Bondpro Corp. v. Siemens Power Generation

• Decision Date: 12 September 2006
• Docket Number: No. 05-3077.,05-3077.
• Citation: 463 F.3d 702
• Parties: BONDPRO CORPORATION, Plaintiff-Appellant, v. SIEMENS POWER GENERATION, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

463 F.3d 702

BONDPRO CORPORATION, Plaintiff-Appellant, v. SIEMENS POWER GENERATION, INC., Defendant-Appellee.

No. 05-3077.

United States Court of Appeals, Seventh Circuit.

Argued May 11, 2006.

Decided September 12, 2006.

COPYRIGHT MATERIAL OMITTED

Peter M. Reinhardt (argued), Menomonie, WI, for Plaintiff-Appellant.

David T. Schultz (argued), Halleland, Lewis, Nilan & Johnson, Minneapolis, MN, for Defendant-Appellee.

Before POSNER, EASTERBROOK, and WOOD, Circuit Judges.

POSNER, Circuit Judge.

The plaintiff in this diversity suit for theft of a trade secret won a verdict on liability from the jury; but before the jury proceeded to the second stage of a bifurcated trial — that of determining what damages, if any, the plaintiff had suffered — the district judge granted judgment for the defendant as a matter of law. Wisconsin law — but as adopted in Wisconsin, the Uniform Trade Secrets Act is to "be applied and construed to make uniform the law relating to misappropriation of trade secrets among states enacting substantially identical laws." Wis. Stat. § 134.90(7). And so "decisions by other jurisdictions [than Wisconsin] on questions involving the UTSA are to be given careful consideration." Minuteman, Inc. v. Alexander, 147 Wis.2d 842, 434 N.W.2d 773, 779-80 (1989).

We begin with some jurisdictional issues. Our Circuit Rule 28(a)(1) requires that the jurisdictional statement in a diversity suit name the states of which the parties are citizens. In violation of this rule, the jurisdictional statement in the plaintiff's brief fails to indicate the citizenship of the parties (both of which are corporations); it says only that they are "citizens of different states." The defendant's brief, compounding the violation, states that the plaintiff's jurisdictional statement is complete and correct. So we ordered the parties to supplement their jurisdictional statements, and the responses indicate that the parties are indeed citizens of different states and thus that the district court had diversity jurisdiction, for the case was removed to the district court by the out-of-state party and the amount-in-controversy requirement is satisfied. But the defendant's response added: "it appears that BondPro is not a corporation in `good standing' with the State of Wisconsin, as its status of April 1, 2004, is listed as delinquent." Inquiry of the plaintiff's counsel at oral argument revealed that he didn't know his client's current status under Wisconsin law or whether that law authorizes a delinquent Wisconsin corporation to bring a suit in a Wisconsin state court. Apparently it does. The only consequence of delinquency is that the Wisconsin Department of Financial Institutions can bring an administrative proceeding to dissolve the corporation, Wis. Stat. § 180.1420, and this was not done. And shortly after the oral argument BondPro was restored to good standing.

Anyway, until a corporation's charter is revoked, it remains a corporate citizen of the state of incorporation, and no more is necessary to allow it to maintain a suit in a federal court, Smith v. Arundel Cooperative, Inc., 660 F.Supp. 912, 913 (D.D.C.1987); 15 Moore's Federal Practice § 102.56[9], p. 102-132.5 (3d ed.2005) — at least as a matter of federal jurisdiction; for it is always open to a defendant to show that the plaintiff in a diversity suit lacks capacity, under the law of the plaintiff's state, to bring a suit. Fed.R.Civ.P. 9(a). Any such defense was waived here, however, because while noting BondPro's delinquency the defendant makes no argument for dismissal based on it. Since a corporation's authority to sue in its state courts is not a jurisdictional prerequisite to removal on grounds of diversity, Maryland People's Counsel v. FERC, 760 F.2d 318, 319 (D.C.Cir.1985) Summers v. Interstate Tractor & Equipment Co., 466 F.2d 42, 49-50 (9th Cir.1972) Zelinger v. Uvalde Rock Asphalt Co., 316 F.2d 47, 53 (10th Cir.1963); see also Fed.R.Civ.P. 9(a); Wagner Furniture Interiors, Inc. v. Kemner's Georgetown Manner, Inc., 929 F.2d 343, 345-46 (7th Cir.1991); MTO Maritime Transport Overseas, Inc. v. McLendon Forwarding Co., 837 F.2d 215, 218 (5th Cir.1988), the waiver eliminates the issue from our consideration.

We add that even if the plaintiff had dissolved since the removal of the case to the district court, this would not affect jurisdiction, United States Liability Ins. Co. v. Fassbinder United Builders, Inc., No. 99 C 50330 (N.D.Ill. Feb. 12, 2003), 2003 U.S. Dist. LEXIS 1991, at *2; see Wild v. Subscription Plus, Inc., 292 F.3d 526, 528 (7th Cir.2002), unless its dissolution signified that there was no longer an adversary proceeding. But there might be; the dissolved corporation might have a successor that could be substituted for it and the suit continue. With immaterial exceptions, jurisdiction depends on the facts that exist when the suit is filed, e.g., Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004) — which means, by the way, that if BondPro had been dissolved before suing and the dissolution had eliminated any interest it had in the suit, resurrection of the corporation after the suit was filed would not have conferred jurisdiction. Wild v. Subscription Plus, Inc., supra, 292 F.3d at 528.

A further sign of the lawyers' carelessness is that their briefs are miscaptioned. The name of the defendant is given as "Siemens Westinghouse Power Corporation," which was changed before the appeal was filed. One might have expected the defendant's lawyer, at least, to know the name of his client. The lawyers' insouciance about jurisdiction, however, goes beyond carelessness, and we hereby direct counsel for both parties to show cause within ten days from the date of this decision why they should not be sanctioned for violating our circuit rule.

There is still another jurisdictional issue. It is whether BondPro has anything tangible to gain from reinstating the jury's verdict, for if not there is no case or controversy within the meaning of Article III of the Constitution. But to explain the issue will require a summary of the facts.

BondPro is a small company that manufactures products (it is still in business despite its scrape with the Wisconsin corporate authorities) that require the bonding of dissimilar materials. Siemens (a subsidiary of the German conglomerate), the defendant, makes electrical generators. The generators produce electrical power by spinning rotors over magnets. The rotors have slots into which copper coils are wedged. The outer layer of each coil consists of insulation material in the form of a U-shaped "slot cell." Siemens manufactures slot cells by first placing the insulation material in a U-shaped ("female") container and then pressing a "male" mold on top and applying heat. This process compresses the insulation into a rigid U-shaped material that can slide into the slots. The process resembles putting material into a bowl and pressing another, slightly smaller bowl into the first bowl to compress and harden the material inside that bowl.

The disadvantage of the process is that the slot cell may emerge with wrinkles in the insulation material that are difficult to smooth out. BondPro developed (though it has never marketed) a process that dispenses with the female mold. Instead the insulating material is placed on the outside of the male mold and pressed against it by placing the mold and the insulation material in a vacuum bag so that air pressure compresses the material against the mold. Any remaining wrinkles are smoothed by hand. The ensemble consisting of the mold and the insulation material pressed against it is then placed in an autoclave, a container in which high levels of heat and air pressure are applied to the contents. The heat and pressure compress the insulation coating the mold into the desired rigid shape and it is then removed from the male mold and slid into a rotor's slot.

In 2001, Scott Wang, BondPro's principal, explained and later demonstrated the process to Mark Miller, a materials engineer employed by Siemens. Though there were some negotiations, they resulted only in agreement (as we shall see) on confidentiality; Siemens didn't seek a license from BondPro to use the process, even though BondPro had made clear in the course of the negotiations that it believed it had proprietary rights to it. Instead Miller filed a patent application on behalf of Siemens for a process similar to BondPro's (more precisely, similar to the description of BondPro's process in its appeal briefs) although among other differences it does not specify the use of an autoclave for the final step of hardening the insulation materials coating the male mold. There are other ways of applying heat and pressure; no particular way is specified in the patent application.

The Patent Office rejected Siemens' application and Siemens has never used the process. Nor for that matter has BondPro, except to make some prototypes to show Siemens. There may have been some use of BondPro's process by other companies, but if so there is no evidence of the value of such use.

Anybody other than Siemens can use the BondPro process without liability because, as BondPro acknowledges and indeed asserts, the process was disclosed to the world in Siemens's patent application. A trade secret that becomes public knowledge is no longer a trade secret. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984); CVD, Inc. v. Raytheon Co., 769 F.2d 842, 850 (1st Cir.1985); see ECT Int'l, Inc. v. Zwerlein, 228 Wis.2d 343, 597 N.W.2d 479, 482 (1999). The mere fact of mention in a public document is not controlling; no one may have noticed the document. See Hoechst Diafoil Co. v. Nan Ya Plastics Corp., 174 F.3d 411, 418 (4th Cir.1999); Gates Rubber Co. v. Bando Chemical Industries, Ltd., 9 F.3d 823, 849 (10th Cir. 1993). Publication in a patent destroys the trade secret, ...