ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
Brad H. Bearnson (#3633)
Aaron K. Bergman (#13147)
BEARNSON & CALDWELL, LLC
399 N. Main Street, Suite 270
Logan, Utah 84321
Email: bbearnson@bearnsonlaw.com
Email: abergman@bearnsonlaw.com
Attorney for Defendants Dutro Company, Reality Engineering, Inc.,
Vicki Davis, William Dutro, and Lee Allen.
IN THE THIRD JUDICIAL DISTRICT COURT,
SALT LAKE COUNTY, UTAH
SECTOR 10, INC., a Delaware corporation;
SECTOR 10 SERVICES USA, INC., a Utah
corporation; and SECTOR 10 HOLDINGS,
INC., a Nevada corporation,
Plaintiffs,
v.
DUTRO COMPANY, a California
corporation; REALITY ENGINEERING,
INC., a Washington corporation; VICKI K.
DAVIS, an individual; WILLIAM DUTRO, an
individual; LEE ALLEN, an individual; JOHN
B. GARGETT, an individual; TRUSYS, INC.,
a Washington corporation; VALLEY
INCEPTION, LLC, a Delaware limited
liability company; INCISIVE SOFTWARE
CORPORATION, and PROXIMEX
CORPORATION, a Delaware corporation,
Defendants.
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
Case No. 119907606
Judge: Honorable Kara Pettit
(Consolidated with Case Nos. 100912234,
100915682, and 100916065)
This matter comes before the Court pursuant to three (3) dispositive motions for
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
Civil No. 119907606
Page 1
The Order of the Court is stated below:
Dated: February 04, 2019 /s/ KARA PETTIT
02:52:15 PM District Court Judge
February 04, 2019 02:52 PM 1 of 7
summary judgment. On January 30, 2018, defendants DUTRO COMPANY, REALITY
ENGINEERING, INC., VICKI K. DAVIS, WILLIAM DUTRO, and LEE ALLEN (hereinafter
referred to collectively at times as the “Dutro” defendants). That same day, defendant
PROXIMEX CORPORATION, LLC (hereinafter referred to as “Proximex”) filed a joinder,
adopting to itself the same law, arguments, and reasoning as set forth in the Dutro defendants’
motion for summary judgment.
That same day, January 30, 2018, Proximex filed its own motion for summary judgment.
Similarly, on January 30, 2018, VALLEY INCEPTION, LLC (“Valley Incisive”) and INCISIVE
SOFTWARE CORPORATION (“Incisive Software”) filed their motion for summary judgment,
which by and large constituted a joinder in those aforementioned motions filed
contemporaneously by the Dutro defendants, and Proximex. Each of the above motions were
fully briefed, save that Plaintiffs did not file any brief in opposition to that motion for summary
judgment filed by Valley Inception and Incisive Software Corporation.
On August 22, 2018, the Court heard oral argument on each of the above motions as
presented by each of the parties to this case. On behalf of the Dutro defendants, argument was
presented by Aaron K. Bergman of Bearnson & Caldwell, LLC. On behalf of Proximex,
argument was presented by Francis DiGiovanni and Thatcher Rahmeier. On behalf of Valley
Inception and Incisive Software, argument was presented by Kenneth B. Black. On behalf of
Plaintiffs, argument was presented by Mr. Robert E Aycock. Plaintiff, by representation through
Pericles DeAvila was also present for the oral argument.
On October 10, 2018, the Court held a teleconference with each of the parties, and
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
Civil No. 119907606
Page 2
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announced its ruling orally, instructing Mr. Bergman as counsel for Dutro defendants to draft,
distribute, and present for the Court’s signing a proposed order. The Court’s reasoning is also
adequately set forth in that October 10, 2018 teleconference, which is hereby incorporated by
reference into this Order.
THEREFORE, having reviewed the pleadings, having reviewed and being apprised of the
applicable law and authorities, and having held and heard oral argument from each of the
respective parties, the Court hereby finds and orders as follows:
1. To the issue of whether a trade secret exists, the Court finds that Defendants
carried, and met their initial burden at summary judgment by showing that there is no genuine
issue of material fact as to the existence of a protectable trade secret.
2. As the nonmoving parties, Plaintiffs are entitled to, and this Court has viewed the
facts presented in that light most favorable to Plaintiffs, attributing to Plaintiffs all positive
inferences that could reasonably be derived therefrom. Notwithstanding, Defendants having met
their burden, the burden then shifted to Plaintiffs who while being the nonmoving parties,
nonetheless do bear the burden of proof at trial.
3. Therefore, for purposes of the existence of a trade secret the question presented to
the Court is whether Plaintiffs set forth evidence of a trade secret, and that said trade secret, if
any, was not generally known or readily ascertainable in the public domain. While this Court
must construe the facts in that light most favorable to the Plaintiffs, regarding the existence of a
trade secret, there is no presumption. Thus, the Court holds that the burden is squarely on
Plaintiffs to present the aforementioned evidence.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
Civil No. 119907606
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4. The Court holds that Plaintiffs have not met their burden and have not set forth
evidence of a trade secret as defined by the Utah Trade Secret Act. As mentioned above, the
reasoning and basis for this holding is adequately set forth in that October 10, 2018 oral ruling.
5. The Court also holds that Plaintiffs failed to present evidence as to how the
alleged trade secret is not already contained in the public domain. It is well established that the
disclosure of such trade secrets in the Plaintiffs’ patent applications would extinguish the trade
secret. Plaintiffs themselves acknowledge that that which was disclosed in their patent
applications could not form the basis of a trade secret claim. Yet, the Plaintiffs presented no
evidence of a trade secret outside of that information and those documents already contained in
Plaintiffs’ patent and patent applications. Thus, the Court holds that Plaintiffs’ trade secret claim
is in reality Plaintiffs’ attempt to protect that which patent law might have protected had
Plaintiffs pursued to completion their patent applications.
6. The Court also finds and holds that, as a matter of law, the source code cannot
form the basis of Plaintiffs’ trade secret claim and it belongs to Reality Engineering. It is
undisputed that the source code was developed by Reality Engineering. It is also undisputed that
Plaintiffs had no work-made-for-hire agreement, nor any non-disclosure agreement signed by
Reality Engineering. See 17 U.S.C. 101. Furthermore, even viewing the evidence in the light
most favorable to Plaintiffs, with all reasonable inferences derived therefrom as the Court must,
Plaintiffs have presented no evidence showing that Reality Engineering was controlled by or
under the common control of Dutro Company. As such, the Court holds, Reality Engineering is
not an “affiliate” as defined by the Master Agreement.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
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7. Therefore, the Court GRANTS Dutro Defendants’ motion for summary judgment
against the Plaintiffs’ claims to the extent such claims relate to the misappropriation of an
alleged trade secret, and specifically dismisses with prejudice Plaintiffs’ Second, Fifth and
Seventh Causes of Action against Reality Engineering and Lee Allen, to the extent such relate to
misappropriation of the alleged trade secret.
8. The Court notes that as mentioned at oral argument, Plaintiffs’ Fifth Cause of
Action raises allegations in relationship to misrepresentations by Lee Allen. Those claims are not
affected by the above ruling.
9. Regarding the statute of limitations as raised by Proximex, Valley Inception, and
Incisive Software, the Court finds that there are disputed issues of material fact regarding notice,
including actual inquiry and constructive notice, that precludes summary judgment on the basis
of the statute of limitations governing Plaintiff’s alleged trade secret claim. Such must be the
Court’s conclusion when viewing the evidence and all reasonable inferences in a light most
favorable to the Plaintiffs. Notwithstanding, because the Plaintiffs have failed to set forth
evidence as to the existence of a trade secret, and further have failed to set forth evidence that the
alleged trade secret has not already been disclosed in Plaintiffs’ patent and patent applications,
the statute of limitations issue is moot.
10. The Court GRANTS Proximex’s, Valley Inception’s, and Incisive Software’s
request for summary judgment and hereby dismisses Plaintiffs’ Second Cause of Action
(Injunctive Relief) and Seventh Cause of Action (Declaratory Relief) to the extent such relates to
misappropriation of the alleged trade secret. In addition, the Court GRANTS summary judgment
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
Civil No. 119907606
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to Proximex, Valley Inception, and Incisive Software, dismissing Plaintiffs’ Sixth Cause of
Action (Misappropriation of Trade Secrets) in its entirety. Because Plaintiffs’ claims against
Proximex, Valley Inception, and Incisive Software arise entirely from the misappropriation of an
alleged trade secret, and there is no evidence of a trade secret, these defendants are dismissed
with prejudice.
11. Finally, the Court recognizes that there was some discussion by Dutro Company
as to Plaintiffs’ First Cause of Action, on whether a contract between Dutro Company and
Plaintiffs exits absent defining the confidential information protected by that agreement. The
Court holds that this issue is a matter for phase II discovery, and therefore is not yet ripe.
Wherefore, the Court withholds any ruling as to that portion of Dutro Company’s motion.
* * * End of Order * * *
(Final Upon Court’s Placement of Electronic Signature and Electronic Seal at Top of First Page)
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
Civil No. 119907606
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CERTIFICATE OF SERVICE
In accordance with Rule 7 of the Utah Rules of Civil Procedure, I hereby certify that a
true and correct copy of the foregoing ORDER GRANTING IN PART AND DENYING IN
PART DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT was, for the purpose of
review and approval as to form, served on the 23rd day of October, 2018, and revised and served
by Plaintiff’s counsel on October 30, 2018, via email to the following:
Robert E. Aycock
Hilda Echegaray
William Chadwick
PIA ANDERSON MOSS HOYT, LLC
136 E. South Temple, Suite 1900
Salt Lake City, Utah 84111
Kenneth B. Black
Jordan C. Bledsoe
STOEL RIVES, LLP
201 S. Main Street, Suite 1100
Salt Lake City, Utah 84111
Deborah Chandler
JONES WALDO HOLBROOK &
McDONOUGH, P.C.
170 S. Main, Suite 1500
Salt Lake City, Utah 84101
Francis DiGiovanni
Thatcher Rahmeier
DRINKER BIDDLE & REATH, LLP
222 Delaware Avenue, Suite 1410
Wilmington, Delaware 19801-1621
/s/ Aaron K. Bergman______________
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTIONS FOR SUMMARY JUDGMENT
Civil No. 119907606
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February 04, 2019 02:52 PM 7 of 7
