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Manitowoc Cranes LLC v. Sany America Inc.

United States District Court, E.D. Wisconsin

December 11, 2017

MANITOWOC CRANES LLC, Plaintiff,
v.
SANY AMERICA INC. and SANY HEAVY INDUSTRY CO. LTD., Defendants.

          DECISION AND ORDER

          William C. Griesbach, Chief Judge.

         On June 12, 2013, Plaintiff Manitowoc Cranes LLC initiated a lawsuit against Defendants Sany America Inc. and Sany Heavy Industry Co. Ltd. (collectively “Sany), asserting claims of patent infringement and misappropriation of trade secrets. See Case No. 13-C-677. The court stayed proceedings in the case on July 17, 2013 pending resolution of an investigation by the United States International Trade Commission (ITC). Manitowoc filed a second action against Sany on May 28, 2015, asserting a claim for tortious interference with contract and jurisdiction under 28 U.S.C. § 1332. See Case No. 15-C-647. The court consolidated the cases on November 18, 2015 and continued the stay, pending the resolution of the ITC proceedings. On December 7, 2016, the parties notified the court of the conclusion of the ITC proceedings and the resulting appeal, and on December 20, 2016, the court lifted the stay and reopened the consociated case. Manitowoc subsequently filed an amended complaint asserting only state law misappropriation of trade secrets and tortious interference with contract claims against Sany. The court has jurisdiction under 28 U.S.C. § 1332.

         This matter is before the court on Manitowoc's motion for summary judgment filed under this court's Fast Track Summary Judgment procedure. Manitowoc requests that the court enter partial summary judgment finding that Sany is liable for trade secret misappropriation and enter summary judgment against Sany's declaratory judgment counterclaims. For the following reasons, Manitowoc's motion will be granted-in-part and denied-in-part.

         BACKGROUND

         Manitowoc is an innovator of crawler crane technology. It complains that Sany misappropriated eight of its trade secrets and tortiously interfered with its employee's contract in violation of Wisconsin law. This is not the first time Manitowoc has raised misappropriation claims against Sany, however. It also brought this claim before the ITC in 2013. See In the Matter of Certain Crawler Cranes and Components Thereof, No. 337-TA-887. The ITC held a three-day evidentiary hearing before an Administrative Law Judge (ALJ) on Manitowoc's claims beginning March 25, 2014. On May 6, 2015, the ITC issued its Commission Opinion, unanimously finding that Sany had violated the Tariff Act by misappropriating Manitowoc's protectable trade secrets and infringing one of Manitowoc's patents. Pl.'s Proposed Findings of Fact (PPFOF) ¶ 11, ECF No. 65. The ITC determined the appropriate remedy included a ten-year limited exclusion order. It also issued a ten-year cease and desist order, effective June 15, 2015. Id. ¶¶ 65-67. Sany appealed the ruling to the United States Court of Appeals for the Federal Circuit. Id. ¶ 68. On October 11, 2016, the Court of Appeals affirmed the ITC's decision and entered judgment without opinion. Id. ¶ 69. This matter is before the court on Manitowoc's motion for partial summary judgment, urging the court to adopt the ITC's findings regarding misappropriation of Manitowoc's trade secrets.

         LEGAL STANDARD

         Summary judgment is appropriate when the moving party shows 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(a). All reasonable inferences are construed in favor of the nonmoving party. Foley v. City of Lafayette, 359 F.3d 925, 928 (7th Cir. 2004). The party opposing the motion for summary judgment must “submit evidentiary materials that set forth specific facts showing that there is a genuine issue for trial.” Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir. 2010) (citations omitted). “The nonmoving party must do more than simply show that there is some metaphysical doubt as to the material facts.” Id. Summary judgment is properly entered against a party “who fails to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial.” Parent v. Home Depot U.S.A., Inc., 694 F.3d 919, 922 (7th Cir. 2012) (internal quotations omitted).

         ANALYSIS

         Manitowoc argues that summary judgment is appropriate because the ITC's determination that Manitowoc's trade secrets were protectable and that Sany misappropriated those trade secrets have preclusive effect in this litigation. The Supreme Court has “long favored application of the common-law doctrines of collateral estoppel (as to issues) and res judicata (as to claims) to those determinations of administrative bodies that have attained finality.” Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 107 (1991). It has recognized that “in those situations in which Congress has authorized agencies to resolve disputes, ‘courts may take it as given that Congress has legislated with the expectation that the principle will apply except when a statutory purpose to the contrary is evident.'” B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S.Ct. 1293, 1303 (2015) (quoting Astoria, 501 U.S. at 108). In other words, “absent a contrary indication, Congress presumptively intends that an agency's determination . . . has preclusive effect.” Id. at 1305.

         Manitowoc argues that this presumption applies to the ITC's determination of trade secret misappropriation. Whether an ITC determination regarding trade secret misappropriation has preclusive effect in subsequent litigation is an issue of first impression. Although there are no cases specifically addressing this issue, Manitowoc cites cases where federal courts have concluded ITC determinations have preclusive effect in other areas of unfair trade practices. For instance, the Second Circuit has held that “ITC adjudications of unfair trade practice and trademark infringement causes of action are entitled to res judicata effect.” Union Mfg. Co., Inc. v. Han Baek Trading Co., Ltd., 763 F.2d 42, 46 (2d Cir. 1985). The First Circuit has also found that an ITC proceeding had res judicata effect on antitrust claims. Aunyx Corp. v. Canon U.S.A., Inc., 978 F.2d 3, 7 (1st Cir. 1992). Manitowoc also argues that there is no evidence that Congress did not intend for ITC misappropriation determinations to have preclusive effect in later proceedings.

         Conversely, Sany contends that because no court has given preclusive effect to this category of ITC determination, the general rule against ITC preclusion set forth in Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558 (Fed. Cir. 1996), should apply to the instant case. However, Texas Instruments is distinguishable from the case at hand. In that case, the plaintiff filed a patent infringement action in federal court as well as a parallel action before the ITC. The plaintiff prevailed in the action before the ITC, whose determination and exclusion order were ultimately affirmed by the Federal Circuit. Id. at 1562-63. The defendant subsequently prevailed in district court. The plaintiff appealed the district court's decision, arguing that the ITC's prior finding of infringement by “the same defendants, using the same processes, ” and the Federal Circuit's later affirmance of that determination should be given preclusive effect under the doctrine of collateral estoppel. Id. at 1568.

         The Federal Circuit rejected the plaintiff's argument. It noted that “an administrative agency decision, issued pursuant to a statute, cannot have preclusive effect when Congress, either expressly or impliedly, indicated that it intended otherwise.” Id. at 1568. It examined the legislative history of the Trade Reform Act of 1974, amending the Tariff Act of 1930, which cautioned, “In patent-based cases . . . [t]he Commission's findings neither purport to be, nor can they be, regarded as binding interpretations of the U.S. patent laws in particular factual contexts. Therefore, it seems clear that any disposition of a Commission action by a Federal Court should not have res judicata or collateral estoppel effect in cases before such courts.” Id. at 1569 (quoting S. Rep. No. 1298, 93d Cong., 2d Sess. 196 (1974), reprinted in 1974 U.S.C.C.A.N. 7186, 7329). The court held that “[b]ased on this legislative history . . . Congress did not intend decisions of the ITC on patent issues to have preclusive effect.” Id. at 1569 (citations omitted) (emphasis added).

         Although the Federal Circuit found that ITC decisions on patent issues do not have preclusive effect in subsequent litigation, it did not create a general rule against preclusion with respect to all ITC determinations as Sany suggests. “The jurisdictional bar to res judicata treatment of ITC patent validity determinations simply does not apply to other decisions by the ITC.” Union Mfg. Co., Inc., 763 F.2d at 45. In short, the court finds that ITC determinations regarding the unfair trade practices of trade secret misappropriation are entitled to preclusive effect. The court will now consider whether Sany is collaterally estopped from disputing that it misappropriated eight Manitowoc trade secrets.

         Collateral estoppel, or issue preclusion, prevents the relitigation of issues resolved in an earlier suit. Taylor v. Sturgell, 553 U.S. 880, 892 (2008). For collateral estoppel to apply, the following elements must be satisfied: “(1) the issue sought to be precluded is the same as an issue in the prior litigation; (2) the issue must have been actually litigated in the prior litigation; (3) the determination of the issue must have been essential to the final judgment; and (4) the party against whom estoppel is invoked ...


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