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Olson v. Nieman's

5/28/1998

tradicts Nieman's claim that it disclosed a different device at the trade show.


Even assuming the model Nieman showed at the trade show did not exactly replicate Olson's device, the evidence shows Sloan developed it based on Olson's diagram. That fact belies Nieman's claim that Sloan came up with a totally original device independent of Olson's diagram. In these circumstances, Nieman's minor modifications do not insulate the company from liability for wrongful use of Olson's device. See Milgrim § 7.07 , at 7-164. The jury could reasonably find Nieman was displaying a model substantially similar to Olson's device, or, at the very least, a model based on Olson's diagram.


Contrary to Nieman's second contention that it did not "use" or "disclose" any confidential information, there was uncontroverted evidence that Nieman displayed the device at the November 1992 trade show, distributed brochures describing the device, and even offered it for sale. Olson knew nothing about these actions.


Shortly before the trade show, Nieman terminated its relationship with Olson. Shortly after the trade show, Olson entered into a confidentiality agreement with Tekonsha, a Nieman competitor. After Olson disclosed the schematic diagram to Tekonsha pursuant to the agreement, the director of engineering for Tekonsha wrote Olson a letter in January 1993, stating that "another vendor does employ the exact idea which you have disclosed. The other vendor (Nieman) has utilized the flasher system for around six months." Olson called the writer of the letter who informed Olson that she had seen a brochure from the November 1992 trade show.


The jury could reasonably find from this evidence that Nieman used or disclosed Olson's trade secret and by its actions placed it within the public domain. As one commentator has noted:


t is an almost undisputed proposition that when an article, the "secret" nature of which is fathomable upon scrutiny and inspection, is marketed, the "secret" is lost. The same rule is applicable when the article is put on display in such a manner as to allow its secret to be known. Similarly, a trade secret may be lost through disclosure occurring in advertising, trade circulars, or in an analogous manner.


Milgrim § 2.05 , at 2-38 to 2-41.


The district court correctly overruled the motions for directed verdict and judgment notwithstanding the verdict.


A. Sufficiency of the evidence: breach-of-contract claim. As mentioned, the district court also overruled Nieman's motions for directed verdict and judgment notwithstanding the verdict regarding Olson's breach-of-contract claim. We need not consider issues Nieman raises as to these rulings because the jury apportioned all of the damages to the misappropriation-of-trade-secret claim.


Nieman's major contention here was that there was not sufficient evidence to support a finding that Nieman breached the confidentiality agreement by disclosing Olson's trade secret. In connection with our discussion of the misappropriation-of-trade-secret claim, we decided there was substantial evidence to support a jury finding that Nieman did disclose the trade secret.


Accordingly, we give the breach-of-contract issue no further consideration.


I. Issues on the Cross-Appeal.


A. Failure to award exemplary damages and attorney fees. Olson complains because the district court refused to award exemplary damages and attorney fees even though the jury found Nieman's conduct willful and malicious. The basis of his complaint is that the district court gave no adequate reasons for its refusal.


We review for abuse of discretion a dist

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