United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT April 17, 2007
Charles R. Fulbruge III
Clerk
Nos. 05-10934, 05-11442
TRIPLE TEE GOLF, INC., a Florida Corporation,
Plaintiff-Appellant,
versus
NIKE, INC., an Oregon Corporation, TOM STITES &
ASSOCIATES, INC., doing business as Impact Golf
Technologies, Inc., JOHN THOMAS STITES, III, also
known as Tom Stites,
Defendants-Appellees.
--------------------
Appeals from the United States District Court
for the Northern District of Texas
--------------------
Before JONES, Chief Judge, WIENER and BARKSDALE, Circuit Judges.
WIENER, Circuit Judge.
Plaintiff-Appellant, Triple Tee Golf, Inc. (“TTG”) sued
Defendants-Appellees (“Defendants”), Nike, Inc. (“Nike”) and Tom
Stites & Associates, Inc. d/b/a Impact Golf Technologies (“IGT”)
for misappropriation of trade secrets, negligent misrepresentation,
breach of confidentiality, breach of implied contract, and
deceptive trade practices. During discovery, the district court
limited TTG’s proofs on all of its claims to evidence related to
the use of TTG’s trade secrets in two specific Nike golf clubs, the
CPR Woods and the Slingshot irons (collectively, the “accused
clubs”). After discovery was completed, Defendants moved for
summary judgment, contending that (1) TTG’s trade secrets describe
a system for weighting golf clubs that is adjustable by the user of
the clubs, and (2) the accused Nike clubs are not “adjustable” at
all. The district court, having determined that all of TTG’s
claims turned on the unlawful use of trade secrets, granted
Defendants’ motion and dismissed TTG’s suit in its entirety.
After the judgment was entered, TTG became aware of two patent
applications previously filed by Nike, describing golf clubs that
are adjustable by the user of the clubs. Based on Defendants’
failure to disclose these patent applications in response to TTG’s
discovery requests, TTG moved for relief from the earlier judgment.
The district court denied this motion, stating that the patent
applications were not relevant to the legal issues that it had
decided. TTG now appeals the district court’s limiting evidentiary
order, grant of summary judgment, and denial of post-judgment
relief.
I. FACTS & PROCEEDINGS
A. Background
TTG was founded by Jack Gillig to produce and market the golf
clubs that he designed. In September 2000, Gillig contacted Tom
Stites, a golf club designer and the founder of IGT, to inquire
whether IGT would fabricate a prototype golf club for TTG based on
one of Gillig’s designs. Gillig and Stites met and discussed
Gillig’s ideas for club design. Gillig showed rough prototypes and
2
sketches to Stites, who made photocopies of Gillig’s written
materials. After reviewing these materials, Stites agreed that IGT
would fabricate a prototype club for TTG.
Shortly after this meeting, however, Stites was hired by Nike
Golf (“Nike”) as its Director of Product Creation. Stites informed
Gillig that, because of Stites’s new association with Nike, IGT
would not be able to make the promised prototype golf club for TTG.
In 2002, TTG submitted its design concepts directly to Nike, but
Nike returned TTG’s submission, indicating that it was not
interested in developing those concepts.
While attending a golf industry trade show in February 2003,
Gillig noticed that Nike’s CPR Woods bore certain similarities to
one of the club designs that he had shown to Stites. Gillig
immediately suspected that Stites and Nike had used TTG’s designs
to develop the CPR Woods, and he later suspected that other of his
designs had been used in Nike’s Slingshot Irons and OZ T-100
putter.
TTG sued Nike and Stites in January 2004, asserting claims for
(1) misappropriation of trade secrets, (2) breach of
confidentiality, (3) breach of implied contract, (4) negligent
misrepresentation, and (5) deceptive trade practices.1
1
TTG filed its original complaint in the Southern District
of Florida, and venue was transferred to the Northern District of
Texas. TTG amended its complaint three times, and its Third
Amended Complaint, filed on May 19, 2005, is the operative
pleading.
3
B. Issues Narrowed During Discovery
TTG’s complaint does not specify its trade secrets in detail,
instead referring generally to “ideas” and “concepts” for a “novel
system of golf clubs and golfing equipment.” During discovery,
Defendants propounded interrogatories to TTG seeking (1) precise
descriptions of TTG’s alleged “trade secrets” (Interrogatory No.
1), and (2) a list of Nike clubs that TTG believed were developed
using those trade secrets (Interrogatory No. 5). TTG’s initial
response to Interrogatory No. 1 did not provide detailed
descriptions of the alleged trade secrets, but an April 2005
supplemental response identified seven specific trade secrets:
(a) The first trade secret of the Plaintiff was for
an adjustable weighting system in a "hollow back" club,
so the distribution of weight in the golf club head could
be changed to obtain a desired flight path and distance
of a golf ball. The Plaintiff contemplated this could be
accomplished through one of three methods: (1) use of an
existing sole plate, with a distinct weight distribution,
and fixed by Allen screws or other means, could be
removed or replaced by a new sole plate with a different
weight distribution,(2) insertion of additional weight
into the hollow of the club, or the sole, to obtain a
different weight distribution, and (3) use of weighted
metal bands, with a distinct weight distribution,
spanning across the hollow, but inside the outside
boundary of the club head, fixed by Allen screws or other
means, that could be removed or replaced by a metal band
with a different weight distribution.
(b) The second "trade secret" is that a peripheral
band could be placed around the perimeter of the hollow
to secure in place either inserted weights, as set forth
in number (2) above, or the metal bands, in number (3),
as set forth above.
(c) The third "trade secret" is a twenty-seven (27)
point weighting system on a three dimensional x, y, and
4
z coordinate system within the space of the "hollow back"
golf club head, and secured with one of the methods set
forth above. There would be three weight boxes along the
front of the face, from left to right along the y axis,
three weight boxes from the bottom of the club head to
the top of the club head along the z axis, and three
weight [boxes] from the front of the club head to the
rear of the club head along an x axis, to create one or
more of twenty-seven (27) weighted coordinates in the
three-dimensional space of the "hollow back" club. The
adjustable weights, as set forth above, would be changed
in the twenty-seven (27) point weighting system to obtain
different weight distributions in the club head, to alter
the flight of the golf ball when struck to the
accommodate the desires and needs of the golfer. At all
times, the weights and weighting system would stay within
the perimeter of the club, as delineated by the
peripheral bands, to comply with all rules and
regulations of golfing.
(d) The fourth "trade secret" is a system to analyze
the swing of a golfer to determine any defect thereof,
and whether the optimal striking point ("sweet spot") on
the face of the golf club should be adjusted by utilizing
the twenty-seven (27) point weighting system to produce
the distance and flight path of the golf ball desired by
the golfer. The golfer's swing would be captured by
video, and then processed through a computer program, to
be written and developed by qualified programmers, to
analyze the golf swing, and determine the placement of
the twenty-seven (27) point weighting system to correct
the swing, or to produce a desired flight path or
distance of the golf ball, by positioning of the optimal
striking point ("sweet spot") on the face of the golf
club.
(e) The fifth "trade secret" is a naming or
designation system for golf clubs. Instead of designation
of a "1 Wood" or a "4 Iron" or a "Pitching Wedge" or a
"Putter," the golf clubs would be named or designated
through lofts and description of the purpose for the
club. For instance, a club may be designated as a "22º
Driver," or a "26º Fairway Iron," etc.
(f) The sixth "trade secret" builds upon the concept
described in the fifth "trade secret." The sixth "trade
secret" is to move away from a standardized set of golf
clubs with a set number of woods/drivers, a set number of
irons, a set number of wedges, and a putter, with a
5
uniform weight distribution throughout the set of clubs.
The new set of golf clubs would be assembled using
non-uniform/different weight distributions, as set forth
above, to achieve different flight paths, distances, and
purposes. The twenty-seven (27) point weighting system
would be combined with different lofts to enable the
golfer to choose specific clubs for specific needs and
desires for his game. The golfer could choose as many, or
as little a number, clubs as he wanted to complete a set
of golf clubs. All of the golf clubs would be branded the
same, and designated or named using the naming system set
forth above. The lofts that are available to the golfer
would be in 2º increments. This will, by its very nature,
create golf clubs with non-standard loft. One example of
this type of club, that was envisioned by the Plaintiff,
was a 22º Driver.
(g) The seventh "trade secret" is the way in which
all of the foregoing ideas would be marketed toward the
general public as one coherent system. The first target
consumer would be children and junior golfers, because
there were no major golf club manufacturers who directed
sets of clubs toward junior golfers. The junior golfer
would be provided a set of clubs with just the basic
"hollow back" golf club head. Instead of a set of golf
clubs with a large number of clubs to understand, the
basic junior set would contain only a few clubs, for
designated purposes, with different lofts, as set forth
above.
The next target consumer would be the parents of the
junior golfer, who are a combination of beginning, high
handicap, or low handicap golfers. This "trade secret"
contemplates that the parents of the junior golfers
observe their children experiencing success with the
system of golf clubs and will want to use a comparable
system themselves to accomplish a better game of golf.
The golf clubs would then be offered to women
players, high handicap players, and low handicap players
using all of the previous "trade secrets" set forth
above. Ultimately, the system of golf clubs, using all of
the trade secrets set forth above will be tailored to
very low handicap/scratch golf players, and for tour
players. The system of golf clubs would be marketed to
these categories of players by emphasizing that each club
can be altered, prior to the start of a round of golf, to
accommodate the conditions, course, hazards, and
6
mechanics of the swing of the golfer, on any particular
day.
TTG’s April 2005 supplemental response also addressed
Defendant’s Interrogatory No. 5, which sought a definitive list of
the Nike products that TTG believed incorporated its trade secrets.
TTG identified Nike’s CPR Woods and Slingshot Irons as the only
clubs relevant to its trade secrets claims, but also indicated that
“certain other Nike golf clubs may be implemented by the use of
Plaintiff’s confidential information and club designs.”
Unsatisfied with that response, Defendants filed a motion to
compel TTG to provide a full and complete response to Interrogatory
No. 5. The district court granted that motion, and TTG complied,
again including, however, its contention that “certain other Nike
golf clubs may be implemented by the use of Plaintiff’s
confidential information and club designs.” Defendants then moved
the district court to enforce its earlier order by limiting TTG’s
trade secrets count and its proofs on that issue to Nike’s CPR
Woods and the Slingshot Irons. The district court granted
Defendants’ motion.
Nevertheless, TTG continued to assert that “confidential
information” was at issue in its non-trade secrets claims. TTG
apparently believed that the court’s earlier orders addressed only
the trade secrets claims. In response, Defendants asked the
district court to clarify its earlier order and confirm that there
was no category of proprietary information at issue in the case
7
other than the alleged trade secrets. The district court granted
this motion and ordered that TTG “not seek to offer at trial any
proof of misuse by any defendant of any information pertaining to
any product” other than the accused clubs.
C. Summary Judgment
Having thus succeeded in narrowing the issue for trial to
whether Defendants had used TTG’s trade secrets to produce Nike’s
accused clubs, Defendants filed a motion for summary judgment on
all of TTG’s claims. The district court granted Defendants’
motion, ruling that (1) all trade secrets asserted by TTG related
to a system of weighting that was “adjustable” by the user of the
club, and (2) neither of the accused clubs are “adjustable” post-
manufacture. This order applied specifically to the first, second,
third, sixth and seventh trade secrets. The court granted summary
judgment on the fourth trade secret because it does not involve
golf clubs, and TTG had already dismissed with prejudice its claim
based on the fifth trade secret. The court also stated that its
dismissal of the trade secrets claims was “dispositive of [TTG’s]
remaining claims because all of them are predicated on a
determination that . . . Nike [] used the trade secrets in its
manufacture and sale of golf clubs.”
D. TTG’s Motion for Relief from Judgment
After the district court granted summary judgment, TTG
uncovered two Nike patent applications for golf clubs that are
8
adjustable post-manufacture.2 Both patents listed Tom Stites as
the inventor and Nike as the assignee, and both were filed with the
U.S. Patent Office in 2003, well before TTG propounded the
following discovery requests to Defendants in October 2004:
Interrogatory No.9
Set forth all United States patents, patent
applications and other publications which NIKE deems
supportive of it’s [sic] contention that any of the
Defendants independently created or developed the clubs
at issue and which are applicable to any golf club
product or system which NIKE is now marketing or intends
to market within the next three years.3
- - - - - - - -
Request No. 67
All golf-related U.S. patents, U.S. pending
applications for patent, all golf-related publications,
and all industry presentations of the following NIKE-
related individual: Tom Stites.4
In response to Interrogatory No. 9, Defendants provided only
patents and patent application publications described in the first
part of the request, i.e., those that “may support Defendants’
contention that Defendants independently developed the clubs at
issue.” Defendants identified no publications “applicable to any
2
Patent Application US 2005/0009625 describes a wood golf
club head with a weight that is “independently movable,” and
Patent Application 2005/0137024 describes a modification of
Nike’s Slingshot Irons that includes a weight that is
“independently movable in multiple directions.”
3
Emphasis added.
4
Emphasis added.
9
golf club product or system which NIKE is now marketing or intends
to market within the next three years.”
In response to Request for Production No. 67, Defendants
stated that “NIKE [] objects to the production of pending,
unpublished patent applications” and “further objects to producing
any documents that are public information equally available to
Plaintiff or its counsel.”5 Defendants concede that they provided
no patent applications to TTG in response to Request No. 67. TTG
did not move to compel either a more complete response to
Interrogatory No. 9, or production of patent applications in
response to Request No. 67. The patent applications at issue were
published by the Patent Office on January 13, 2005 and June 23,
2005. The discovery deadline in this case was June 14, 2005; the
pre-trial conference was set for July 5, 2005; and trial was set
for August 8, 2005.
When it discovered the two patent applications post-summary
judgment, TTG filed a Motion for Relief from Final Judgment and for
Sanctions, asserting that Defendants improperly withheld the patent
applications from discovery. The district court agreed with TTG
that Defendants “should have disclosed in their discovery responses
. . . the existence of the two patent applications,” but denied
TTG’s motion, conclusionally stating that those applications “[had]
5
Patent applications are available through the Patent
Office website, and the record makes clear that TTG and its
attorneys were familiar with this process.
10
nothing to do with the issues presented to the court for decision.”
The court speculated that “the applications might form the basis
for another action by plaintiff against defendants,” but ultimately
declared, again conclusionally, that they “were not relevant to the
legal issues the court resolved . . . in this case.”
II. ANALYSIS
A. Summary Judgment
1. Standard of Review
We review a grant of summary judgment de novo, applying the
same standards as the district court.6 Summary judgment is
appropriate when the pleadings, affidavits, and other summary
judgment evidence show that no genuine issue of material fact
exists and the moving party is entitled to judgment as a matter of
law.7 The movant bears the burden of identifying those portions
of the record it believes demonstrate the absence of a genuine
issue of material fact.8 The burden then shifts to the nonmovant
to show the existence of a genuine fact issue for trial; however,
the nonmovant may not rest upon allegations in the pleadings to
6
Baker v. Am. Airlines, 430 F.3d 750, 753 (5th Cir. 2005).
7
Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986).
8
Celotex, 477 U.S. at 322-25.
11
make such a showing.9 All evidence must be viewed in the light
most favorable to the nonmovant.10
2. TTG’s Trade Secrets Claims
a. Generally Applicable Trade Secret Law
In this diversity action, we apply Texas substantive law.11
In Texas, a “trade secret” is defined as a “formula, pattern,
device or compilation of information used in a business, which
gives the owner an opportunity to obtain an advantage over his
competitors who do not know or use it.”12 To succeed in its
misappropriation of trade secrets claims, TTG must show that (1) a
trade secret exists; (2) Defendants acquired the trade secret by
breach of a confidential relationship or other improper means; and
(3) Defendants used the trade secret without authorization.13
b. The District Court’s Summary Judgment Reasoning
The district court granted summary judgment, dismissing TTG’s
trade secrets claims based solely on the court’s conclusion that
9
Id. at 321-25; Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255-57 (1986).
10
United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
11
Erie R. Co. v. Tompkins, 304 U.S. 64, 78-80 (1938). The
parties raise no choice-of-law issues and each cites Texas law
(or Fifth Circuit cases interpreting Texas law) as the
controlling substantive law in this case.
12
Taco Cabana Intern. v. Two Pesos, Inc., 932 F.2d 1113,
1123 (5th Cir. 1991) (citing Hyde Corp. v. Huffines, 314 S.W.2d
763, 776 (Tex. 1958)).
13
Guy Carpenter & Co. v. Provenzale, 334 F.3d 459, 467 (5th
Cir. 2003) (applying Texas common law).
12
TTG could not prove the third factor in the aforementioned test.
Its reasoning was straightforward: (1) All of TTG’s trade secrets
relate to a golf club weighting system that is “adjustable by the
user of the club”; (2) the accused clubs are in no way “adjustable
by the user of the club”14; (3) there is, therefore, no summary
judgment evidence to indicate that Defendants “used” TTG’s alleged
trade secrets; and consequently, (4) TTG will not be able to prove
an essential element of its trade secrets claims; so (5) summary
judgment for Defendants on those claims is appropriate. The court
also concluded that dismissal of TTG’s trade secrets claims
disposed of its remaining claims as well, as all of them depended
on a determination that Nike used TTG’s trade secrets.
c. “Adjustability”
The district court grounded its decision primarily in its
finding that all of TTG’s trade secrets rely in some way on an
“adjustable” weighting system. TTG does not dispute that
conclusion generally, but instead argues that the district court
improperly narrowed the definition of “adjustable” to “adjustable
by the user of the clubs.” In doing so, TTG urges, the district
court ignored the deposition testimony of Gillig as the developer
of TTG’s alleged trade secrets, indicating that those trade secrets
14
None dispute that the heads of the accused Nike clubs,
the CPR Woods and Slingshot Irons, are cast as one piece of metal
that cannot be changed post-manufacture, except through
extraordinary means.
13
contemplate two kinds adjustability: (1) adjustability post-
manufacture, and (2) adjustability “at the factory.”
The district court’s reading of “adjustable,” in the context
of TTG’s chosen definition of its trade secrets, more closely
conforms with common usage. For example, TTG defined its first
trade secret as an “adjustable weighting system in a ‘hollow back’
club, so the distribution of weight in the golf club could be
changed.” The definition goes on to specify that “the Plaintiff
contemplated [that changes] could be accomplished through one of
three methods,” namely: (1) “use of an existing sole plate . . .
[that] could be removed or replaced by a new sole plate,” (2)
“insertion of additional weight into the hollow of the club, or the
sole,” or (3) use of weighted metal bands . . . fixed by Allen
screws or other means, that could be removed or replaced.”15 None
disputes that this definition contemplates a club designed and
constructed in such a way that its weight distribution can be
altered post-manufacture.
TTG contends, however, that its concept also covers
adjustability “at the factory,” i.e., the ability of the club
manufacturer to vary the weight distribution of a club permanently,
before completion. Presumably, TTG’s definition of adjustability
“at the factory” might include either (1) the ability to produce
made-to-order clubs built to a particular customer’s
15
Emphasis added.
14
specifications, or (2) the ability to adjust the weight
distribution of individual variations of one kind of club (e.g., a
3-iron) to achieve particular results (e.g., higher or lower ball-
flight trajectory). TTG does not contend that either of the
accused Nike clubs are made-to-order.16 We presume, then, that TTG
uses “adjustable at the factory” to mean a weight-distribution
system that can be varied during the course of manufacture so that
each kind of club (e.g., a 3-iron) can be produced in a variety of
weight-distribution models, each variation of the same club
produced to achieve a different result.
Defendants first point out that the accused clubs are
produced according to only one weight-distribution model, such that
the head of each kind of club (e.g., 3-iron) is identical in every
set of clubs produced.17 Defendants also contend that, using TTG’s
definition, all golf clubs would have to be considered “adjustable
at the factory,” as each kind of club within a given set of clubs
is necessarily constructed according to a weight-distribution model
that (1) is designed to produce a particular result, and (2) can be
altered pre-manufacture (or “at the factory”) to produce a
different result. As such, Defendants contend, “adjustability at
16
Defendants also point to deposition testimony from TTG’s
marketing expert indicating that made-to-order clubs would not be
considered “adjustable.”
17
Other specifications, such as the flexibility or the
length of the clubs’ shaft, are customizable in the Nike clubs,
as in any clubs.
15
the factory” describes nothing more than any club manufacturer’s
capability to adjust its club-weighting design to achieve a
different result before actually fabricating a particular kind of
club.
Accordingly, if we were to read “adjustable” to include
“adjustable at the factory,” as that phrase is characterized by
TTG, we would be forced not only to disregard the common,
conversational meaning of “adjustable,” but also to overlook
numerous references in TTG’s trade secrets definitions to the
ability to “change,” “remove,” “replace,” or “insert” weighting
elements. These actions simply cannot be equated with a club
maker’s decision —— inherent in any golf club design —— as to how
permanently to distribute weight in any given club within a given
set of clubs. We construe TTG’s trade secrets, therefore, as did
the district court, to contemplate a weighting system “adjustable
by the user of the club.”
Unlike the district court, however, we do not end our summary
judgment analysis here, but go on to more closely examine whether
the lack of “adjustability” in the accused clubs, as contemplated
by TTG’s description of its trade secrets, necessarily eliminates
any “genuine issue of material fact” as to TTG’s trade secrets
claims.
TTG’s “adjustable at the factory” argument, although
admittedly unpersuasive as made, is at least suggestive of the more
basic proposition that Defendants might have misappropriated TTG’s
16
proprietary design even though they chose not to make the clubs
adjustable post-manufacture. In other words, even though TTG’s
trade secrets describe a club-weighting system that is adjustable
post-manufacture, Defendants could not lawfully appropriate the
proprietary design elements of that system into a permanently
weighted club any more than they could copy it directly. We now
consider whether a material fact issue remains in TTG’s trade
secrets claims based on the design elements of TTG’s weighting
system, as described in TTG’s trade secrets definitions, despite
the fact that the accused clubs are not adjustable post-
manufacture.
It is undeniable that TTG’s trade secret descriptions
contemplated an “adjustable” weighting system. It is equally
undeniable, though, that those descriptions also comprised specific
concepts for implementing that adjustability. In TTG’s final
response to Defendants’ Interrogatory No. 5, which asked for
particular descriptions of all Nike products in which TTG’s trade
secrets are used, TTG detailed its allegations regarding which of
those implementation concepts Defendants used and how they used
them. These allegations are corroborated by the report of TTG’s
expert, Douglas Winfield. This report states Mr. Winfield’s
unequivocal belief that Defendants would not have been able to
produce the accused clubs (adjustable or not) without employing
particular elements of TTG’s design as specified in its trade
secrets.
17
The Winfield report identifies several such design elements
that Defendants arguably learned from TTG, none of which rely on
actual post-manufacture adjustability. For example, regarding the
Slingshot Irons, the Winfield report states that,
“Nike used the trade secret18 and/or confidential
information of Gillig/Triple Tee to solve the problem of
how to move the weight bar far enough from the back of
the club face to achieve more of an effect on a flight
path and how to keep the weight bar on the back of a
cavity back iron within the ‘Rules of Golf.’”
His report also states the opinion that,
While Stites had prototypes and other “iron” heads with
weight bars within a “hollow back” or “cavity back,” none
of them achieved as substantial of a displacement of the
CG [center of gravity] away from the club face [as did
TTG’s prototypes]. It is my opinion, that Stites did not
learn this design technique until he met with Gillig in
September 2000.
With respect to the CPR Wood, Winfield states that “[b]ased on my
review of prototypes and golf clubs produced by Defendants, it is
my opinion that Stites did not possess the design technique and
geometry incorporated in the ‘CPR Wood’ product prior to meeting
with Gillig.” Winfield’s report goes on to detail the reasons for
his opinion, his methodology, and the state of the art of golf club
design as it relates to the TTG club designs.
In reviewing a summary judgment, our task is to decide, inter
alia, whether the district court properly considered all of the
summary judgment evidence in reaching its decision. In this case,
18
Winfield’s report makes clear that any reference to TTG’s
“trade secret” therein is based on the same trade secrets
descriptions that TTG submitted to the district court.
18
we conclude that, even though TTG chose to describe its trade
secrets largely in terms of the “adjustability” of the weight-
distribution system, it nevertheless presented enough evidence,
particularly Winfield’s expert report, to create a material fact
issue whether Defendants misappropriated other fundamental elements
of those trade secrets. We reach this conclusion for several
reasons.
First, even though TTG’s trade secrets, as described,
contemplate a weight-distribution system that is adjustable post-
manufacture, this “adjustability” is but one of several design
elements of that system. “Adjustability” is merely an abstract
concept that must be implemented in some very real way. We must
treat the particular way that TTG envisioned implementing that
concept as at least as important to TTG’s trade secret definition
as the concept itself. Second, if TTG could prove that Defendants
used fundamental elements of TTG’s design to produce a permanently
weighted club, TTG would have a viable trade secrets claim. Third,
TTG did produce enough summary judgment evidence, particularly the
report of its expert, to meet the “genuine issue of material fact”
standard as to whether Defendants used any elements of TTG’s
design. Finally, given the complex and technical nature of the
claims at issue, the district court should have resisted basing
summary judgment on but a single element of TTG’s alleged trade
secrets, and instead should have allowed all the evidence to be
presented to a jury, which then could have weighed the
19
“adjustability” factor, among all others, in its final analysis.
Accordingly, we reverse the district court’s grant of summary
judgment on TTG’s trade secrets claims and remand them for further
proceedings not inconsistent with this opinion.19
2. TTG’s Remaining Claims
The district court also granted summary judgment for
Defendants on TTG’s claims for breach of confidentiality, breach of
implied contract, negligent misrepresentation, deceptive trade
practices, and accounting. The entirety of its reasoning on this
issue is contained in the following, single paragraph.
Plaintiff’s Other Claims
The disposition adverse to plaintiff on his
contention that defendants misappropriated his alleged
trade secrets is dispositive of his remaining claims
because all of them are predicated on a determination
that Gillig disclosed trade secrets to Stites, that
Stites transferred the trade secrets to Nike, and that
Nike then used the trade secrets in its manufacture and
sale of golf clubs. Therefore, summary judgment is to be
granted as to the remaining claims.
The district court’s ruling on these claims was predicated on
its determination that “[a]ll of plaintiff’s claims relate to, and
grow out of, the misappropriation of trade secrets claims.” This
conclusion also forms the basis of the district court’s earlier
evidentiary order limiting TTG’s proofs on all claims to (1) only
19
As the district court found no evidence that Defendants
had used TTG’s alleged trade secrets, it did not address any of
Defendants’ other summary judgment arguments. We address only
the issues presented on appeal and any other questions are to be
answered, in the first instance, on remand.
20
the Nike clubs at issue in the trade secrets claims, and (2) only
the proprietary information at issue in the trade secrets claims.
TTG also appeals this evidentiary order.
As the district court based its entire summary judgment
decision on its trade secrets ruling, our reversal of that ruling
revives all of TTG’s other claims as well. We thus must consider
the earlier evidentiary order to determine whether TTG may present
evidence related to (1) the additional “confidential information”
that it contends is at issue in its non-trade secret claims, and
(2) Nike clubs other than the accused clubs.
B. The June 2005 Evidentiary Order
1. Standard of Review
We review a district court’s evidentiary ruling for an abuse
of discretion.20 If we find that an abuse of discretion has
occurred, we then apply the harmless error doctrine.21 Thus, the
evidentiary ruling will be affirmed unless the district court
abused its discretion and a substantial right of the complaining
party was affected.22
2. Discussion
20
Green v. Adm'rs of the Tulane Educ. Fund, 284 F.3d 642,
660 (5th Cir. 2002) (citations omitted).
21
Id.
22
Id.
21
Again, Defendants sought throughout discovery to identify
precisely what proprietary information they are alleged to have
misused and which Nike products TTG believes have incorporated that
information. TTG, on the other hand, understandably appears to
have been reluctant to limit its case too narrowly. Eventually,
the district court compelled TTG to define all of its trade secrets
with specificity and to identify which Nike clubs TTG believed were
designed and manufactured using those secrets. TTG does not
challenge the order requiring this limitation of its trade secrets
claims.
Even as it narrowed its trade secrets claims, however, TTG
continued to assert that other proprietary information not rising
to the level of a trade secret had been disclosed to Defendants and
used in Nike clubs. Specifically, TTG alleged that its “design
elements” were used in the CPR Woods and the OZ T-100 putter. TTG
also alluded generically to “certain other Nike golf club products”
that it believed may yet be developed on the basis of TTG’s
“confidential information.”
Defendants objected to the inclusion of these additional
allegations about TTG’s non-trade secret “confidential information”
and asked the district court to make clear to all that its earlier
evidentiary order, limiting TTG’s proofs on its trade secrets count
to information related to the accused clubs, viz., Nike’s CPR Woods
and Slingshot Irons, also limited TTG’s proofs on its remaining
claims in the same way. Defendants argued that TTG was attempting
22
to introduce a new category of proprietary information at the last
minute, even though, throughout discovery, TTG had made clear that
only its trade secrets were at issue, even in its non-trade secrets
claims.
In contrast, TTG insisted that it had always made clear that
its non-trade secrets claims involved (1) proprietary information,
such as design sketches, that did not rise to the level of trade
secrets, and (2) Nike clubs other than the accused clubs. The
district court granted Defendants’ motion and limited TTG’s proofs
on all claims strictly to (1) trade secret information (2) related
to the accused clubs. As any evidence related to the CPR Wood,
including any “design sketches,” remained admissible even under the
limiting order, the practical effect of this order was to preclude
TTG from offering any evidence related to the Nike OZ T-100 putter
or any as yet unidentified Nike clubs.23
We must now decide whether the district court abused its
discretion in limiting TTG’s proofs in this way. As noted earlier,
Texas defines a “trade secret” as a “formula, pattern, device or
compilation of information used in a business, which gives the
owner an opportunity to obtain an advantage over his competitors
23
At the time the court entered this order, TTG had
identified no other Nike clubs that it believed were made using
TTG’s proprietary information. We deal with the later-discovered
Nike patent applications in the next section of this opinion.
23
who do not know or use it.”24 We read this definition to cover any
sufficiently realized proprietary golf club design, even if only
executed in “design sketches.”25 The record makes clear that all
of TTG’s claims involve allegations that Defendants misused TTG’s
proprietary club designs, whether by appropriating elements of its
weighting system or copying its unique “design geometry.”
Consequently, we agree with the district court’s conclusion that
all of TTG’s claims “relate to, and grow out of” its
misappropriation of trade secrets claims.
In defining its trade secrets in this case, TTG made no
reference to a putter design. On appeal, however, TTG insists that
its putter “design sketches” were “confidential information” that
did not “rise to the level of trade secrets” but could form the
basis for TTG’s other tort claims, such as breach of
confidentiality.
TTG seems to confuse what constitutes a trade secret with the
evidence necessary to prove that trade secret. At bottom, each of
TTG’s claims involves an allegation that the Defendants unlawfully
used TTG’s proprietary club design, causing it financial injury.
For TTG to succeed on any of these claims, then, it must first
prove that it in fact possessed (1) proprietary information, that
24
Taco Cabana Intern. v. Two Pesos, Inc., 932 F.2d 1113,
1123 (5th Cir. 1991) (citing Hyde Corp. v. Huffines, 314 S.W.2d
763, 776 (Tex. 1958)).
25
See id. (citing several cases in which drawings
constituted trade secrets).
24
was (2) valuable to its business. We see no salient difference
between this predicate and a finding that a trade secret exists.26
To determine whether a trade secret exists, Texas courts apply the
Restatement of Torts' six-factor test:
(1) the extent to which the information is known outside
of his business; (2) the extent to which it is known by
employees and others involved in his business; (3) the
extent of the measures taken by him to guard the secrecy
of the information; (4) the value of the information to
him and to his competitors; (5) the amount of effort or
money expended by him in developing the information; (6)
the ease or difficulty with which the information could
be properly acquired or duplicated by others.27
We understand how TTG might conclude that its sketches do not “rise
to the level of a trade secret,” but the district court was correct
in recognizing that all of TTG’s claims were “trade secrets”
claims, regardless whether TTG chose to identify them as such.
We acknowledge that TTG’s pleadings and discovery responses
have consistently referenced “confidential information” not
included in its description of its trade secrets. We also
acknowledge that, in some breach of confidentiality cases, courts
may regard “confidential business information” as being distinct
from “trade secrets.” Such cases, however, typically involve
former employees accused of misusing their former employer’s
proprietary information, such as customer lists or pricing data,
26
See id. at 1123 (defining a trade secret as a “formula,
pattern, device or compilation of information used in a business,
which gives the owner an opportunity to obtain an advantage over
his competitors who do not know or use it”).
27
In Re Bass, 113 S.W.3d 735, 739 (Tex. 2003).
25
which arguably is not “secret” but still provides the one who
possesses it with a competitive advantage.28 This case, on the
other hand, involves only TTG’s proprietary club designs, which
clearly fall into the category of “trade secrets.” Simply put, if
TTG believed that Defendants copied its “design sketches” in
producing the Nike OZ T-100 putter, TTG should have included that
allegation in its trade secrets claims. Having not done so, it
cannot now be heard to argue that those design sketches belong to
a different category of proprietary information which, although
insufficient to form the basis of a trade secrets claim,
nevertheless can support its other tort claims.
Accordingly, we view the district court’s limitation of TTG’s
proofs on all of its claims to trade secret information related to
the accused clubs as an appropriate exercise of its of discretion
in evidentiary matters. On remand, that order will remain in force
to prohibit TTG from offering any evidence related to the Nike OZ
T-100 putter or any other Nike club that TTG could have included in
its trade secrets claims.29
C. TTG’s Motion for Relief from Final Judgment
28
See, e.g., Mercer v. C.A. Roberts Co., 570 F.2d 1232,
1238 (5th Cir. 1978); Jeter v. Assoc. Rack Corp., 607 S.W.2d 272,
275-76 (Tex. Civ. App.-Texarkana 1980).
29
Pursuant to the holding set forth in the next section of
this opinion, however, this order must be revised, or withdrawn
and reissued, to allow for evidence related to the undisclosed
Nike patent applications at issue in TTG’s Motion for Relief from
Final Judgment.
26
1. Background
The last issue in this appeal is whether the district court
erred reversibly in denying TTG’s Motion for Relief from Final
Judgment.30 After the district court granted summary judgment for
Defendants, TTG became aware of two previously published Nike
patent applications for golf clubs that are “adjustable” post-
manufacture, one of which even describes an adjustable version of
the Slingshot Irons. TTG had propounded both an interrogatory and
a document request that undeniably contemplated patent applications
such as those it later uncovered, but Defendants did not respond to
the interrogatory and objected to the document request. No pending
Nike patent applications were provided to TTG during discovery, and
—— being aware of none —— TTG did not ask the court to compel
Defendants to do so.
In its post-judgment motion, TTG insisted that it was entitled
to relief from the earlier judgment pursuant to FRCP 60(b) because
(1) these recent patent applications amounted to “newly discovered
evidence,” or alternatively, (2) Defendants’ failure to disclose
these applications was a “fraud upon the court.” In a short order
denying TTG’s motion, the district court agreed with TTG that
Defendants should have provided the patent applications during
discovery, but ruled that these particular patent applications had
30
TTG’s motion also requested sanctions against Defendants.
27
“nothing to do with the issues presented to the court for decision
in this case.”
2. Standard of Review
We review the district court’s denial of TTG’s motion for
post-judgment relief for an abuse of discretion.31 “A trial court
abuses its discretion when its ruling is based on an erroneous view
of the law or a clearly erroneous assessment of the evidence.”32
Given the district court’s agreement with TTG that Defendants
should have provided the patent applications during discovery, its
denial of TTG’s motion was based entirely on its conclusion that
those applications were not “relevant” to the issues that it had
decided. Our review is limited to the propriety of that finding.
3. Discussion
TTG contends that the patent applications were relevant to its
case in several ways. First, TTG points to two paragraphs of its
Complaint containing allegations that Defendants used TTG’s
proprietary information in developing and attempting to patent new
golf club systems. Next, TTG identifies the discovery requests
through which it expressly sought information regarding Nike golf
club systems under development and, specifically, “pending
applications for patent.” Further, TTG asserts that the patent
31
Goldstein v. MCI WorldCom, 340 F.3d 238, 257 (5th Cir.
2003).
32
Bocanegra v. Vicmar Servs., Inc., 320 F.3d 581, 584 (5th
Cir. 2003).
28
applications were relevant to all of the expert opinions given on
both sides, especially to the extent these experts concluded
whether Nike was “using” TTG’s trade secrets. Finally, TTG
contends that the patent applications were relevant to the district
court’s findings, which ultimately led to summary judgment, that
there was no evidence that Nike used a weighting system that was
adjustable by the user of the clubs.
Defendants counter that the district court did not err in
holding the patent applications irrelevant, because —— in the end
—— the case involved only the two accused clubs, and the patent
applications “do not cover” those clubs. In Defendants’ view,
“[w]hether the NIKE patent applications show other golf clubs that
are adjustable by the golfer, or whether NIKE someday, in the
future, decides to offer an adjustable golf club is irrelevant to
the basis for the District Court’s grant of summary judgment —
which dealt with actual golf clubs.”33 The district court gave no
reasons for its conclusion that the patent applications were
irrelevant, but it presumably agreed with Defendants on this point.
We acknowledge that the patent applications were not
technically relevant to the narrow grounds on which the district
court decided Defendants’ summary judgment motion. Once the
district court decided that the only issue it needed to consider
was whether Defendants had used TTG’s trade secrets in the accused
33
Emphasis added.
29
clubs, the patent application evidence presumably could not have
been allowed into the case. We also agree with Defendants’ general
proposition that a 60(b) motion is not an opportunity for a party
to “relitigate its case” and with the district court’s conclusion
that the patent applications “might form the basis of another
action” by TTG.
We reverse, however, because we are convinced that the
district court erroneously disregarded the relevance of the patent
applications to its evidentiary orders that laid the foundation for
its grant of summary judgment. Had the patent applications been
disclosed during discovery, the district court should not have ——
and likely would not have —— granted Defendants’ motion seeking to
limit TTG’s proofs to only the accused clubs on any of its claims.34
Consequently, the fact that the accused clubs were not adjustable
post-manufacture would alone not have precluded the existence of
any material fact issue whether Defendants had “used” TTG’s trade
secrets, and summary judgment would not have been appropriate.35
As we are reversing the district court’s summary judgment dismissal
34
As noted above, the court’s decision to limit TTG’s trade
secrets proofs to only the accused clubs was based on TTG’s
inability to connect its proprietary weighting system to any
other Nike product. If TTG had had the patent applications at
that point, it might have been able to establish connections to
other Nike clubs under development.
35
A plaintiff need not prove an actual sale or production
of a product to show “use” of its trade secrets. See Dresser-Rand
Co. v. Virtual Automation Inc., 361 F.3d 831, 840-41 (5th Cir.
2004)(citations omitted).
30
of every TTG claim that involves the misuse of its trade secrets in
the accused clubs, the practical effect of our additional reversal
of its denial of post-judgment relief will be to allow TTG to
expand its claims beyond the accused clubs to include any misuse of
its trade secrets in any Nike club comprehended by the subject
patent applications.
For the foregoing reasons, we (1) affirm the district court’s
evidentiary order limiting TTG’s proofs on all of its claims to
evidence related to the misuse of its trade secrets in the accused
clubs, subject, however, to the potential need to expand that order
so as not to exclude evidence relevant to other clubs comprehended
by the aforesaid patent applications, (2) reverse the district
court’s summary judgment dismissal of those of TTG’s claims that
involve the accused clubs, and (3) reverse the district court’s
denial of TTG’s motion for post-judgment relief based on the
aforesaid patent applications. We remand this matter to the
district court for further proceedings consistent with this
opinion.
AFFIRMED in part, REVERSED in part, and REMANDED.
31