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Olson v. Nieman's Ltd.5/28/1998
's competitive edge or advantage." U.S. West Communications, Inc. v. Office of Consumer Advocate, 498 N.W.2d 711, 714 (Iowa 1993). Although Olson's device could be reverse engineered once placed on the market, this fact ignores substantial record evidence that Olson's device could have brought him economic value before its release on the market. See Iowa Code § 550.2(4)(a) (" erives independent economic value, actual or potential, from not being generally known . . . and not being readily ascertainable by proper means") (emphasis added); Milgrim § 2.05 , at 2-53 ("A clear distinction should be drawn between a trade secret which will be disclosed if and when the product in which it is embodied is placed on sale, and a `trade secret' embodied in a product which has been placed on sale, which product admits of discovery of the 'secret' upon inspection, analysis, or reverse engineering.").
The jury could find from the evidence that Olson had several economic options, provided his idea remained secret: He could (1) sell the idea to a manufacturer for a flat fee or for royalties, or (2) patent the device. There is evidence that manufacturers, including Nieman, were interested in his device. There was also Harms' testimony that Olson's idea was patentable before Nieman publicly disclosed it. The jury could easily find that Olson's idea had potential, independent economic value if it were kept secret until Olson could exercise his several economic options.
c.
Reasonable efforts to maintain secrecy. Nieman claims that Olson's efforts to preserve any secrecy of the written schematic were not reasonable under the circumstances. In support of this claim, Nieman points out that Olson sent a copy of the schematic diagram to Hayes Axles, Inc. about the same time that he sent a copy to Nieman. Olson entered into a confidentiality agreement with Hayes Axles, Inc., which required Olson to mark any confidential information with an appropriate legend, marking, stamp, or other positive written identification. Nieman contends Olson failed to appropriately mark as confidential any of the information he sent to Hayes Axles, Inc.
Before sending the agreement and schematic drawing to Hayes Axles, Inc., Olson marked the drawing with the word "inventor," intending this as an appropriate legend of confidentiality. There was no evidence that Hayes Axles, Inc. did not consider the drawing confidential. Nor was there any evidence that Hayes Axles, Inc. ever disclosed the information to third parties. We agree with the district court all of this evidence generated a jury question on the reasonable-efforts-to-preserve-secrecy issue.
1. Misappropriation.
Nieman insists there was no misappropriation, even assuming Olson possessed a trade secret. Iowa Code section 550.2(3) defines "misappropriation" to include the following:
d. Disclosure or use of a trade secret by a person who at the time of disclosure or use knows that the trade secret is acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use.
e.
Disclosure or use of a trade secret by a person who at the time of disclosure or use knows that the trade secret is derived from or through a person who owes a duty to maintain the trade secret's secrecy or limit its use.
Nieman does not dispute that the confidentiality contract imposed a fiduciary duty on it not to disclose technical information related to Olson's device. Contrary to Olson's contention, Nieman asserts that it did not "use" or "disclose" any "confidential information" by displaying a model and distributing brochures at the November 1992 trade show. Nieman cites two reason
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