When two businesses enter into a contract, there is not only an expectation that both parties will fulfill their obligations as outlined within the four corners of the document, but that each side will also abstain from conduct that could prove detrimental to their respective business interests.
In a very interesting case out of Iowa, a manufacturer of finishing equipment for various industries is alleging that one of the U.S.’s most well-known manufacturers of windows did exactly this.
Back in 2008, Deimco Finishing Equipment of Tama filed a lawsuit against the Pella Corporation alleging both breach of contract and misappropriate of trade secrets.
Specifically, the complaint alleged that Pella instructed its engineers to disassemble Deimco’s finishing equipment in order to study the design and use what they learned to create their own version, an action attorneys argued was a prima facie violation of the Iowa Trade Secrets Act and a breach of the contract that expressly reserved Deimco’s ownership rights relating to design.
A trial court judge disagreed, however, dismissing the lawsuit in 2013. Here, she ruled that Deimco had failed to take reasonable measures to ensure design secrecy, pointing to everything from the availability of company tours showcasing the equipment to its prominent display at trade shows.
The matter eventually came before the Iowa Court of Appeals, where Deimco argued that none of the venues cited by the trial court revealed anything concerning the confidential design of the machinery and that it had presented sufficient evidence to merit a jury trial on both claims.
The appellate court ultimately found these arguments persuasive, as it reversed the decision of the trial court and gave the green light for the case to move toward trial earlier this week. Here, it found the internal company emails from Pella expressing reservations about disassembling Deimco’s equipment to be especially persuasive.
It remains unclear whether Pella will file an appeal with the Iowa Supreme Court.
Cases like these serve to demonstrate the wildly varying circumstances under which complex business litigation can — and frequently does — develop.