrets, breach of contract, and unjust
enrichment, as well as unfair competition and deceptive trade practices under the
CCPA, along with federal claims of trademark infringement and misleading trade
practices under the Lanham Act. ISR then sought a preliminary injunction to
prevent the defendants from teaching the ISR program to other instructors.
Following an evidentiary hearing, the district court denied ISR’s request for a
preliminary injunction as to Heumann and Shidler. 2 Subsequently, the defendants
moved for summary judgment, which was granted. In its ruling, the district court
concluded that the ISR program was not a trade secret as a matter of law and
dismissed ISR’s misappropriation-of-trade-secrets claim. The district court further
concluded that both the covenant not to compete and the confidentiality provision
in the license agreement were not enforceable, and dismissed ISR’s breach-of-
2
Judgment as a matter of law favoring Geerdes was granted on the basis
that she was not trained as a Master Instructor.
-5-
contract claim. As to ISR’s remaining claims—trademark infringement and
misleading trade practices under the Lanham Act, and violations of the CCPA—the
court concluded that, because ISR failed to advance sufficient evidence on each
element, those claims must be dismissed as well. ISR appeals the grant of summary
judgment to defendants. 3
II
We review the grant of summary judgment de novo, applying the same legal
standard used by the district court. Perry v. Woodward, 199 F.3d 1126, 1131 (10th
Cir. 1999). Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). In our
review, we examine the evidence and draw reasonable inferences therefrom in the
light most favorable to the non-moving party. Simms v. Okla. ex rel. Dep’t of
Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999).
“Although the movant must show the absence of a genuine issue of material fact, he
or she need not negate the nonmovant’s claim.” Id. Once the movant carries this
burden, the nonmoving party must “bring forward specific facts showing a genuine
3
ISR did not appeal the district court’s denial of its request for a
preliminary injunction.
-6-
issue for trial as to those dispositive matters for which he or she carries the burden
of proof.” Id. (quotation omitted). An issue of material fact is genuine if the
nonmovant presents facts that would allow a reasonable jury to find in favor of the
nonmovant. Id.
A
In evaluating the district court’s decision regarding ISR’s trade-secrets
claim, we look to Colorado law. Colorado has adopted the Uniform Trade Secrets
Act, which defines a trade secret as “any scientific or technical information, design,
process, procedure, formula, [or] improvement . . . which is secret and of value.”
Colo. Rev. Stat. § 7-74-102. In order “[t]o be a ‘trade secret’ the owner thereof
must have taken measures to prevent the secret from becoming available to persons
other than those selected by the owner to have access thereto for limited purposes.”
Id. Trade-secret status is a question of fact. Colo. Supply Co. v. Stewart, 797 P.2d
1303, 1306 (Colo. Ct. App. 1990); see also Rivendell Forest Prods., Ltd. v.
Georgia-Pacific Corp., 28 F.3d 1042, 1045 (10th Cir. 1994) (holding that in this
context “doubts as to existence of triable issue of fact . . . must be resolved in favor
of the existence of triable issues”).
Factors considered in determining whether a trade secret exists include:
(1) the extent to which the information is known outside the business;
(2) the extent to which it is known to those inside the business, i.e., by
the employees; (3) the precautions taken by the holder of the trade
secret to guard the secrecy of the information; (4) the savings effected
-7-
and the value to the holder in having the information as against
competitors; (5) the amount of effort or money expended in obtaining
and developing the information; and (6) the amount of time and
expense it would take for others to acquire and duplicate the
information.
Colo. Supply Co., 797 P.2d at 1306. In Rivendell, we held, consistent with
Colorado law, that information can be a trade secret notwithstanding the fact that
some of its components are well-known. 28 F.3d at 1045. “[A] trade secret can
exist in a combination of characteristics and components each of which, by itself, is
in the public domain, but the unified process, design and operation of which, in
unique combination, affords a competitive advantage and is a protectable secret.”
Id. (quotation omitted).
In arriving at its conclusion that the ISR program is not a trade secret as a
matter of law, the district court determined that (1) “[v]ariations of the swim, float,
swim method are known both inside and outside the children’s aquatic business,”
(2) ISR did not take precautions to guard the secrecy of its information “until at
least 1996, after hundreds of instructors had been trained and thousands of students
taught,” (3) “[p]arents and bystanders were allowed to watch and videotape
lessons,” and (4) “a variation on ISR’s methods could be created through a perusal
of commercially available child psychology, child health, and swimming instruction
-8-
books.” 4 Barnett v. Shidler, No. 00-B-731, slip op. at 5 (D. Colo. Jan. 4, 2002).
Ultimately, the court found that “ISR allowed its program to become part of the
public domain before seeking protection . . . [and] the Prompts and Procedures,
based on principles of behavioral conditioning, was already in use to teach children
swim, float, swim throughout the nation” and thus “as a matter of law . . . ISR has
no protectable trade secret.” Id. at 5–6.
Our review leads us to conclude that the district court improperly looked at
components of the ISR program in isolation, rather than as a whole, in determining
that ISR does not possess a trade secret. This runs afoul of the analytical approach
set forth in Rivendell. 28 F.3d at 1045–46 (concluding that the district court
improperly examined the separate elements of an alleged trade secret rather than
the combination of elements). ISR’s position is that the ISR program, as a whole,
is a trade secret. 5 (See Appellants’ Br. at 15 (“The unified process, design and
4
ISR contends that the district court improperly relied on library books
and information downloaded from the internet. ISR suggests these books and
materials are hearsay and should not have been considered when ruling on
defendants’ motion for summary judgment. ISR’s hearsay argument lacks merit.
As correctly explained by the defendants in their reply brief, these pieces of
evidence were not admitted for the truth of the matter asserted therein, but rather
for the very fact of their existence.
5
Consistent with this theory, ISR asserts that none of its publications,
including Precision Strokes for Little Folks, discloses trade secrets. Although its
publications provide general information about the techniques used by ISR and
the psychological foundations for those techniques, ISR’s position is that the ISR
program, as a whole, is a trade secret and cannot be learned from its publications.
-9-
operation of the ISR Program, in unique combination, affords a competitive
advantage and is a protectable secret.”).) In failing to follow our holding in
Rivendell—that a trade secret can exist in a combination of characteristics, each of
which, considered separately, is in the public domain, but, taken together, may
yield a competitive advantage that results in a protectable trade secret—the district
court applied an inappropriate standard. We do not suggest that had the district
court merely stated that it was also considering its findings in the aggregate, that
would have been sufficient. Rivendell’s requirement of analysis in the aggregate is
more than a formality. It is a substantive component of trade-secret analysis
integral to a court’s ultimate conclusion regarding the existence of material facts
for trial. On our review of the record, we conclude that a Rivendell analysis sets in
relief numerous genuine issues of material fact precluding summary judgment.
In support of the first and second factors used by Colorado courts to
determine the existence of a trade secret—the extent to which the information is
known outside the business and to those inside the business—ISR submitted four
affidavits attesting to the uniqueness of the ISR program. First, Tom Werts, an
aquatic safety consultant with over thirty years of experience, including a position
as the National Director of Water Safety for the American Red Cross, stated in his
affidavit: “The ISR program and the techniques used by its instructors are unique.
They are not taught by other aquatic organizations. The ISR program is a
-10-
behavioral approach to pediatric drowning prevention.” (1 Appellants’ App. at 71.)
Second, in his affidavit, Dr. Barnett stated that the ISR program “is not simply
teaching children to swim. The ISR Program is a unique and specially designed
behavioral approach to pediatric drowning prevention.” 6 (4 id. at 1455.) Third,
Lisa Grether, a current ISR instructor, averred that the ISR program uses trade
secrets and is unique. Finally, Dr. David Carr, who, in his role as an advisory
board member for the State of Florida, had the opportunity to evaluate various
infant-swimming programs for certification in Florida, submitted an affidavit in
which he claimed that “Dr. Barnett’s program was the only program which offered
a behavioral approach to pediatric drowning prevention” and that the ISR program
is “unique unto itself” and “not capable of being copied simply by watching from
poolside.” (1 id. at 358–59.)
In further support of the first and second factors, ISR points to testimony
from two current ISR instructors, Carol Gnam and Cindy Asay, who relayed
repeated admissions by Shidler and Heumann regarding the uniqueness of the ISR
program. ISR also elicited testimony from David Dubois, one of defendants’
6
Emphasizing the difference between standard swimming programs and
the ISR program, Dr. Barnett points out that although the YMCA, American
Medical Association, and American Academy of Pediatrics (“AAP”) recommend
not teaching children to swim until they are four years of age, the ISR program
teaches infants as young as six months old how to survive in the water. (See 1 id.
at 64.)
-11-
experts, stating that he knows of no other aquatic program whose specific goal is to
certify instructors, in a five-week time frame, to teach infants and toddlers aquatic
survival skills. 7
In support of the third factor—the precautions taken by the holder of the
trade secret to guard the secrecy of the information—ISR presented Dr. Barnett’s
affidavit, franchise agreements, and license agreements. In his affidavit, Dr.
Barnett averred that “ISR has protected the confidentiality of all of the ISR
research and materials since the 1970’s by franchise agreements with
confidentiality restrictions and later by the restrictions of the license agreements.”
(4 id. at 1455.) As for the franchise agreements, they contained a “Confidentiality
of Information” provision providing that “[f]ranchisee shall not at any time or in
any way divulge, disclose, or communicate to any person or organization in any
manner whatsoever any information concerning any matters affecting or relating to
the business of Franchisor.” (3 Appellees’ Supp. App. at 1158.) Moreover, license
agreements, prior to 1996, contained a “Confidentiality of Information” provision
stating:
7
Dubois claimed that the only other program he was aware of that could
train instructors to teach infants with the same results as ISR was a program run
by Ginny Flahive. During her testimony, however, Flahive explained that in order
to become an instructor under her program, in contrast to the ISR program,
individuals must first spend one year teaching children age four and older.
-12-
LICENSEE shall not at any time or in any way divulge, disclose or
communicate to any person or organization in any manner whatsoever
any information concerning any matters affecting or relating to the
business of LICENSOR. . . . LICENSEE further agrees not to write for
publication any article concerning Infant Swimming Research teaching and
data techniques and theory, infant swimming or infant and young child
aquatic activities and drowning accidents and . . . not to train or endeavor to
train instructors or assistants in the same or similar methods or techniques
without SPECIFIC WRITTEN CONSENT FROM LICENSOR. . . . Upon
termination of this agreement, LICENSEE will surrender all documents
pertaining to LICENSOR’S business, technique, advertising and trade
secrets.
(1 Appellants’ App. at 61.) Beginning in 1996, the Confidentiality of Information
section provided that “Licensee acknowledges that the materials contain trade
secrets of Licensor and as such provide a competitive advantage.” (1 id. at 74.)
Based on our review of the evidence, we conclude that ISR has raised
genuine issues of material fact as to the contested factors. 8 ISR submitted evidence
that its program is unique in that it instructs individuals, in a five-week period, how
to teach aquatic-survival skills to infants as young as six-months old. ISR further
submitted evidence showing that, through franchise agreements and license
8
The first three factors are the focus of this appeal. Assuredly, however,
we are satisfied that ISR submitted sufficient evidence in support of the final
three factors as well. In support of the fourth factor—the value to the holder of
possessing trade-secret information—ISR cites the affidavits of Dr. Barnett, Dr.
Carr, and Dr. Werts, in which they attest to the competitive advantages of the ISR
program. Finally, as to the fifth and sixth factors—the amount of effort or money
expended in developing the trade-secret information and the amount of time and
expense it would take for others to duplicate the information—ISR produced
evidence that Dr. Barnett spent his entire adult life developing the ISR program
and evidence that no other infant swimming program compares.
-13-
agreements, it has taken precautions to guard the secrecy of its program. 9 Factual
issues remain in regard to whether the nuanced ISR program is distinguishable from
standard infant-swimming programs and whether ISR took reasonable precautions
to guard the secrecy of its alleged trade-secret program. Indulging all inferences in
favor of ISR, we hold that summary judgment is not appropriate on the question of
whether the ISR program, viewed comprehensively, is a trade secret.
B
We turn to the district court’s dismissal of the contract claims. 10 Each
defendant signed a “Nondisclosure and Confidentiality Agreement,” which required
9
Defendants’ arguments that ISR did not protect the confidentiality of the
ISR program until 1996 are not dispositive at this summary judgment stage.
Defendants first contend that Dr. Barnett conceded at the preliminary-injunction
hearing that ISR did not possess a trade secret until 1996 and that information
available to the public before 1996 is identical to information after 1996. We
have reviewed the record and are not persuaded that Dr. Barnett has conceded the
case. At a minimum, there is conflicting evidence on this question. Defendants
also ask us to consider the fact that the franchise agreements did not expressly
mention trade secrets and that the license agreements did not expressly refer to
the ISR program as a trade secret until 1996. A rational jury could consider the
franchise agreements, as well as the license agreements, in determining whether
ISR took reasonable precautions to guard the secrecy of the ISR program. In any
event, the question of whether the ISR program became a protectable trade secret
after 1996 is for the trier of fact.
10
The district court also dismissed ISR’s unjust-enrichment claim because,
among other reasons, ISR failed to state that claim in the Pre-Trial Order. As
noted by the district court, claims in the Pre-Trial Order supercede claims in the
complaint. See Fed. R. Civ. P. 16(e). Because ISR did not properly raise its
claim below, we will not engage in this “highly fact-intensive” inquiry here.
Dudding v. Norton Frickey & Assocs., 11 P.3d 441, 445 (Colo. 2000) (en banc).
-14-
them to hold ISR’s confidential information in secrecy and use it solely for the
purposes contemplated in the parties’ license agreements. As discussed above, the
license agreements contain (1) a covenant not to compete and (2) a confidentiality
provision.
1. Covenant Not to Compete
The covenant not to compete provides that:
Licensee shall not, during the terms of this Agreement and for 2 (two) years
immediately following the termination of this Agreement, regardless of who
initiates the termination, engage directly or indirectly in the teaching of
infants or young children to swim or engage in the business or training other
individuals for the purpose of teaching infants or young children to swim,
other than pursuant to the terms of this Agreement. . . . This Covenant Not to
Compete shall be effective within a five hundred (500) mile radius from the
present site of the business address of Licensee. This Covenant applies to
self-employment or employment on behalf of any other person, firm,
corporation, partnership or other business organization.
(1 Appellants’ App. at 61–62.) Under Colorado law, covenants not to compete are
void, save under limited circumstances. Colo. Rev. Stat. § 8-2-113(2). One
exception protects “[a]ny contract for the protection of trade secrets.” Id. § 8-2-
113(2)(b). “For a covenant not to compete to fit within the trade secret exception
to § 8-2-113(2), the purpose of the covenant must be the protection of trade secrets,
and the covenant must be reasonably limited in scope to the protection of those
trade secrets.” Gold Messenger, Inc. v. McGuay, 937 P.2d 907, 910 (Colo. Ct.
App. 1997). Having concluded that the ISR program was not a trade secret as a
matter of law, the district court determined that the covenant not to compete was
-15-
necessarily void under Colorado law. This being the primary basis of the district
court’s rationale, and given our conclusion that genuine issues of material fact
remain on ISR’s trade-secrets claim, it follows that this breach-of-contract claim
must go forward as well. 11
2. Confidentiality provision
Contained in the license agreements signed by defendants after 1996, the
confidentiality provision provides:
The research and printed materials provided by Dr. Harvey Barnett, Harvey
Barnett, Inc. and Infant Swimming Research, Inc., which pertain to the
education of infants and children in aquatic survival and swimming
techniques, are unique intellectual properties entitled to protection as such at
law. Licensee shall not at any time or in any way during the term of
this Agreement or after its termination, divulge, disclose or
communicate to any person or organization in any manner whatsoever
any information concerning any matters affecting or relating to the
business and trade secrets of Licensor. . . . Licensee agrees not to train or
not to endeavor to train instructors or assistants in the same or similar
methods without SPECIFIC WRITTEN CONSENT FROM
LICENSOR. . . . Licensee acknowledges that the materials contain trade
secrets of Licensor and as such provide a competitive advantage. ANY
BREACH OF THE TERMS OF THIS PARAGRAPH SHALL BE A
MATERIAL BREACH OF THIS AGREEMENT AND SHALL RESULT IN
IMMEDIATE REVOCATION OF THE LICENSE AND TERMINATION OF
THIS AGREEMENT. . . . Licensee will not disclose to another person any of
the methods, techniques, trade secrets or systems used by Licensor in
business. Further, at any time following termination of this Agreement, use
11
Defendants argue that the covenants not to compete are unreasonable as
to the scope of conduct the covenants purport to prohibit. Because the district
court did not address this argument, we decline to do so for the first time on
appeal and remand for that purpose. See R. Eric Peterson Constr. Co. v. Quintek,
Inc., 951 F.2d 1175, 1182 (10th Cir. 1991).
-16-
of Licensor’s trade secrets, under any other name or organization constitutes
unfair competition due to the distinctive results of Licensor’s techniques.
Terms of this and all paragraphs are permanent.
(1 Appellants’ App. at 74.) In dismissing ISR’s claim relating to this provision, the
district court concluded that, even if this provision created an enforceable duty on
defendants not to disclose confidential information not rising to the level of a trade
secret, the provision was a disguised restrictive covenant that was unenforceable as
vague and overly broad.
In Mai Basic Four, Inc. v. Basis, Inc., 880 F.2d 286 (10th Cir. 1989), we held
that the confidentiality and non-disclosure agreements at issue could not be
characterized as restrictive covenants because they “serve entirely different
purposes than do agreements not to compete and must be analyzed on the basis of
those distinct purposes alone.” 12 Id. at 288. We noted that the Mai Basic
defendants remained “free to work for whomever they wish, wherever they wish,
and at whatever they wish, subject only to the prohibition against misusing
plaintiff’s proprietary information and the requirement that defendants assign to
plaintiff any work product relating to plaintiff’s business that was developed by
defendants while they were employed by plaintiff or shortly thereafter.” Id.
12
Although Mai Basic involved a contract dispute in New Mexico, its
rationale is equally applicable here.
-17-
Defendants distinguish Mai Basic on the ground that the present
confidentiality provision prevents licensees from divulging “any information
concerning any matters affecting or relating to the business and trade secrets of
Licensor,” thus preventing competition regardless of whether it involves the use of
trade-secret information. (Appellees’ Br. at 25.) We disagree with the defendants’
proposed distinction. As in Mai Basic, the pertinent provision preserves “the
valuable confidential information plaintiff necessarily had to disclose to the
individual defendants during the course of their employment.” 800 F.2d at 288.
This provision is different from a blanket covenant not to compete in that it does
not purport to prevent defendants from teaching swimming to infants using widely
known techniques. As indicated by its title, the purpose of the confidentiality
provision is to prevent defendants from divulging confidential information; it
prevents defendants from teaching infants utilizing the allegedly confidential
techniques possessed by ISR.
We conclude the district court erred in determining that the confidentiality
provision is a disguised restrictive covenant. Thus, we reverse the district court’s
decision on this breach-of-contract claim as well. On remand, the trier of fact
should consider whether the ISR program contained confidential information
-18-
protected under this provision. 13 See Mulei v. Jet Courier Serv., Inc., 739 P.2d 889,
892 (Colo. Ct. App. 1987) (noting that “confidential information acquired during
the course of employment may be protected” and “[t]he determination of what
constitutes confidential information is a question for the trier of fact” (quotation
omitted)), rev’d on other grounds, 771 P.2d 486 (Colo. 1989) (en banc).
C
ISR’s remaining claims address misleading trade practices in violation of the
Lanham Act, 15 U.S.C. § 1125, 14 as well as unfair competition and deceptive trade
practices in violation of the CCPA, Colo. Rev. Stat. § 6-1-105. 15 These claims are
13
We note that the license agreements contain a severability clause. In
granting summary judgment in favor of the defendants, the district court did not
address the question of severability. Should the district court ultimately conclude
that certain provisions of the license agreements are unenforceable, severability is
an option.
14
Pursuant to the Lanham Act, 15 U.S.C. § 1125(a)(1)(A),
Any person who, on, or in connection with any goods or services . . .
uses in commerce any word, term, name, symbol, or device, or any
combination thereof, or any false designation of origin, false or
misleading description of fact, or false or misleading representation
of fact, which—is likely to cause confusion, or to cause mistake, or
to deceive as to the affiliation, connection, or association of such
person with another person, or as to the origin, sponsorship, or
approval of his or her goods, services, or commercial activities by
another person, . . . shall be liable in a civil action by any person who
believes that he or she is or is likely to be damaged by such act.
15
Pursuant to the CCPA,
(1) A person engages in a deceptive trade practice when, in the
(continued...)
-19-
predicated on the defendants’ allegedly false and misleading advertisements to the
public. In dismissing these claims, the district court found that summary judgment
was appropriate because there was (1) no evidence of any resulting confusion or
mistake and (2) no evidence of damages. See Cottrell, Ltd. v. Biotrol Int’l, Inc.,
191 F.3d 1248, 1252 (10th Cir. 1999) (elements of the Lanham Act); Hall v.
Walter, 969 P.2d 224 (Colo. 1998) (en banc) (elements of the CCPA).
ISR’s disagreement with the district court’s decision that ISR failed to
advance evidence of likelihood of confusion is based entirely on a quote from our
decision in Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d 934, 941 (10th Cir.
1983) (quotation omitted): “Intent on the part of the alleged infringer to pass off
its goods as the product of another raises an inference of a likelihood of
confusion.” ISR is correct that a party need not set forth evidence of actual
confusion in order to prevail in a trademark-infringement action. See id. In
(...continued)
15
course of such person’s business, vocation, or occupation, such
person:
(a) Knowingly passes off goods, services, or property as
those of another;
(b) Knowingly makes a false representation as to the source,
sponsorship, approval, or certification of goods,
services, or property;
(c) Knowingly makes a false representation as to affiliation,
connection, or association with or certification by
another . . .
Colo. Rev. Stat. § 6-1-105.
-20-
devoting merely a single sentence in its opening brief to this issue, only to quote
Beer Nuts, however, ISR has failed to advance evidence on whether there was so
much as a likelihood of confusion resulting from the defendants’ false
representations—a showing necessary to prevail on its Lanham Act misleading-
trade-practices claim. 16
As for injury—a further required element under the Lanham Act as well as
the CCPA—ISR fails on two counts: it does not develop its argument and it
advances no evidence whatsoever of loss of business or loss of profits. It merely
makes an argument about the appropriate measure of damages. 17 In the absence of
an adequately developed argument, and in the absence of any evidence of injury,
we must affirm the district court. “Conclusory allegations that are unsubstantiated
do not create an issue of fact and are insufficient to oppose summary judgment.”
Elsken v. Network Multi-Family Sec. Corp. , 49 F.3d 1470, 1476 (10th Cir. 1995).
We conclude that ISR has failed to show a genuine issue for trial as to whether it
suffered an injury in fact as a result of the defendants’ misleading advertisements.
16
We have held that de minimus evidence of actual confusion does not
establish the existence of a genuine issue of material fact regarding the likelihood
of confusion in a trademark-infringement claim. See King of the Mountain
Sports, Inc. v. Chrylser Corp., 185 F.3d 1084, 1092 (10th Cir. 1999).
17
In support of its position, ISR contends that the parties agreed to
liquidated damages. That the parties agreed to liquidated damages in the event of
a breach of the license agreement does not create a genuine issue of material fact
for trial as to whether the defendants, through their misleading advertisements,
caused the requisite injury under the Lanham Act and CCPA.
-21-
See, e.g., Hall, 969 P.2d at 235 (holding that a CCPA plaintiff “must be able to
show that the defendant’s actions in violation of the CCPA caused the plaintiff’s
injury” (emphasis added)). We affirm the district court on these remaining
claims. 18
III
In sum, we REVERSE the district court’s decision granting summary
judgment in favor of defendants on ISR’s claim of misappropriation of trade
secrets, and on its claim of breach of contract, and we REMAND for further
proceedings consistent with this opinion. 19 We AFFIRM the district court’s
decision in all other respects.
18
In its complaint, ISR also alleged trademark infringement in violation of
15 U.S.C. § 1114(1)(a). ISR’s trademark infringement claim is based on the
defendants’ use of the phrase “Infant Aquatic Survival” as the name of its
program. In dismissing this claim, the district court found that defendants’ use of
the phrase “Infant Aquatic Survival” was merely descriptive and used in good
faith to describe its services, which is a defense under the relevant statute. See 15
U.S.C. § 1115(b)(4) (listing as a defense to a charge of trademark infringement
that the “use of the name, term, or device charged to be an infringement is a use,
otherwise than as a mark, . . . of a term or device which is descriptive of and used
fairly and in good faith only to describe the goods or services of such party”).
ISR has not challenged this decision by the district court on appeal and thus we
affirm on this ground the district court’s ruling.
We do so notwithstanding appellants’ counsel’s failure to meet basic
19
standards relating to the record on appeal. Appellants inexcusably failed to
include in the record, among other things, the complaint and defendants’ motion
for summary judgment. See 10th Cir. R. 10.3(C). In many instances, appellants’
record-designation deficiencies were bailed out by the appellees themselves.
-22-