General Water Technologies v. Van Zweden

2022 UT App 90THE UTAH COURT OF APPEALS
GENERAL WATER TECHNOLOGIES INC.,
Appellee,
v.
NATHAN VAN ZWEDEN, DAVE ROTZLER, AND
MED WATER SYSTEMS LLC,
Appellants.
Opinion
No. 20200414-CA
Filed July 14, 2022
Second District Court, Farmington Department
The Honorable David M. Connors
No. 160700809
Troy L. Booher, Dick J. Baldwin, Taylor Webb,
Bruce M. Pritchett Jr., Jonathan R. Rudd, and
Dusten L. Heugly, Attorneys for Appellants
Sean N. Egan, Attorney for Appellee
JUSTICE DIANA HAGEN authored this Opinion, in which JUDGES
DAVID N. MORTENSEN and RYAN D. TENNEY concurred. 1
HAGEN, Justice:
¶1 To establish a trade secret misappropriation claim, the
plaintiff must show that the defendant misappropriated
information that meets the definition of a trade secret under the
Utah Uniform Trade Secrets Act (the UUTSA). See Utah Code
1. Justice Diana Hagen began her work on this case as a judge of
the Utah Court of Appeals. She became a member of the Utah
Supreme Court thereafter and completed her work on the case
sitting by special assignment as authorized by law. See generally
Utah R. Jud. Admin. 3-108(4).
General Water v. Van Zweden
Ann. § 13-24-2(4) (LexisNexis 2013). Whether information
qualifies as a trade secret is ultimately a question for the fact
finder. See USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 46, 372 P.3d
629. In this case, a jury found Appellants Nathan Van Zweden and
Dave Rotzler liable for misappropriating two purported trade
secrets held by General Water Technologies Inc.: (1) the design of
a water filtration system and (2) pricing-related information. We
hold that there was sufficient evidence to support the jury’s
determination as to the design secret, but not the pricing secret.
Therefore, we affirm in part and reverse in part.
BACKGROUND 2
¶2 General Water Technologies Inc. (Gen Water) and Med
Water Systems LLC (Med Water) are two Utah-based companies
that each supply medical-grade water filtration systems to
healthcare facilities throughout the country. Van Zweden and
Rotzler are former employees of Gen Water who left for Med
Water in late 2014 and 2015, respectively. Following their
departures, Gen Water learned that one of its largest clients had
decided to switch providers to Med Water. Gen Water then sued
Van Zweden, Rotzler, and Med Water for trade secret
misappropriation. After a jury found Van Zweden and Rotzler
liable, the district court enjoined them from using Gen Water’s
trade secrets.
2. “On appeal, we review the record facts in a light most favorable
to the jury’s verdict and recite the facts accordingly. We present
conflicting evidence only as necessary to understand issues raised
on appeal.” USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 8 n.3, 372
P.3d 629 (cleaned up).
20200414-CA 2 2022 UT App 90General Water v. Van Zweden
History
¶3 Gen Water produces and sells water filtration systems for
use in medical laboratories. The machine at issue in this case
produces Type I grade reagent water—water suitable for use in
medical analyzers. As one of Gen Water’s salesmen, Van Zweden
traveled the country marketing the machine to various healthcare
facilities. And although Rotzler had originally been hired as a
part-time accountant, Gen Water later trained him to assemble its
machines and install them at customers’ facilities. Together, Van
Zweden and Rotzler’s experience at Gen Water gave them “a leg
up” once they left the company for Med Water and began
competing for potential clients.
¶4 One of Gen Water’s larger clients, Mayo Clinic, had
purchased “a little over [twenty]” of Gen Water’s machines for its
“locations in Wisconsin and Minnesota.” Mayo Clinic had also
contracted Gen Water to provide maintenance services on the
purchased machines for an annual fee. Shortly before the contract
term had run, however, Van Zweden began corresponding with
Mayo Clinic’s representatives—this time on Med Water’s behalf.
He indicated that Med Water could provide the same
maintenance services but at a significant discount. Mayo Clinic
subsequently notified Gen Water of its intention not to renew the
contract, then signed with Med Water.
¶5 Gen Water discovered the correspondence and promptly
filed suit against Van Zweden, Rotzler, and Med Water,
requesting damages and an injunction under the UUTSA. The gist
of the allegations was that Med Water had consistently underbid
Gen Water to potential clients and that it did so by relying on
information that Van Zweden and Rotzler had acquired while
working for Gen Water. This included Gen Water’s “confidential
and proprietary pricing and bid strategy information.” Gen Water
also alleged that the defendants were marketing a water filtration
system that was “nearly identical” to Gen Water’s machine.
20200414-CA 3 2022 UT App 90General Water v. Van Zweden
Nondisclosure Issues
¶6 A lengthy discovery period ensued. But several years into
the litigation, Gen Water had yet to disclose a computation of its
damages. The defendants therefore moved to exclude all evidence
of Gen Water’s damages for untimely disclosure—a request
granted by the district court. Gen Water could therefore pursue
only injunctive relief. See InnoSys, Inc. v. Mercer, 2015 UT 80, ¶ 34,
364 P.3d 1013 (recognizing “a right under the [UUTSA] to the
issuance of an injunction without regard to proof of measurable
economic injury to the plaintiff”).
¶7 The defendants later took issue with Gen Water’s
description of its trade secrets and, less than one month before
trial, moved to exclude “evidence of [Gen Water’s] unspecified
trade secrets.” By that point, Gen Water had seemingly clarified
that there were two alleged trade secrets: (1) “its filtration system”
and (2) “its pricing information, its strategies for maintaining and
soliciting current and prospective customers including pricing
and bidding information.” Even so, the defendants argued that
Gen Water had not timely disclosed “any witness or any
document that would specifically identify what exactly [its] trade
secrets” were. They also complained about Gen Water’s lack of
“specificity as to what is secret about its pricing, and . . . what is
secret about its purification/filtration system.” Gen Water
opposed the motion and, by the time the defendants filed their
reply memorandum, eight days remained before trial. The
defendants separately objected to Gen Water’s pretrial
disclosures, arguing, similarly, that “[n]ot a single one of [Gen
Water’s] witnesses was ever disclosed as testifying at trial about
specifically identified trade secrets.”
¶8 These issues were addressed on the first day of trial, after
yet another nondisclosure issue arose. Gen Water had arrived
with a model of its water filtration system, which it intended to
use as a demonstrative exhibit. The defendants objected on the
20200414-CA 4 2022 UT App 90General Water v. Van Zweden
basis that it, too, had not been disclosed. Gen Water countered
that the nondisclosure was harmless, in part, because the
defendants could just as easily “bring in their own machine” for
demonstrative purposes. The district court ruled, “I’m going to
allow the machine to be shown . . . . If the defendants wish to bring
their own machine at some point and point to it, they may do the
same thing.”
¶9 The court then addressed the defendants’ prior
nondisclosure objections. “[W]e’ll just take it on a . . . question-by-
question basis. If there’s an appropriate objection, you’ll raise it at
that time, and we’ll deal with it.” The court added that, “to the
extent there are going to be objections to specific testimony based
on specific nondisclosure,” it would reserve ruling on those
objections until they were raised at trial.
¶10 But the defendants raised no such objection to the evidence
Gen Water actually presented at trial. On day two of trial, they did
ask the court to exclude two potential witnesses identified for the
first time in Gen Water’s pretrial disclosures. See Utah R. Civ. P.
26(a)(5)(A)(i) (“A party must . . . separately identify[] witnesses
the party will call and witnesses the party may call.”). Gen Water
indicated that it had not intended to call either individual as a
witness, so the court excluded them. Gen Water then presented
significant witness testimony and physical evidence during its
case-in-chief, with no further nondisclosure objections by the
defendants. At one point, for instance, Gen Water moved to admit
a set of computer-aided drawings of its water filtration system.
When the court asked the defendants if they had any objections to
its admission, the defendants said, “No objection.”
Gen Water’s Evidence
¶11 At trial, Gen Water’s trade secrets were defined in the jury
instructions as follows: (1) “the design of [the] water purification
machine” (the design secret) and (2) “pricing and bidding
20200414-CA 5 2022 UT App 90General Water v. Van Zweden
information” (the pricing secret). As witnesses, Gen Water called
several of its representatives to testify, including one of its
technicians, its management consultant, and a billing specialist.
¶12 The technician and consultant testified about the design
secret. Collectively, they testified that Gen Water was formed in
2001 and, at that time, had primarily distributed a German
company’s product. Although Gen Water had toyed with
developing its own machine for several years, it began seriously
doing so in 2008, after the German company raised its prices. Gen
Water then hired an inventor to build a prototype based on “some
drawings” of what it envisioned its design would look like, using
“half of an SG box”—the German company’s product—“just to
get the idea.” The inventor’s prototype was not to Gen Water’s
satisfaction, and the working relationship ended after the
inventor was unable to resolve its issues. Gen Water continued to
develop the product on its own, working, at times, through “trial
and error.” In total, it took “approximately two years” before Gen
Water’s machine was ready to be sold.
¶13 The final product consisted of a “head” and a “reservoir.”
It housed a “seven-step [filtration] process” for producing Type I
water and was “largely assembled” using component parts “from
third party suppliers.” The technician and consultant both
pointed to various parts of Gen Water’s demonstrative exhibit
while testifying. And when discussing the internal components of
the machine, Gen Water’s witnesses opened the demonstrative
exhibit using an ordinary Phillips-head screwdriver.
¶14 The technician and consultant identified at least two ways
in which Gen Water’s machine was preferable to competitors’
systems. First, its internal components were arranged to optimize
the size of the machine. As the technician testified, “Laboratories
generally don’t have a lot of room. So we made it as small as we
could.” Later, when challenged by defense counsel regarding
whether the machine’s individual components were trade secrets,
20200414-CA 6 2022 UT App 90General Water v. Van Zweden
the technician responded that “[t]he way they are put together is
the secret.” The consultant added, “[T]he key element of our
machine is the size . . . . The way we put stuff in it, it was on
purpose.” Indeed, “the major difference” between Gen Water’s
machine and the inventor’s prototype was “the way that
everything [was] mounted in the machine.”
¶15 Second, Gen Water designed the machine “for longevity.”
The technician testified,
[W]e were trying to make . . . a machine that we
didn’t have to visit very often. It was very reliable.
The customer could change the parts on it if they
needed. It was very important for them. If their
water machine goes down, then their analyzer
doesn’t work. And, you know, if it’s in an
emergency room, it could put them in big trouble.
So we tried to make it as easy to fix as possible. . . .
These filters in the front, . . . the customer can change
those.
Similarly, the consultant explained that other “machines in the
field . . . were not very reliable . . . . We only wanted to see our
customers once a year. We didn’t want to see them every two or
three months. So we designed it into the machine for longevity to
last that long.” The technician added that, once a machine had
“run its natural life,” the client would generally return it to Gen
Water for disposal.
¶16 The technician and consultant also testified about what
Gen Water had done to ensure the secrecy of the machine’s
design. The consultant testified that the company kept the
schematics for its machine locked in a safe and that only he knew
the combination. When questioned by defense counsel, the
technician acknowledged that Gen Water had a photo of its
machine on the company’s website—taken from the front with the
20200414-CA 7 2022 UT App 90General Water v. Van Zweden
cabinet-door open. But even though the photo displayed a portion
of the machine’s interior, the technician stated that it was
impossible to reconstruct the machine based solely on that limited
view. “It doesn’t show where anything goes . . . . Just looking at
the picture would be comparable to looking at a dashboard on a
car and be[ing] able to wire the speedometer . . . .”
¶17 Finally, the technician and consultant testified that Med
Water marketed a machine that was essentially the same as Gen
Water’s. By marketing an identical product to Gen Water’s
machine, Med Water had effectively forced Gen Water “to
compete against [itself]” when vying for customers.
¶18 For his part, the billing specialist testified about the pricing
secret. The billing specialist said that Gen Water sold its product
“to labs and hospitals across the country,” working “through
analyzer [and] sales representatives.” Like Mayo Clinic, Gen
Water’s clients were ordinarily “billed on an annual basis after the
initial cost [of] the [machine] itself,” for “re-certification and
continuation of the warranty,” as well as “for any filters that they
might have used throughout the year.” Accordingly, with each
potential client, the billing specialist would generate a quote that
reflected both the cost of the machine and the annual costs.
¶19 When asked to identify the “information that Gen Water
uses for sales that it keeps secret,” the billing specialist responded
that such information included “the pricing of [Gen Water’s]
system itself” and “the pricing on the annual re-certification and
warranty continuation.” Gen Water’s “pricing” was “not on [its]
website,” and, to the billing specialist’s knowledge, were someone
to call and ask about pricing, Gen Water would not “give them
that information.” But on account of Van Zweden’s position at
Gen Water, he had “[o]n numerous occasions . . . request[ed]
information about a particular client.” In turn, the billing
specialist had “emailed him a complete client list, which
20200414-CA 8 2022 UT App 90General Water v. Van Zweden
include[d] the pricing of the annual re-certification of each
location.”
¶20 Pressed on how exactly Gen Water had developed the
“prices for the machines and the services,” the billing specialist
testified as follows:
It’s a combination of finding all the costs of all the
components that go into the system, and
determining . . . from there what the final cost of the
system is. We also have shipping costs. We have
costs of sending an individual out to the lab, you
know, plane fare, hotel, car, those types of things.
And then their time to put the system in as well.
He later clarified, however, that Gen Water charged “a standard
price” for its “water systems and . . . annual maintenance
contracts.” Gen Water’s prices did not change from “one location
versus the other”; only its profit margin did. And because the
billing specialist merely generated quotes using QuickBooks
software, he could not speak to what “factors” Gen Water had
used to arrive at its standard pricing.
Jury Verdict and Post-Trial Motions
¶21 At the close of Gen Water’s case-in-chief, the defendants
moved for a directed verdict, arguing that Gen Water had
presented insufficient evidence to support the existence of its
trade secrets under the UUTSA. The district court denied the
motion and, at the end of trial, the jury concluded that Gen Water
had established the existence of both of its trade secrets. The jury
further found that those trade secrets had been misappropriated
by Van Zweden and Rotzler, but not by Med Water.
Consequently, the district court permanently enjoined only Van
Zweden and Rotzler from using Gen Water’s trade secrets.
20200414-CA 9 2022 UT App 90General Water v. Van Zweden
¶22 The defendants filed two post-trial motions, a motion for
judgment notwithstanding the verdict (JNOV), and a motion to
clarify the scope of the injunction. The motion for JNOV contained
the same arguments that Van Zweden and Rotzler now make on
appeal, including a challenge to the sufficiency of the evidence.
The district court denied the motion for JNOV, reasoning that
although “the evidence presented at trial was conflicting,” there
was sufficient evidence to support the jury’s verdict.
¶23 In their motion to clarify, the defendants requested
clarification “that the injunction does not apply to Med Water or
anyone acting on behalf of Med Water”—including Van Zweden
and Rotzler. The court denied the request but granted the motion
“[o]n a limited basis.” That is, the court “modif[ied] the language
of the permanent injunction to more closely follow . . . [rule]
65A(d)” of the Utah Rules of Civil Procedure. Thus, under the
modified injunction, “Van Zweden and Rotzler, their officers,
agents, servants, employees, and attorneys, and any person in
active concert or participation with Van Zweden or Rotzler who
has notice or hereafter receives notice of this injunction, are . . .
enjoined” from using either of Gen Water’s trade secrets. The
defendants appeal.
ISSUES AND STANDARDS OF REVIEW
¶24 There are essentially three issues before us. First, Van
Zweden and Rotzler argue that the district court erred by
permitting Gen Water “to present . . . undisclosed evidence” at
trial, despite their motion to exclude and pretrial objection. They
separately argue that Gen Water should not have been able to use
its untimely disclosed demonstrative exhibit. Because both
arguments go to the district court’s application of our discovery
rules, we discuss them together. Although a district court’s
“interpretations of the Utah Rules of Civil Procedure are . . .
reviewed for correctness, we grant district courts a great deal of
20200414-CA 10 2022 UT App 90General Water v. Van Zweden
deference in matters of discovery and review discovery orders for
abuse of discretion.” RJW Media Inc. v. Heath, 2017 UT App 34,
¶ 18, 392 P.3d 956 (cleaned up).
¶25 Second, Van Zweden and Rotzler contend that “the district
court erred in denying [their] motion for directed verdict and
[JNOV]” because Gen Water “failed to . . . prove a protectable
trade secret” at trial. We review the court’s decisions in this regard
for correctness. See USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 34,
372 P.3d 629. “A directed verdict and a [JNOV] are justified only
if, after looking at the evidence and all reasonable inferences in a
light most favorable to the nonmoving party, the [district] court
concludes that there is no competent evidence which would
support a verdict in the nonmoving party’s favor.” Id. (cleaned
up).
¶26 Finally, Med Water challenges the district court’s refusal to
clarify the scope of the permanent injunction as requested. “The
granting or refusal of an injunction, whether temporary or
permanent, . . . rests in the sound discretion of the [district] court
. . . .” Shell Oil Co. v. Stiffler, 48 P.2d 503, 506 (Utah 1935). We
therefore defer to the court’s discretion unless its decision was
premised on “an erroneous conclusion of law,” or lacked “an
evidentiary basis.” See RJW Media, 2017 UT App 34, ¶ 18 (cleaned
up).
ANALYSIS
I. Nondisclosure Issues
¶27 Van Zweden and Rotzler argue that “it was error for the
district court to allow [Gen Water] to present its undisclosed
evidence” at trial despite their prior motion to exclude and
objection to Gen Water’s pretrial disclosures. They argue that
“[t]he district court also erred by allowing [Gen Water] to present
20200414-CA 11 2022 UT App 90General Water v. Van Zweden
an undisclosed device as a demonstrative exhibit at trial.”
(Cleaned up.) We disagree with both arguments.
¶28 Under rule 26, a party’s initial disclosures must identify
“each fact witness the party may call in its case-in-chief” and must
include, generally, “a copy of all documents, data compilations,
electronically stored information, and tangible things in the
possession or control of the party that the party may offer.” Utah
R. Civ. P. 26(a)(1). Demonstrative exhibits can be disclosed later,
but “must be served on the other parties at least 28 days before
trial.” Id. R. 26(a)(5)(A)(iv), (a)(5)(B). Further, parties have a
continuing duty to supplement their disclosures whenever they
“learn[] that a disclosure . . . is incomplete or incorrect in some
important way.” Id. R. 26(d)(5).
¶29 “If a party fails to disclose or to supplement timely a
disclosure . . . that party may not use the undisclosed witness,
document, or material at any hearing or trial unless the failure is
harmless or the party shows good cause for the failure.” Id. R.
26(d)(4). “The sanction of exclusion is automatic and mandatory
unless the sanctioned party can show that the violation . . . was
either justified or harmless.” Sleepy Holdings LLC v. Mountain West
Title, 2016 UT App 62, ¶ 21, 370 P.3d 963 (cleaned up). Where the
district court determines that the non-disclosing party has met its
burden to show harmlessness or good cause, we will not question
that determination absent an abuse of discretion. See Blank v. Garff
Enters. Inc., 2021 UT App 6, ¶ 22, 482 P.3d 258.
¶30 Here, the district court never reached those questions
because Van Zweden and Rotzler abandoned their nondisclosure
objections at trial. Once the parties had fully briefed the motion to
exclude and the separate objection to Gen Water’s rule 26(a)(5)
disclosures, the court’s first opportunity to address those matters
was on the morning of trial. The court deferred its ruling on the
pretrial motion to exclude “evidence of [Gen Water’s] unspecified
trade secrets,” and it indicated that it would entertain those
20200414-CA 12 2022 UT App 90General Water v. Van Zweden
objections at trial on a “question-by-question basis.” “This
certainly was a permissible means of proceeding.” See State v.
Dibello, 780 P.2d 1221, 1227 (Utah 1989).
¶31 Yet the defendants raised no contemporaneous
nondisclosure objections to the evidence Gen Water presented at
trial, other than objecting to two witnesses that Gen Water never
intended to call. And when directly asked by the court, the
defendants affirmatively represented that they had no objection
to the admission of Gen Water’s computer-assisted drawings of
its machine—quintessential evidence of the design secret. Because
the defendants chose not to pursue any specific objections at trial,
the district court had no opportunity to determine whether a
particular piece of evidence had been disclosed and, if not,
whether Gen Water could establish either harmlessness or good
cause for the nondisclosure. Therefore, “the issue was not
adequately preserved for appeal.” 3 See id.¶32 As for Gen Water’s undisclosed demonstrative exhibit,
Van Zweden and Rotzler argue that the court erroneously
permitted its use at trial “without conducting an analysis of
whether [Gen Water] had good cause for its failure to disclose or
whether the nondisclosure was harmless.” Under a fair reading of
the record, however, we think that the court engaged in such an
analysis. Responding to the objection, Gen Water specifically
argued that the nondisclosure of its demonstrative exhibit was
harmless because the defendants could “bring in their own
machine” for the same purpose. And moments later, when the
court concluded that it would allow Gen Water to use its
demonstrative exhibit, the court restated Gen Water’s exact
argument: “If the defendants wish to bring in their own machine
3. To the extent Van Zweden and Rotzler argue that Gen Water’s
failure to define its trade secrets in its disclosures meant that the
case should not have gone to trial, they failed to request dismissal
on that basis.
20200414-CA 13 2022 UT App 90General Water v. Van Zweden
at some point and point to it, they may do the same thing.”
Therefore, the court presumably agreed with Gen Water’s
harmlessness analysis and allowed Gen Water to use its
demonstrative exhibit on that basis. On appeal, Van Zweden and
Rotzler have not challenged the court’s harmlessness
determination, so we have no reason to question it. And assuming
the nondisclosure was harmless, the court acted within its
discretion by allowing Gen Water to use its demonstrative exhibit
at trial. 4
II. Sufficiency of the Evidence
¶33 Van Zweden and Rotzler next challenge the district court’s
denial of their motions for a directed verdict and JNOV, arguing
that Gen Water failed to prove the existence of its trade secrets at
trial. We agree, but only in part. For the reasons explained below,
we hold that there was insufficient evidence with respect to the
pricing secret but not the design secret.
¶34 Under the UUTSA, a plaintiff can obtain injunctive relief
for “actual or threatened misappropriation.” Utah Code Ann.
§ 13-24-3(1) (LexisNexis 2013). “Misappropriation” is defined as
the “acquisition of a trade secret of another by a person who
knows or has reason to know that the trade secret was acquired
by improper means; or,” under certain circumstances, the
“disclosure or use of a trade secret of another without express or
implied consent.” Id. § 13-24-2(2). Thus, “a prima facie case of
4. Van Zweden and Rotzler point to the fact that, when they
attempted to use a demonstrative exhibit of their own, “the court
refused to allow it.” But the exhibit was not “their own machine,”
which the court said it would allow; rather, the exhibit was a
different machine built by the same inventor that Gen Water had
retained when developing its product. Further, Van Zweden and
Rotzler do not independently challenge the court’s decision to
exclude the inventor’s machine as a demonstrative exhibit.
20200414-CA 14 2022 UT App 90General Water v. Van Zweden
[trade secret] misappropriation is established on the basis of two
essential elements: [1] existence of a protectable trade secret of a
plaintiff and [2] demonstration of misappropriation by a
defendant.” InnoSys, Inc. v. Mercer, 2015 UT 80, ¶ 24, 364 P.3d 1013(cleaned up). Van Zweden and Rotzler’s arguments exclusively
concern whether Gen Water established the first element—the
existence of its trade secrets.
¶35 The UUTSA defines a “trade secret” as follows:
[I]nformation, including a formula, pattern,
compilation, program, device, method, technique,
or process, that:
(a) derives independent economic value, actual or
potential, from not being generally known to,
and not being readily ascertainable by proper
means by, other persons who can obtain
economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy.
Utah Code Ann. § 13-24-2(4). “The plaintiff bears the burden of
proving the existence of a trade secret” under this definition, “and
there is no presumption in his or her favor.” See USA Power, LLC
v. PacifiCorp, 2016 UT 20, ¶ 45, 372 P.3d 629 (cleaned up).
¶36 Van Zweden and Rotzler argue that Gen Water failed to
meet this burden with respect to either of its trade secrets. In their
view, the evidence at trial failed to show either (A) that the pricing
and design secrets were not generally known or readily
ascertainable and (B) that Gen Water took reasonable efforts
under the circumstances to keep them secret. Both assessments,
however, were ultimately for the fact finder to make. See id. ¶ 52.
We therefore ask “whether the jury could have reasonably
20200414-CA 15 2022 UT App 90General Water v. Van Zweden
inferred from the evidence presented that” the pricing and design
secrets “actually met the statutory standard.” See id. ¶ 53; see also
Baird v. Baird, 2014 UT 08, ¶ 29, 322 P.3d 728 (“When confronted
with questions of fact, this court will only rule as a matter of law
if the evidence is so clear and persuasive that all reasonable minds
would find one way.” (cleaned up)). With that standard in mind,
we now turn to Van Zweden and Rotzler’s arguments.
A. Not Generally Known or Readily Ascertainable
¶37 A trade secret must “[d]erive[] independent economic
value, actual or potential, from not being generally known to, and
not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use.” Utah
Code Ann. § 13-24-2(4)(a). Information is “not generally known”
when it is “secret from at least some interested parties.” USA
Power, 2016 UT 20, ¶ 57 (cleaned up). Thus, “partial or limited
disclosure of the information” is permitted under the UUTSA,
and others can independently know of the information “so long
as they also keep it confidential.” Id. Whether information is
“readily ascertainable by proper means” turns on “the ease or
difficulty with which the information could be properly acquired
or duplicated by others.” Id. ¶ 59 (cleaned up); see also Envirotech
Corp. v. Callahan, 872 P.2d 487, 494 (Utah Ct. App. 1994)
(discussing how trade secrets are not “protect[ed] against
discovery by fair and honest means, such as by independent
invention, accidental disclosure, or by so-called reverse
engineering” (cleaned up)). That is, if the information is
obtainable “without much difficulty,” then it is “readily
ascertainable” and therefore ineligible for protection under the
UUTSA.5 USA Power, 2016 UT 20, ¶ 59 (cleaned up); see also CDC
5. Both the statutory text and our supreme court’s decision in USA
Power suggest that whether the information “derives independent
economic value” from being secret constitutes a separate sub-
(continued…)
20200414-CA 16 2022 UT App 90General Water v. Van Zweden
Restoration & Constr., LC v. Tradesmen Contractors, LLC, 2012 UT
App 60, ¶ 26, 274 P.3d 317 (“Where information alleged to be a
trade secret can be readily ascertained by performing a basic
research task, the information does not qualify as a trade secret.”).
¶38 Our supreme court has instructed that “the generally
known or readily ascertainable standard cannot be viewed as
whether the information is generally known and readily
ascertainable to the general public, but, based on the defendant’s
knowledge and experience, whether the information was known
or ascertainable to the defendant.” USA Power, 2016 UT 20, ¶ 54
(cleaned up). This reflects the distinction courts have drawn
“between confidential information” that a defendant learns while
employed by the plaintiff—which sometimes qualifies as a trade
secret—and the general “skill and knowledge of the [defendant’s]
trade”—which cannot. Microbiological Rsch. Corp. v. Muna, 625
P.2d 690, 696–97 (Utah 1981) (cleaned up). In other words,
regardless of whether the defendant learned the information at
issue from his employer, he cannot be sued for trade secret
misappropriation if the information is already “known to others
in [the] defendant’s field of expertise.” See id. at 698; see also id. at
698–99 (holding that defendant microbiologist could not be
enjoined from using processes “that [any] competent
microbiologist” could derive from “information published in the
literature and his own general knowledge”); J & K Computer Sys.,
Inc. v. Parrish, 642 P.2d 732, 735 (Utah 1982) (holding that
computer programmers could be enjoined from using a
“proprietary accounts receivable program” not within “their
general knowledge, skills, memory or experience”). In light of
these standards, we address whether Gen Water produced
element of the analysis. See 2016 UT 20, ¶¶ 68–70 (quoting Utah
Code Ann. § 13-24-2(4)(a) (LexisNexis 2013)). But Van Zweden
and Rotzler do not challenge the sufficiency of the evidence
supporting that sub-element.
20200414-CA 17 2022 UT App 90General Water v. Van Zweden
sufficient evidence from which a jury could find that either the
pricing secret or design secret met this legal standard.
1. Pricing Secret
¶39 Van Zweden and Rotzler argue that Gen Water failed to
present evidence that the pricing secret was not generally known
or readily ascertainable. They argue that, like the “pricing
information” at issue in CDC Restoration & Construction, LC v.
Tradesmen Contractors, LLC, 2012 UT App 60, 274 P.3d 317, the
pricing secret does not qualify as a trade secret as a matter of law.
¶40 We agree that the pricing secret is virtually
indistinguishable from the pricing information at issue in CDC
Restoration. In that case, a contractor sued a competitor for
misappropriating information regarding “what a given project
might cost.” Id. ¶ 2. On appeal, we affirmed summary judgment
in favor of the competitor on the basis that there was no “genuine
issue of material fact as to” whether “the pricing information was
not generally known and not readily ascertainable.” Id. ¶ 19. The
contractor had failed to set forth facts showing “how its pricing
information was in fact developed,” whether the information was
“unique or especially innovative, such that it could not be readily
duplicated by others in the industry,” or whether it had “required
great time or financial investment to develop.” Id. ¶ 20. Absent
any other supporting facts, the contractor’s “pricing information
[was] not, as a matter of law, entitled to trade secret protection.”6
Id. ¶ 27.
6. Van Zweden and Rotzler misconstrue CDC Restoration for the
broader proposition that, as a matter of law, “labor and
equipment pricing” can never be subject to trade secret protection.
(Citing CDC Restoration, 2012 UT App 60, ¶¶ 27, 28 n.2.) Whether
information qualifies as a trade secret is necessarily fact
(continued…)
20200414-CA 18 2022 UT App 90General Water v. Van Zweden
¶41 Similarly, here, Gen Water merely claimed protection of
the pricing of its products and services. 7 Gen Water presented no
evidence that the company had expended “great time or financial
investment to develop” its pricing, see id. ¶ 20, or that it had
developed a unique process or formula for calculating the price of
its product. As the billing specialist testified, Gen Water
developed its pricing by adding together “the costs of . . . the
[third-party] components that go into the system,” “shipping,”
“sending an individual out to the lab,” and labor—none of which
were particularly unique considerations when it comes to
developing the price of a product or service. See id. ¶ 17.
¶42 Moreover, Gen Water’s pricing was “standard” across the
board. Gen Water charged each customer the same price for the
machine and service contract even though the costs to Gen Water
varied by location. Although the billing specialist suggested that
the fixed price incorporated a decision regarding Gen Water’s
profit margin, he could not describe how that varied from
dependent. Therefore, we decline to adopt a per se rule that
anything classifiable as “labor and equipment pricing
information” is necessarily unprotected. See id. ¶ 27.
7. The billing specialist also testified that Gen Water kept its
“client list” secret. To the extent Gen Water claims that the pricing
secret encompassed the “client list,” we likewise see no evidence
suggesting that such information was not generally known or
readily ascertainable. Additionally, at various points in its brief,
Gen Water characterizes the pricing secret as “pricing practices,”
“its pricing relationship with certain existing customers,”
“bidding and pricing strategies,” and “bidding and client
information,” among other things. To the extent Gen Water claims
that the pricing secret encompassed more than just the price of its
products and services, such information was never “described as
[a] trade secret[]” to the jury. See USA Power, 2016 UT 20, ¶ 53.
20200414-CA 19 2022 UT App 90General Water v. Van Zweden
standard pricing decisions in the industry. There was no evidence
to suggest that Gen Water’s fixed pricing was “unique or
especially innovative,” much less that someone in the industry—
Van Zweden and Rotzler included—could not have “readily
duplicated” it using the same criteria. See id. ¶ 20.
¶43 In short, we see little difference between the pricing secret
and the contractor’s “pricing information” in CDC Restoration,
which we held was ineligible for trade secret protection as a
matter of law. See id. ¶ 27. Accordingly, we conclude that Gen
Water presented insufficient evidence to support a finding that
the pricing secret was not generally known or readily
ascertainable. Van Zweden and Rotzler are therefore entitled to
JNOV on that basis.
2. Design Secret
¶44 Van Zweden and Rotzler also argue that Gen Water
presented insufficient evidence to support a finding that the
design secret was not generally known or readily ascertainable.
They argue that the design secret cannot be a trade secret because
Gen Water’s machine consists entirely of third-party components.
And they further assert that the machine uses the same multi-step
process for producing Type I water as competitors’ models,8
which, in their view, defeats Gen Water’s claim.
8. As far as we can tell, this assertion is unsupported by the record.
Van Zweden and Rotzler only direct us to a portion of the
consultant’s testimony where he testified that each component
part of Gen Water’s machine came from a third-party supplier
and that a separate machine developed by the inventor contained
at least five of the same components used in Gen Water’s filtration
process. Thus, the consultant’s testimony did not establish that
Gen Water’s filtration process was necessarily the same as
competitors’ models.
20200414-CA 20 2022 UT App 90General Water v. Van Zweden
¶45 But these arguments misconstrue the scope of the design
secret which, as Gen Water defined it, is “the design of its water
purification machine.” The design secret therefore was not limited
to either the third-party components taken individually or even
the multi-step process for producing Type I water. Rather, those
elements are merely part of “the design of [Gen Water’s] water
purification machine.” Under the UUTSA, even a “compilation of
information already within the public domain” qualifies as a trade
secret, so long as the compilation is not “generally known or
readily ascertainable” when considered as a whole. See USA
Power, 2016 UT 20, ¶ 54 (cleaned up). Accordingly, even though
the individual components of Gen Water’s machine or the multi-
step process may not qualify as trade secrets, the design secret is
still protectable if, taken as a whole, it meets the statutory
elements.
¶46 The evidence presented at trial was sufficient for a
reasonable jury to conclude that the design secret was a
compilation of information not generally known or readily
ascertainable. Gen Water’s witnesses testified that, beginning in
2008, the company enlisted the help of an inventor to develop a
product that differed from competitors’ models. Two years later,
Gen Water had produced a machine designed to minimize not
only how much space it took up in medical labs, but how often it
needed to be serviced—qualities that set it apart from other
machines on the market. Given the time it took for Gen Water to
develop its machine, the money it impliedly spent hiring an
inventor, and the unique aspects of the final product, the jury
could have reasonably inferred that the design secret was not
generally known and not readily ascertainable by others with Van
Zweden and Rotzler’s general knowledge and experience.
¶47 Van Zweden and Rotzler argue that “even if [Gen Water’s]
design may have qualified as a trade secret prior to being placed
on the market, it cannot be a trade secret once the device is sold
and disclosed to the public.” “‘[T]rade secret law . . . does not offer
20200414-CA 21 2022 UT App 90General Water v. Van Zweden
protection against discovery by fair and honest means, such as by
independent invention, accidental disclosure, or by so-called
reverse engineering, that is by starting with the known product
and working backward to divine the process which aided in its
development or manufacture.’” Envirotech, 872 P.2d at 494(quoting Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 475–76
(1974)). Accordingly, Van Zweden and Rotzler contend that once
the machine was sold, the design secret became readily
ascertainable through reverse engineering.
¶48 There was no evidence at trial to suggest that Van Zweden
and Rotzler actually reverse engineered the design secret. Nor
was there any direct evidence that reverse engineering was even
possible. But because Gen Water had the burden of proof and
“provided no evidence to contradict Med Water’s assertion that
the [Gen Water] device could be reverse engineered,” Van
Zweden and Rotzler claim that Gen Water failed to prove the
existence of a trade secret.
¶49 Certainly, Gen Water had the burden to prove, as an
element of its claim, that the design secret was not generally
known or readily ascertainable. But Van Zweden and Rotzler
have provided no authority for the proposition that a plaintiff can
carry that burden only by affirmatively disproving all possible
ways in which the information might be obtained through proper
means. And where, as here, there is no evidence in the record to
support the defense theory that the machine had been—or even
could have been—reverse engineered, we question whether the
plaintiff has a duty to prove a negative. See State v. Johnson, 856
P.2d 1064, 1073 (Utah 1993) (“The burden of proving a negative is
nearly impossible to meet.”), superseded by statute on other grounds
as recognized in State v. Hammond, 2001 UT 92, ¶ 20, 34 P.3d 773; see
also Gordon v. State, 2016 UT 11, ¶ 24, 369 P.3d 1255 (discussing
how the burden of proof may shift “in circumstances where the
responding party has unique access to proof of the matter in
question”).
20200414-CA 22 2022 UT App 90General Water v. Van Zweden
¶50 Moreover, even assuming that it was theoretically possible
to reverse engineer the design secret, it does not automatically
follow that the information was readily ascertainable. The jury
must still consider “the ease or difficulty with which the
information could be properly acquired or duplicated by others,”
USA Power, 2016 UT 20, ¶ 59 (cleaned up), that is, by “persons
who can obtain economic value from its disclosure or use,” Utah
Code Ann. § 13-24-2(4).
¶51 In USA Power, PacifiCorp claimed that it had reverse
engineered USA Power’s purported trade secret, making it
readily ascertainable as a matter of law. 2016 UT 20, ¶ 60. Our
supreme court rejected this argument on two grounds: (1) “the
jury could have reasonably found that PacifiCorp did not actually
reverse-engineer all of USA Power’s confidential back-up
studies” and (2) “the jury could have found that the information
that was not reverse-engineered was also not readily
ascertainable.” Id. ¶ 62. The court observed that the confidential
information that was not reverse engineered included “analyses
[that] were done from the unique perspective of USA Power.” Id.
¶ 66. The court questioned whether that information was
ascertainable at all but concluded that, at the very least, “it was
certainly reasonable for the jury to conclude that PacifiCorp could
not have ascertained such information without much difficulty.”
Id. ¶ 67. The court also rejected PacifiCorp’s argument that USA
Power was required to present expert testimony on that point,
emphasizing that “[w]hether information is readily ascertainable
is an issue for the jury, which requires them to apply the facts
presented to the correct legal standard.” Id. The court concluded
that “there was certainly enough evidence presented to determine
that USA Power’s proprietary business information was not
readily ascertainable.” Id.
¶52 In this case, there is no record evidence that Van Zweden
and Rotzler did, in fact, reverse engineer the design secret. So “the
20200414-CA 23 2022 UT App 90General Water v. Van Zweden
issue becomes whether the information that was not reverse-
engineered was also not readily ascertainable.” See id. ¶ 66.
¶53 Van Zweden and Rotzler claim that anyone who purchases
one of Gen Water’s machines can simply open it and discover the
design secret with the help of an ordinary screwdriver. But the
fact that the information is “revealed to certain customers . . . does
not prevent the [information] from being classified as a trade
secret where the plaintiff was attempting to keep the secret and
the [information] is still unavailable to the [relevant] trade as a
whole.” See Parrish, 642 P.2d at 735. The question is whether the
information is “readily ascertainable by proper means by[] other
persons who can obtain economic value from its disclosure or use.” Utah
Code Ann. § 13-24-2(4) (emphasis added). For convenience, we
use the term “competitor” as shorthand for this statutorily
defined group.
¶54 In this case, the jury could reasonably infer that acquiring
and duplicating the design secret would not have been easy given
the way the machines were sold, installed, and recycled. See
Learning Curve Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714, 730
(7th Cir. 2003) (“Reverse engineering can defeat a trade secret
claim, but only if the product could have been properly acquired
by others, as is the case when the product is publicly sold.”). The
billing specialist testified that Gen Water sold its machines
directly to healthcare facilities through its sales representatives.
Because the machines were installed and serviced by Gen Water
onsite, the jury could reasonably conclude that it would be
exceedingly difficult for a competitor to obtain a machine by
posing as a legitimate customer.
¶55 The jury could also infer that it would be a challenge for a
competitor to access machines that had been directly sold to
medical facilities. Even if a competitor could locate Gen Water
machines without much difficulty, the jury could reasonably
conclude that a competitor would not be at liberty to stroll into a
20200414-CA 24 2022 UT App 90General Water v. Van Zweden
medical laboratory, remove a panel from an expensive piece of
equipment, and examine the machine’s interior. The jury could
also infer that it would be difficult for a competitor to obtain a
used machine from a customer based on the technician’s
testimony that, once a machine has “run its natural life,”
customers generally return it to Gen Water for disposal.
¶56 Finally, even assuming that a competitor could gain access
to a machine without much difficulty, there was at least some
evidence—the time and effort it took to develop the design
secret—that could have supported a jury finding that reverse
engineering could not be accomplished easily. Therefore, even if
the design secret was susceptible to reverse engineering, there
was at least some evidence to support the jury’s conclusion that it
was “not . . . readily ascertainable by proper means by[] other
persons who [could] obtain economic value from its disclosure or
use.” See Utah Code Ann. § 13-24-2(4).
¶57 Lastly, Van Zweden and Rotzler assert that Gen Water
“made its product design publicly available” by posting a photo
of the machine’s interior on its website. But as the technician
testified, the photo showed only a limited portion of the interior.
The jury was entitled to credit that testimony, including the
technician’s assertion that recreating the machine from the photo
was “comparable to looking at a dashboard on a car and be[ing]
able to wire the speedometer.”
¶58 Having disposed of Van Zweden and Rotzler’s arguments
to the contrary, we hold that there was sufficient evidence to
support the jury’s determination that the design secret was not
generally known or readily ascertainable. We reemphasize the
“difficult standard of review” Van Zweden and Rotzler face on
appeal and, accordingly, the degree of deference we afford the
jury’s decision. See USA Power, 2016 UT 20, ¶ 43. “We do not re-
weigh the evidence and decide if we think the jury got it right.”
See id. “[R]ather, we only review the record before us to determine
20200414-CA 25 2022 UT App 90General Water v. Van Zweden
if there was an adequate basis in the evidence to support the jury’s
verdict,” see id. ¶ 52, disregarding, as we must, “any conflicting
evidence or evidence that tends to disprove the prevailing party’s
case,” see Collins v. Wilson, 1999 UT 56, ¶ 14, 984 P.2d 960. Under
that standard, we cannot say that no reasonable jury could have
found that the design secret was not generally known or readily
ascertainable.
B. Reasonable Efforts to Maintain Secrecy
¶59 Because there was sufficient evidence that the design secret
was not generally known or readily ascertainable, we turn to Van
Zweden and Rotzler’s argument that Gen Water failed to show
that the design secret was “the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.” Utah
Code Ann. § 13-24-2(4)(b). Utah courts have yet to squarely
address this element of the analysis. See John Bean Tech. Corp. v. B
GSE Group, LLC, 480 F. Supp. 3d 1274, 1296 (D. Utah 2020). But the
plain statutory language requires only “reasonable efforts,” not
“all conceivable efforts.” See id. (cleaned up). Whether the efforts
to maintain secrecy “are reasonable under the circumstances” is a
question of fact for the jury. See Utah Code Ann. § 13-24-2(4)(b).
¶60 Van Zweden and Rotzler argue that Gen Water did not
make reasonable efforts to maintain secrecy because it did not
“require [them] to sign confidentiality . . . or non-competition
agreements.” But under Utah law, no written contract is required
to impose a duty on former employees not to “use confidential
information obtained during the course of [their] employment.”
See Envirotech, 872 P.2d at 497 (cleaned up). Regardless, the
existence of written confidentiality agreements is merely evidence
of a plaintiff’s efforts to keep information secret, see, e.g., Avnet,
Inc. v. Wyle Lab’ys, Inc., 437 S.E.2d 302, 304 (Ga. 1993); Centrol, Inc.
v. Morrow, 489 N.W.2d 890, 894–95 (S.D. 1994); the absence of such
agreements does not compel the conclusion that the plaintiff’s
other measures did not amount to “reasonable efforts . . . under
20200414-CA 26 2022 UT App 90General Water v. Van Zweden
the circumstances,” see Utah Code Ann. § 13-24-4(4)(b); see also
Editions Play Bac, SA v. Western Pub. Co., No. 92 Civ. 3652, 1993 WL
541219, at *8 (S.D.N.Y. Dec. 28, 1993); Alpha Pro Tech, Inc. v. VWR
Int'l LLC, 984 F. Supp. 2d 425, 437–38 (E.D. Pa. 2013); Retirement
Corp. of Am. v. Henning, No. C-180643, 2019 WL 5856005, at *5
(Ohio Ct. App. Nov. 8, 2019).
¶61 Gen Water presented testimony that the machine’s
schematics were locked in a safe to which only the consultant
knew the combination. The jury was entitled to weigh that
evidence against the absence of written confidentiality
agreements in determining whether Gen Water’s efforts to
maintain secrecy were reasonable under the circumstances. Once
again, “it is not our role to determine, in the first instance, whether
we would” reach the same conclusion as the jury did here. See
USA Power, 2016 UT 20, ¶ 52. It is enough that “the jury could
have reasonably inferred from the evidence presented that” Gen
Water had met its burden. See id. ¶ 53. Here, the testimony that
Gen Water kept the schematics locked in a safe is a sufficient
evidentiary basis for the jury’s conclusion that the design secret
was subject to reasonable efforts to preserve its secrecy. Therefore,
as to the design secret, we hold that the district court correctly
denied Van Zweden and Rotzler’s motions for directed verdict
and JNOV, and we affirm accordingly.
III. Scope of the Injunction
¶62 Lastly, Med Water appeals the district court’s denial of its
motion to clarify the scope of the injunction. As modified by the
district court, Van Zweden and Rotzler may be subject to
contempt for violating the injunction—along with “any person
[acting] in concert or participation with” them who has “notice of
the injunction.” Med Water takes issue with this language,
reasoning that, “when the jury found that Med Water did not
misappropriate trade secrets, the jury necessarily found that Med
Water, acting through Van Zweden, did not misappropriate trade
20200414-CA 27 2022 UT App 90General Water v. Van Zweden
secrets.” Thus, by enjoining “any person [acting] in concert or
participation with Van Zweden,” Med Water argues that the
district court has erroneously barred “Med Water from engaging
in the very conduct that the jury found did not constitute
misappropriation—selling its water filtration devices . . . through”
Van Zweden.
¶63 We read Med Water’s motion to clarify as a request to
modify the terms of the injunction to expressly exclude Med
Water from the class of persons enjoined from aiding and abetting
Van Zweden’s violation of the injunction. 9 The relevant language
in the injunction comes from rule 65A(d) of the Utah Rules of the
Civil Procedure, which states that injunctions are binding “upon
those persons in active concert or participation with [the enjoined
party] who receive notice, in person or through counsel, or
otherwise, of the order.” Utah R. Civ. P. 65A(d). This rule
incorporates the common law doctrine that “a person who
knowingly assists a defendant in violating an injunction subjects
himself to civil as well as criminal proceedings for contempt.” See
Alemite Mfg. Corp. v. Staff, 42 F.2d 832, 832–33 (2d Cir. 1930).
Otherwise, an enjoined party could easily “nullify a decree [of
injunction] by carrying out prohibited acts through aiders and
abettors.” See Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14 (1945).
¶64 We are aware of no authority suggesting that this rule
functions differently where the person who assists the enjoined
party in violating the injunction was also a codefendant in the
underlying action but was found not liable by a jury. As Gen
Water persuasively argued below, “the jury’s verdict merely
makes Med Water the functional equivalent of a non-party. Yet, it
is well-settled that non-parties who act in concert or participate
9. To the extent Med Water sought a ruling on whether its
intended course of action—continuing to sell through Van
Zweden—would violate the injunction, it has not invoked any
legal authority for seeking such an advisory opinion.
20200414-CA 28 2022 UT App 90General Water v. Van Zweden
with parties subject to an injunction are likewise subject to the
restraints of that injunction provided that they receive notice of
it.” (Citing BMW of N. Am., LLC v. Issa, No. 2-19-cv-220, 2020 WL
1325278, at *5 (D. Utah Mar. 20, 2020).) Because Gen Water has
cited no authority exempting Med Water from the class of persons
prohibited from aiding and abetting Van Zweden’s violation of
the injunction, we affirm the district court’s denial of the motion
to clarify. 10
CONCLUSION
¶65 There was sufficient evidence at trial to support the jury’s
verdict as to the design secret, but not the pricing secret.
Therefore, Van Zweden and Rotzler are entitled to judgment
notwithstanding the verdict on the pricing secret. We affirm in all
other respects and remand for further proceedings consistent with
this opinion.
10. Furthermore, because rule 65A(d) governs “[e]very . . . order
granting an injunction,” it necessarily applies to a district court’s
injunction regardless of its terms. See Utah R. Civ. P. 65A(d). We
therefore fail to see how the district court could have abused its
discretion by refusing to modify the injunction in a way that
would have lacked legal effect.
20200414-CA 29 2022 UT App 90