Seatrax v. Sonbeck

Citation200 F.3d 358
Decision Date25 January 2000
Docket NumberNo. 98-20815,98-20815
Parties(5th Cir. 2000) SEATRAX, INC., Plaintiff-Appellant, v. SONBECK INTERNATIONAL, INC., PATRICK E. HUDSON, EDDIE H. HUDSON, JR., and MARK A. BOBECK, Defendants-Appellees,
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Appeal from the United States District Court for the Southern District of Texas

Before KING, Chief Judge, and POLITZ, and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Seatrax, Inc., ("Seatrax") filed suit against Sonbeck, Inc., et al., ("Sonbeck") for trademark infringement under federal law. Seatrax also filed suit under state law for misappropriation of trade secrets and unfair trade practices by misappropriation. In a jury trial Seatrax prevailed on its trademark infringement claim, but now appeals the magistrate judge's pretrial, evidentiary, and post-verdict rulings. For reasons set forth below, we affirm the magistrate judge's rulings.

FACTUAL AND PROCEDURAL HISTORY

This case involves trademark infringement and allegations of misappropriation of trade secrets and unfair trade practices. Seatrax is a Texas corporation that manufactures a brand of offshore marine cranes, known as "SEAKING," that are used in the oil and gas industry. The SEAKING crane was first designed and manufactured by Mechanical Systems, Inc. ("MSI"), a company owned by William D. Morrow (Morrow), William R. Bath ("Bath"), and John B. Goss ("Goss"). In 1978, MSI licensed the SEAKING technology to Branham Industries, Inc. ("BII"). As part of the agreement, BII was given access to technical information, manuals, service bulletins, computer software and SEAKING manufacturer drawings ("SEAKING drawings"). Also, as part of the licensing agreement, Morrow was employed at BII to engineer and supervise the SEAKING line. The defendants Mark Bobeck ("Bobeck"), Edward Hudson, and Pat Hudson were also employed at BII. Pat Hudson was in charge of SEAKING crane sales, Eddie Hudson was in charge of SEAKING crane production, and Bobeck was a project superintendent. After the licensing agreement between MSI and BII had expired in 1990, Morrow, Bath and Goss filed suit against BII claiming unpaid royalties and that BII had refused to return the SEAKING technology. During the BII litigation, Morrow, Bath, and Goss assigned their rights in the SEAKING crane technology to Affco, Inc., Seatrax's parent company. Also, during the BII litigation, defendants Bobeck, Pat Hudson, and Edward Hudson left BII to form Sonbeck, an "aftermarket supplier" of replacement parts for offshore marine cranes, including the SEAKING brand. At the conclusion of the BII litigation, the court, inter alia, enjoined BII and third parties from using the SEAKING technology without obtaining written consent from Morrow, Bath, and Goss. After the court issued its injunction, Morrow, now a Seatrax officer, and Pat Hudson searched BII premises for the SEAKING drawings, but did not uncover them.

In 1992, BII filed a bankruptcy liquidation proceeding and its assets were sold at a public auction. Sonbeck purchased a container of SEAKING crane parts at the auction. Between 1990 and 1992, Sonbeck entered into a sales agency agreement with Seatrax to assist Seatrax in selling SEAKING parts. Seatrax also purchased SEAKING parts from Sonbeck. However, the agreement was terminated in 1992. In 1993, Seatrax received a registered trademark from the United States Patent and Trademark Office for the SEAKING name. In 1996, Seatrax learned that Sonbeck without its consent had disseminated service manuals for SEAKING parts that bore the SEAKING mark registered to Seatrax.

In July 1996, Seatrax filed suit in federal district court in Texas alleging trademark infringement under the Lanham Act (15 U.S.C. 1114-1118), unfair competition, and misappropriation of trade secrets under Texas law. Seatrax sought injunctive relief, compensatory and treble damages, and attorney's fees. Pursuant to 28 U.S.C. 636(c), both parties consented to proceed before a federal magistrate judge for all purposes, including the entry of final judgment. During the discovery phase, Seatrax learned that Sonbeck was in possession of 288 SEAKING drawings. Both parties moved for summary judgment. The magistrate judge granted Sonbeck's motion for summary judgment on the state law claim of misappropriation of trade secrets but preserved the Lanham Act claim for the jury. The magistrate judge also denied Seatrax's motions for summary judgment. Prior to trial, the court excluded evidence of alleged oral misrepresentations and testimony from Seatrax's expert witness. The court further precluded Seatrax from presenting its common-law unfair trade practice by misappropriation claim to the jury. The jury found in favor of Seatrax regarding its trademark infringement claim under the Lanham Act. The magistrate judge granted injunctive relief, but denied Seatrax's requests for accounting of profits and attorney's fees. Seatrax filed post-trial motions for a new trial and reconsideration of summary judgment which the magistrate judge denied.

DISCUSSION

Although the jury found in favor of Seatrax on its trademark infringement claim, Seatrax nonetheless appeals the magistrate judge's pretrial, evidentiary, and post-verdict rulings. First, Seatrax claims that the magistrate judge erroneously granted summary judgment in favor of Sonbeck on its state law claim of misappropriation of trade secrets. Seatrax also maintains that the magistrate judge improperly excluded its state law claim of unfair competition by misappropriation from the jury. Additionally, Seatrax attacks the magistrate judge's evidentiary rulings regarding the exclusion of evidence, witnesses, and testimony. Finally, Seatrax argues that the magistrate judge erroneously denied its request for accounting of profits and attorneys' fees. We address each of Seatrax's claims in turn.

I. Summary Judgment

We review a grant of summary judgment de novo. Exxon Corp v. Baton Rouge Oil, 77 F. 850, 853 (5th Cir. 1996). Once a properly supported motion for summary judgment is presented, the burden shifts to the non-moving party to set forth specifically facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 212, 249, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986); Brothers v. Klevenhagen, 28 F.3d 452, 455 (5th Cir. 1994), cert. denied 513 U.S.1045, 115 S.Ct. 638, 139 L.Ed.2d 545 (1994). We review "the facts drawing all inferences most favorable to the party opposing the motion." Montagorda County v. Russell Law, 19 F.3d 215, 217 (5th Cir. 1994). Therefore, the entry of summary judgment is appropriate if "there is no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); Rojax v. TK Communications, Inc., 87 F.3d 745, 747 (5th Cir. 1996).

The magistrate judge granted Sonbeck's motion for summary judgment on the state law claim of misappropriation of trade secrets based on Sonbeck's argument that Seatrax's claim was barred by the then applicable two-year statute of limitations under Texas law. See TEX.CIV.PRAC. & REM. 16.003. The magistrate judge found that the alleged acts of misappropriation occurred between 1990 and 1992, which was approximately four years before Seatrax filed suit. However, during the summary judgment proceedings, Seatrax argued that because Sonbeck concealed its acts of misappropriation between 1990 and 1992, Seatrax was unable to discover that it had a possible cause of action until 1996 when it learned that Sonbeck was distributing manuals that bore the SEAKING trademark. Thus, Seatrax asserted that the discovery rule exception tolled the statute of limitations until 1996. Nevertheless, the magistrate judge held that the discovery rule exception was inapplicable because misappropriation of trade secrets is not inherently undiscoverable.1 The magistrate judge also found that Seatrax failed to exercise due diligence to discover the alleged acts of misappropriation between 1990 and 1992.

Approximately six months after the jury trial and the magistrate judge had entered final judgment, Seatrax filed a motion to reconsider the summary judgment ruling. Seatrax alleged that the magistrate judge applied the wrong statute of limitations. Before Seatrax filed its first motion for summary judgment on May 14, 1997, Texas enacted a three year statute of limitations for suits alleging misappropriation of trade secrets. Under TEX. CIV. PRAC. & REM. CODE 16.010, "[a] person must bring suit for misappropriation of trade secrets not later that three years after the misappropriations is discovered or by the exercise of due diligence should have been discovered." (emphasis added). Furthermore, the revised statute of limitations expressly incorporates the discovery rule exception. The effective date of the revised statute was May 1, 1997, approximately two weeks before Seatrax filed its first motion for summary judgment. Because the revised statute of limitations expressly provides that it applies to actions pending "in which [a] trial . . . begins on or after [the] effective date," Seatrax argues that the magistrate judge applied the wrong statute of limitations. However, neither party nor the magistrate judge raised the revised statute of limitations during the summary judgment proceedings. Nevertheless, the magistrate judge treated Seatrax's motion to reconsider as a motion for relief from judgment under Fed. R. Civ. P 60(e) and held that Seatrax's claim would have been barred under the new statute of limitations because Seatrax failed to exercise due diligence to discover the acts of misappropriation between 1990 and 1992.

We begin our analysis by acknowledging that Seatrax's failure during the summary judgment phase to assert the revised statute of limitations in...

To continue reading

Request your trial
291 cases
  • Rodriguez v. Bexar Cnty. Hosp. Dist.
    • United States
    • U.S. District Court — Western District of Texas
    • November 30, 2015
    ...to the non-moving party to set forth specifically facts showing that there is a genuine issue for trial." Seatrax, Inc. v. Sonbeck Intern., Inc., 200 F.3d 358, 363-64 (5th Cir. 2000) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. at 249, 106 S. Ct. at 2510-11). The nonmoving party cannot......
  • Philip Morris Usa Inc. v. Lee, EP-05-CA-0490-PRM.
    • United States
    • U.S. District Court — Western District of Texas
    • April 8, 2008
    ...C. Attorney's Fees The Lanham Act also allows for an award of attorney's fees "`in exceptional cases.'" Seatrax, Inc. v. Sonbeck Int'l Inc., 200 F.3d 358, 372-73 (5th Cir. 2000) (quoting 15 U.S.C. § 1117). The exceptional case is one in which the defendant's conduct is "`malicious, fraudule......
  • Malletier v. Dooney & Bourke, Inc.
    • United States
    • U.S. District Court — Southern District of New York
    • December 13, 2007
    ...Testimony on subject matters unrelated to the witness's area of expertise is prohibited by Rule 702. See, e.g., Seatrax, Inc., v. Sonbeck Int'l, Inc., 200 F.3d 358 (5th Cir.2000) (in an infringement action, expert on marine cranes could not testify to the defendant's profits from infringing......
  • Ultraflo Corp. v. Pelican Tank Parts, Inc.
    • United States
    • U.S. District Court — Southern District of Texas
    • February 22, 2013
    ...business and presents an opportunity to obtain an advantage over competitors who do not know or use it.” Seatrax, Inc. v. Sonbeck Intern., Inc., 200 F.3d 358, 365 (5th Cir.2000), citing Computer Assoc. Int'l. Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex.1996) (quoting from the Restatement ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT