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Olson v. Nieman's

5/28/1998

Appeal from the Iowa District Court for Cerro Gordo County, Gilbert K. Bovard, Judge.


Company appeals from jury verdict awarding inventor damages for misappropriation of inventor's trade secret. Inventor cross-appeals. AFFIRMED ON THE APPEAL; AFFIRMED ON THE CROSS-APPEAL.


A jury awarded Andrew H. Olson $650,000 against Nieman's, Ltd. (Nieman) for the company's alleged misappropriation of Olson's idea, which Olson claims was a trade secret. Nieman appealed and Olson cross- appealed. On the appeal, Nieman raises issues regarding the district court's (1) refusal to extend an expert disclosure deadline, (2) admission of expert testimony on the patentability of Olson's idea, and (3) admission of expert testimony on damages. Nieman also contends insufficient evidence supported the jury's verdict for Olson on his breach-of-contract and misappropriation-of-trade-secret claims.


On the cross-appeal, Olson raises issues regarding the district court's (1) refusal to award him exemplary damages and attorney fees, (2) submission of a supplemental special interrogatory regarding allocation of the damages award among Olson's three theories of action, and (3) setting aside a verdict on his misappropriation-of-intellectual- property claim.


We affirm on the appeal and cross-appeal.


I. Facts.


Olson developed an idea for "breakaway hazard lights." He envisioned a device that would activate flashing lights on a trailer if the trailer disengaged from the transporting vehicle.


In May 1992 Olson built a prototype of the breakaway hazard lights. He also drew a schematic diagram showing how the device would work. Olson then contacted Nieman to see if the company was interested in his idea. Olson and Nieman agreed in writing that Olson would disclose his schematic drawing to Nieman and Nieman would keep "all technical information related to the design and use" of the device confidential.


Nieman sought out an independent electrical engineer, Dale Sloan, to incorporate the device into its existing system and provided Sloan with the schematic drawing so he could do so. Sloan agreed to keep the schematic drawing confidential.


Sloan thought that Olson's device did not function properly with Nieman's breakaway braking system. Sloan believed, however, he could develop a device that would work with the Nieman system.


Nieman and Olson failed to reach an agreement regarding Olson's compensation for his device. In October 1992 Nieman wrote Olson telling him that " e have found it necessary to decline working with you due to your requirements financially."


A month later at a trade show, Nieman demonstrated and distributed literature describing Sloan's implementation of Olson's idea. The demonstration model malfunctioned and Nieman ceased to display it.


In December, via a confidentiality agreement, Olson agreed to disclose his idea to Tekonsha, a Nieman competitor. After receiving the confidentiality agreement and Olson's idea, Tekonsha informed Olson that Nieman had been using a flasher system employing "the exact idea which you have disclosed." Following a telephone conversation with a Tekonsha employee, Olson learned of Nieman's display at the trade show a month earlier.


I. Proceedings.


Once he learned Nieman had publicly displayed the device, Olson filed suit against Nieman. The suit alleged breach of contract, conversion of intellectual property, wrongful misappropriation of trade secrets pursuant to Iowa Code chapter 550 (1993), and common-law misappropriation of intellectual property.


The district court set a February 6, 1996 deadline for

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