AcryliCon USA, LLC v. Silikal GMBH, 17-15737

• Citation: 985 F.3d 1350
• Decision Date: 26 January 2021
• Docket Number: No. 17-15737,17-15737
• Parties: ACRYLICON USA, LLC, a Delaware limited liability company, Plaintiff-Appellee, v. SILIKAL GMBH, a foreign corporation, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

985 F.3d 1350

ACRYLICON USA, LLC, a Delaware limited liability company, Plaintiff-Appellee,

v.SILIKAL GMBH, a foreign corporation, Defendant-Appellant.

No. 17-15737

United States Court of Appeals, Eleventh Circuit.

January 26, 2021

Jeffrey B. Crockett, Scott A. Hiaasen, Kevin C. Kaplan, Coffey Burlington, PL, Miami, FL, Christina M. Baugh, Barnes & Thornburg, LLP, Atlanta, GA, Henry D. Fellows, Jr., Fellows LaBriola, LLP, Atlanta, GA, Gabriel Groisman, Meland Budwick, PA, Miami, FL, for Plaintiff-Appellee.

Mark Emery, David Thomas Kearns, Matthew H. Kirtland, Norton Rose Fulbright US, LLP, Washington, DC, John Da Grosa Smith, Smith, LLC, ATLANTA, GA, for Defendant-Appellant.

Before JORDAN and TJOFLAT, Circuit Judges, and SCHLESINGER,^* District Judge.

TJOFLAT, Circuit Judge:

This case involves the breach of an agreement between two parties who shared a trade secret, AcryliCon USA, LLC ("AC-USA"), and Silikal GmbH ("Silikal"). The trade secret consisted of the formula for 1061 SW, a flooring resin Silikal manufactured and sold (along with other flooring resins). The agreement provided that AC-USA and its affiliate, AcryliCon International, Ltd. ("AC-International"), would be Silikal's exclusive distributors of 1061 SW and that Silikal would not sell the resin without AcryliCon's¹ written permission.

According to AC-USA, Silikal breached the agreement by selling 1061 SW without its written permission, so it sued Silikal under common law for breach of contract ("Contract" claim) and under the Georgia Trade Secrets Act of 1990 ("GTSA")² for misappropriation of the shared trade secret ("Misappropriation" claim).³ A jury awarded AC-USA damages of $1.5 million on each of the two claims, and the District Court awarded AC-USA $3 million in punitive damages on the Misappropriation claim. The District Court thereafter denied Silikal's post-verdict motion for judgment as a matter of law on the Misappropriation and Contract claims and entered a final judgment for AC-USA for $5,861,415.⁴

Silikal appeals. It argues first that the District Court erred in denying its motion to dismiss the case for lack of personal jurisdiction. It argues alternatively that the Court erred in denying its motion for judgment as a matter of law on the Misappropriation and Contract claims.⁵ We reject Silikal's argument that the District Court lacked jurisdiction over its person, and therefore affirm the Court's denial of Silikal's motion to dismiss. We are persuaded, though, by Silikal's argument that AC-USA failed to prove its Misappropriation claim. We also agree that AC-USA failed to prove that it sustained cognizable damages on its Contract claim. We therefore reverse the District Court's judgment on the Misappropriation claim and vacate the damages awarded on the Contract claim. We also hold that AC-USA is entitled to nominal damages and attorney's fees on its Contract claim in a sum to be determined by the District Court on remand.

I.

A.

At the center of this dispute is an industrial flooring resin called 1061 SW. A flooring resin is a liquid that settles into a solid floor when it is combined with other chemicals and spread over a surface. The 1061 SW resin is unique for two reasons: It forms a floor with roughly twice the compressive strength of other resins, and it is a valuable trade secret. The 1061 SW resin is used to make commercial floors in restaurants, manufacturing facilities, hospitals, schools, grocery stores, and the like.

Although the parties shared the formula for the purpose of their manufacturer-distributor relationship, AC-USA and Silikal each claim to own the 1061 SW formula, to the exclusion of the other. Silikal traces its ownership back to 1987, when it claims to have invented the formula. AC-USA, meanwhile, claims ownership by virtue of a 2010 Global Settlement Agreement ("GSA") entered into by the parties and their affiliates. The GSA resolved a lawsuit between AC-International and Silikal America—entities affiliated with but distinct from the parties before us today.

B.

The 1061 SW formula was invented in 1987. While Silikal claims to have invented the formula on its own, AC-USA insists that Silikal merely participated in its invention, and that Bjorn Hegstad, a chemical engineer who founded AC-International, came up with the idea. According to AC-USA, Hegstad and Silikal agreed⁶ at the time of the formula's invention that the formula belonged to Hegstad and AC-International, and that Silikal possessed the formula for the sole purpose of manufacturing the 1061 SW resin for Hegstad and AC-International.

From 1987 to 1997, Hegstad sold 1061 SW in Norway under an agency agreement between Hegstad and Silikal. In 1997, AC-International and Silikal executed an agency agreement establishing AC-International as the exclusive distributor of 1061 SW resin.⁷

In 2008, AC-USA was incorporated. That same year, AC-USA entered into a licensing agreement with two affiliates of AC-International—Raliz AG and AcryliCon Distribution Est.—that gave AC-USA the right to import, market, and sell "AcryliCon Systems"⁸ in the United States, including the 1061 SW resin. AC-USA was not permitted to sell AcryliCon Systems outside of the United States without permission from AC-International.

Shortly after AC-USA was formed, disputes between AC-International and Silikal resulted in a lawsuit between the two parties.⁹ The lawsuit was resolved in 2010 when the parties entered into the GSA. Although AC-USA was not a party to the lawsuit, it was a party to the GSA.¹⁰

The GSA created a contract that accomplished several objectives ("GSA Contract"). First, it terminated the 1997 agency relationship between AC-International and Silikal. Second, it settled all present and future claims relating to the parties’ business relationship, except for claims arising from the GSA Contract itself. Third, Silikal promised that it would "preserve the secrecy" of the 1061 SW formula. Fourth, Silikal promised that it would not sell the 1061 SW resin to anyone other than AcryliCon without AcryliCon's written consent.¹¹ Fifth, Silikal promised to ship "all laboratory records and other available documents regarding the formulation and development of the 1061 SW resin" to Bjorn Hegstad. Finally, Silikal promised that it would "make no statements or representations ... regarding the formula for 1061 SW," and all parties agreed not to make statements or representations "that Silikal Products and AcryliCon Systems are the same."

The GSA Contract also contains a forum-selection provision. The provision states that disputes arising from activities in the United States shall be governed by "the laws of the United States and the State of Georgia," and that jurisdiction shall be exclusive in the Northern District of Georgia. The parties also waived any objections to personal jurisdiction and to the location of venue in the Northern District of Georgia as to all disputes relating to the GSA Contract and arising from activities in the United States. As to disputes arising outside of the United States, the GSA states that they shall be governed according to the laws of the place of the dispute.

C.

AC-USA filed this lawsuit in 2014, claiming that Silikal breached the GSA Contract by manufacturing the 1061 SW resin, selling it on a global scale, and taking credit for AcryliCon Systems in its marketing. AC-USA pled seven counts in its complaint: misappropriation of trade secrets,¹² trademark infringement,¹³ unfair competition,¹⁴ state statutory trademark infringement and unfair competition,¹⁵ common law trademark infringement and unfair competition,¹⁶ deceptive trade practices,¹⁷ and breach of contract.¹⁸

AC-USA filed its complaint in the United States District Court for the Northern District of Georgia.¹⁹ Silikal responded with a motion to dismiss for lack of personal jurisdiction. According to Silikal, the Northern District of Georgia lacked jurisdiction over its person because Silikal had not sold 1061 SW in the United States to anyone other than AcryliCon. Accordingly, the GSA, which designates the Northern District of Georgia as the jurisdiction for claims arising from activities in the United States, did not apply. For the same reason, Silikal also asserted that the Court could not exercise jurisdiction under any applicable long-arm statute.

AC-USA countered that the Northern District of Georgia could exercise personal jurisdiction over Silikal under the GSA because Silikal had sold 1061 SW resin in the United States under the label "R 61 H." The parties produced competing affidavits on the issue. AC-USA submitted an affidavit from Bernd Diel, who supervised operations at a Silikal factory in Germany. ²⁰

Diel stated that Silikal had sold 1061 SW to customers other than AcryliCon in the United States, and that when it did so, it labeled the 1061 SW as R 61 H. Silikal produced an affidavit from Hubert Weimann, Silikal's Managing Director.²¹ According to Weimann, Silikal "never sold 1061 SW or any product containing the formulation 1061 SW to any customer in the United States, other than directly to Acrylicon." Weimann acknowledged that Silikal had sold a resin called R 61 in the United States, but insisted that R 61 was distinct from 1061 SW.

The District Court denied Silikal's motion to dismiss, finding that it had personal jurisdiction over Silikal under the GSA. According to the District Court, Diel's affidavit, together with Silikal's admission that it sold R 61 in the United States, was a sufficient basis on which to exercise personal jurisdiction over Silikal.²²

Following the District Court's ruling, Silikal answered AC-USA's complaint. The answer essentially denied liability on all claims.²³ Then, after limited discovery, AC-USA filed a motion for partial summary judgment on its Contract claim,²⁴ and for a permanent injunction barring Silikal from producing or selling 1061 SW. The Court granted AC-USA's motion and issued a permanent injunction²⁵ against Silikal, in no small part because...