United States District Court, D. Nebraska
FARMERS EDGE INC., FARMERS EDGE U.S. INC., and FARMERS EDGE U.S. LLC, Plaintiffs/Counterclaim Defendants,
FARMOBILE, LLC, JASON G. TATGE, HEATH GARRETT GERLOCK, and RANDALL THOMAS NUSS, Defendants/Counterclaimants.
MEMORANDUM AND ORDER
F. Bataillon Senior United States District Judge.
matter is before the court after a bench trial on May 23,
2018, and May 24, 2018, on a claim for attorney fees under
the Defend Trade Secrets Act (“DTSA”), 18 U.S.C.
§ 1835, sought by defendants/counterclaimants Farmobile,
LLC, Jason G. Tatge, Heath Garrett Gerlock, and Randall
Thomas Nuss (hereinafter, collectively,
“Farmobile”, or “the individual
defendants” when referring to Tatge, Gerlock and Nuss,
) from plaintiffs/counterclaim defendants Farmer's Edge
Inc., Farmer's Edge (US) Inc., and Farmers Edge (US)
LLC's (collectively, “FEI”).
action involves the disintegration of a business and
employment relationship, alleged misuse of proprietary
information, and other alleged business-related torts and
defenses. United States and Canadian patents and patent law
issues are tangentially involved in the dispute. The relevant
background details are set forth in the court's previous
orders and need not be repeated herein. See Filing No.
407 and Filing No. 408.
the court granted Farmobile's motion for summary judgment
on FEI's claim for misappropriation of trade secrets
under the DTSA, as well as its claims under the Nebraska
Trade Secrets Act (“NTSA”), Neb. Rev. Stat.
§ 87-504, and common law. Farmers Edge Inc. v.
Farmobile, LLC, No. 8:16CV191, 2018 WL 2869005, at *6
(D. Neb. May 3, 2018). The court found that FEI could not
maintain an action under the DTSA because FEI failed to
identify any use or disclosure of the alleged trade secrets
after the enactment of the DTSA in 2016. Id. at *5.
Further, the court dismissed FEI's NTSA claim, finding
that “none of the trade secrets identified by FEI are
actual trade secrets under Nebraska law because the allegedly
protected information was at least readily ascertainable by
proper means.” Id.The court denied FEI's
cross-motion for summary judgment. Filing No. 407.
Thereafter, the parties settled the remaining claims and
counterclaims, except for Farmobile's DTSA claim for
attorney fees. That claim was tried to the court.
argues that FEI acted in bad faith in bringing and
maintaining the DTSA action. It argues that the court has
already found FEI's DTSA claim objectively specious and
contends the only issue for resolution is FEI's
subjective intent in bringing and continuing to maintain the
claim. It asserts that FEI had either actual knowledge that
its trade secret misappropriation claim had no merit at its
inception or at some point further along in the litigation or
was reckless in not knowing that the claim lacked merit. It
argues that FEI's shifting definitions of its trade
secrets are evidence of its subjective bad faith. Further,
Farmobile argues that there is no continuing violation since
the misappropriation occurred the day Farmobile filed its
patent application. It contends that FEI knew the
misappropriation occurred more than 3 years before the DTSA
the other hand, contends that it had a good faith belief the
Farmobile's Canadian and U.S. Patent Application
disclosed and revealed Crop Ventures' trade secrets in
violation of the DTSA. It contends the DTSA claim is not
objectively specious because continued use of a trade secret
after the date of enactment of the DTSA violates the DTSA
even if the misappropriation occurred before that date. FEI
also contends it acted with subjective good faith in
concluding that Farmobile violated the DTSA after its
enactment by filing an amendment and response to a Non-Final
Office Action with the United States Patent and Trademark
Office (“USPTO”) in May of 2016. Further, it
relies on the fact that Farmobile has not withdrawn its
Canadian patent and has filed an action for infringement
against FEI in Canada.
FINDINGS OF FACT
filed this lawsuit on April 29, 2016 and the Farmobile
defendants were served with the summons and complaint on May
9, 2016. The Defend Trade Secrets Act went into effect on May
11, 2016. SeePub. L. 114- 153, 130 Stat. 376. On
June 22, 2016, FEI amended its complaint to add a
misappropriation of trade secrets claim under the DTSA. FEI
alleged that Farmobile had misappropriated the trade secrets
of Crop Ventures, a company that FEI had acquired. FEI also
alleged that Farmobile improperly used Crop Ventures'
software code. The record shows that on June 10, 2016,
Farmobile filed an “Amendment and Response to Non-Final
Office Action” with the USPTO that argued that the
claimed invention in its U.S. Patent Application was novel,
focusing on the fact that the claimed invention was using
multiple implement profiles to match and understand the data
coming from the implement.
bench trial, Wade Barnes, the CEO of FEI, testified that he
made the decision to go forward with the DTSA claim, in
consultation with Ron Osborne and Chief Technical Officer
Kevin Grant, though he acknowledged he did not know when the
DTSA was enacted. He stated that he and Osborne talked about
what was claimed in the patent, the work that had been done
at Crop Ventures, and the similarities between the two. He
admitted that although he was CEO, he was not “detailed
around the engineering and the technical side of it”
and characterized himself as the “big picture
guy.” Further, Barnes stated that although he did not
know all the engineering details, Osborne was one-hundred
percent confident that the claims in the patent were
identical to things that had been worked on at Crop Ventures.
He also stated that as things developed in discovery, he
became more confident of FEI's position in pursuing the
claim. In particular, he pointed to emails disclosed in
discovery. Barnes did not recall when he was made aware of
the fact that there was no evidence that FEI had copied Crop
Ventures' software code.
also stated that FEI once pursued a partnership or joint
venture with Farmobile, and, as part of that negotiation, had
become aware in May of 2014 that Farmobile had a patent
application. He also stated that the fact that precision
agriculture companies had not built a telemetrics device like
those involved in this litigation before then led him to
believe there were trade secrets involved. He stated that at
the time he acquired Crop Ventures, he was not fully aware of
the fact that Crop Ventures might have a claim against
Farmobile and the individual defendants, but he thought there
was something fishy about the situation.
Osborne, formerly CEO of Crop Ventures and now employed as
Chief Strategy officer at FEI, testified that he reviewed the
complaint and amended complaint in this case before filing
and reviewed responses to interrogatories during the course
of the litigation. He stated that Crop Ventures was sold to
FEI on January 31, 2015. He stated that no money changed
hands in connection with the transaction. At the time of the
acquisition, FEI was Crop Ventures' only customer.
stated he had been angry, hurt, and disappointed with Jason
Tatge's departure from Crop Ventures and subsequent
creation of Farmobile. He testified that he knew that Tatge
had formed a new company that was competing with Crop
Ventures by December of 2013. With respect to Farmobile's
patent application, Osborne testified that he believed he had
first seen the document in the fall of 2015 in an internal
email from someone at FEI. He was asked to determine if the
inventions described in the patent were conceived at Crop
Ventures. He considered everything in the patent to have been
developed or conceived at Crop Ventures. He stated that
although the terminology was different, the concepts were the
testified to his background as an entrepreneur, having
started several tech-related companies. He first created a
company called Transmission Networking and later formed
Salus-Novus, a medical data technology firm. In 2012, Heath
Gerlock, then a Salus-Novus employee, proposed an ag-related
implement to automate the creation of a farm record. He
stated that the terminology “electronic farm”
record had been used and the concept of a travel path had
been discussed at Crop Ventures. He stated Farmobile's
patent application included “exactly what they had been
doing at Crop Ventures-wanting to have the CAN data
automatically create an implement profile inside the platform
so that Crop Ventures could more intelligently record the
information, display it to the farmer and feed it into the
record.” He stated that the information in the patent
appeared to be taken from work done by Gerlock and Randy Nuss
at Crop Ventures. He believed these were designs and concrete
plans by Crop Ventures to achieve its business goals.
also testified that he believed the information in
Farmobile's patent application contained Crop
Ventures' trade secrets and he also believed that the
essence of what Crop Ventures was doing was not in the public
sphere at that time. He further testified that Nuss had been
working on a method for mapping parameters when he left Crop
Ventures. After the lawsuit was filed, Osborne became aware
of an email from Randy Nuss to Tatge and Gerlock that
discussed the issue.
George Edwards testified that he was retained as an expert on
behalf of Farmobile to perform a software analysis and
software comparison of products developed by Crop Ventures
and Farmobile. He stated that at the time the individual
defendants left Crop Ventures, the software and source code
for the Crop Ventures product did not have the functionality
to perform the functions Osborne described. Dr. Edwards
further testified that the technical concepts that were
identified in the report of FEI's expert, Aaron Ault,
were disclosed or ascertainable from public sources of
information. He also stated he is sometimes asked to do that
sort of analysis in a pre-lawsuit investigation.
Tatge also testified at the trial. He is presently the
founder and CEO of Farmobile. He stated that while employed
at Crop Ventures, he became aware that Crop Ventures'
product could not do what Osborne had claimed it could do. He
stated he resigned from the company with cause because he had
not been paid. He remained in contact with Osborne over the
summer of 2013, occasionally texting or calling Osborne about
the unpaid salary. He testified he attempted to negotiate
with Osborne to purchase the assets of Crop Ventures in
August 2013. He testified that, at that time, ...