Bepex International, LLC v. Hosokawa Micron BV

Background

Bepex International, LLC and Hosokawa Micron BV (HMBV) design and manufacture custom industrial processing equipment. Their companies had once shared a parent company, and they operated for decades under license agreements that allowed HMBV to use Bepex’s proprietary information to manufacture and sell certain Bepex products in specified European countries. The last license agreement began on September 2, 2016, and expired on September 2, 2019. It required confidentiality to continue after termination.

Bepex sued HMBV for breach of contract and trade-secret misappropriation under the federal Defend Trade Secrets Act (DTSA) and the Minnesota Uniform Trade Secrets Act (MUTSA). The dispute involved three sales. Two orders were accepted before the license expired but delivered afterward; the third sale was ordered after expiration. Bepex alleged that HMBV used Bepex’s trade secrets for all three sales. HMBV argued that the trade-secret claims failed as a matter of law and that the contract claims failed because the relevant sales began while the license was still effective.

Trade-Secret Claims

The court granted summary judgment to HMBV on the DTSA and MUTSA claims and dismissed those claims with prejudice. The court did not decide whether HMBV actually misappropriated Bepex’s trade secrets. Instead, it held that the statutes could not reach the alleged conduct on this record.

The DTSA generally limits claims against foreign defendants for conduct outside the United States unless an act furthering the alleged misappropriation occurred in the United States. The court held that no reasonable jury could find such an act here. The license agreement’s United States choice-of-law and exclusive-jurisdiction provisions did not expand the DTSA’s statutory reach. The court also rejected Bepex’s arguments based on the original transfer of information and training in the United States, Bepex’s own United States activities, HMBV’s alleged failure to return drawings, royalty payments involving United States accounts, and sales allegedly connected to United States parent companies. The court found no evidence that the disputed products were sold or advertised to United States customers or ended up in the United States market.

Because no qualifying act occurred in the United States, the court likewise held that MUTSA did not apply to the alleged out-of-state conduct. The court therefore did not reach HMBV’s separate argument that Bepex had failed to identify its trade secrets with enough specificity.

Breach-of-Contract Claims

The court denied summary judgment on the breach-of-contract claims. The license agreement did not define when a sale occurred for this dispute—when HMBV accepted an order or when it delivered the equipment. The court held that the agreement was ambiguous, meaning it reasonably allowed more than one interpretation, and that the parties’ conflicting evidence about their course of dealing, the sales documents, and the timing of design and delivery created genuine disputes of material fact for a factfinder.

The court rejected HMBV’s argument that Minnesota’s Uniform Commercial Code resolved the issue because the license agreement was not a contract for the sale of goods between Bepex and HMBV. The court also stated that, to the extent Bepex intended its contract claim to include the third sale involving equipment allegedly designed independently after the license expired, HMBV’s motion was denied without prejudice because the issue had not been adequately briefed.

Damages

Because the trade-secret claims were dismissed, the court did not decide HMBV’s challenges to exemplary damages, attorney fees, or unjust-enrichment damages tied to those claims. The court denied summary judgment on Bepex’s lost-profits theory because factual disputes remained about whether Bepex could have made the disputed sales if HMBV had not made them. The court also declined to revisit the timeliness of Bepex’s lost-profits disclosure because Judge Docherty had already rejected that argument and HMBV had not objected to that part of his order.

Motions to Strike

The court affirmed Judge Docherty’s September 19, 2022 order on HMBV’s first motion to strike and overruled Bepex’s objections. Judge Docherty had found several disclosures timely but barred Bepex from using Tom Brion as an expert witness because his disclosure was late and not substantially justified or harmless. The court found no clear error or legal error in that ruling. It explained that a deposition of Brion as Bepex’s corporate representative under Federal Rule of Civil Procedure 30(b)(6) was not an expert deposition and did not change the result.

The court denied HMBV’s second motion to strike as moot. The challenged materials concerned the trade-secret claims or related damages theories, which were no longer viable after summary judgment was granted on those claims.

Disposition

The court ordered that HMBV’s motion for summary judgment was granted in part and denied in part: granted on the DTSA and MUTSA claims and denied on the breach-of-contract claims. HMBV’s second motion to strike was denied as moot. Bepex’s objections to Judge Docherty’s first-motion-to-strike order were overruled, and that order was affirmed.