Universal Instruments Corporation, Plaintiff-Counter-Defendant-Appellant,
Micro Systems Engineering, Inc., Missouri Tooling & Automation, Inc., Defendants-Counter-Claimants-Appellees [*].
Argued: September 21, 2018
Appeal from the United States District Court for the Northern
District of New York
from a judgment entered in the United States District Court
for the Northern District of New York (Sharpe, J.),
dismissing plaintiff's claims for breach of contract,
copyright infringement, misappropriation, and unfair
competition arising from its sale of equipment and software
for an automated assembly system. On appeal, plaintiff
contends that the district court erred in granting
defendants' motion for judgment as a matter of law.
Mason Saharia (Kannon K. Shanmugam, Giselle Barcia, Stacie M.
Fahsel, on the brief), Williams & Connolly LLP,
Washington, D.C.; Anthony L. Meola, Christopher E. Blank,
Victor J. Baranowski, Schmeiser, Olsen & Watts LLP,
Latham, New York, for Plaintiff-Counter- Defendant-Appellant
Universal Instruments Corporation.
B. Tulchin (Thomas C. White, Adam R. Brebner, Jacob B.
Lieberman, on the brief), Sullivan & Cromwell LLP, New
York, New York, for Defendants-Counter-Claimants-Appellee
Micro Systems Engineering, Inc.
J. Kaplan (Marie E. Christiansen, on the brief), Kaplan Rice
LLP, New York, New York, for
Defendants-Counter-Claimants-Appellee Missouri Tooling &
Before: Walker and Chin, Circuit Judges, and Keenan, District
Universal Instruments Corporation ("Universal")
developed and sold an automated assembly system to
defendant-counter-plaintiff-appellee Micro Systems
Engineering, Inc. ("MSEI") in 2007 pursuant to a
purchase agreement. MSEI developed a multi-phase plan to
build a system to automate the handling of medical devices
during its quality testing process, and Universal won the bid
to provide the equipment for the first phase. MSEI awarded
the second and third phases of the project not to Universal
but to Universals competitor,
defendant-counter-plaintiff-appellee Missouri Tooling &
Automation, Inc. ("MTA"). In implementing phases
two and three, MSEI and MTA used intellectual property,
including computer source code, that Universal had provided
for phase one.
brought this action below alleging, inter alia, that
MSEI and MTA had infringed Universals copyright in its source
code, breached the terms of the purchase agreement, and
misappropriated Universals trade secrets. Certain claims were
dismissed on defendants' motion for judgment on the
pleadings, and, after discovery, the parties proceeded to a
jury trial on the remaining claims. At the close of the
evidence, however, the district court granted defendants'
motion for judgment as a matter of law. Universal appeals.
reasons set forth below, we affirm the judgment of the
a medical device company that designs and manufactures
electronics for implantable pacemakers and defibrillators.
Before selling these components, MSEI subjects them to a
battery of tests to ensure they are working properly. MSEI
sought to automate its then manual system of moving
components from one test station to another; to that end,
MSEI solicited bids for the development of a Test Handling
System (the "THS"). MSEI sought to build the THS in
phases. The first phase would automate the handling of some
product testing stations with further automation to be added
in subsequent phases.
in 2006, MSEI obtained bids from suppliers for phase one. One
of the bidders was Universal, a developer of automated
assembly platforms. MSEI awarded phase one to Universal, and
the parties memorialized their agreement in an Equipment
Purchase Agreement (the "EPA"), executed in June
ultimately developed by Universal had two software
components: the station software and the server software. The
station software was embedded on each individual Polaris
station and "manage[d] the operation of conveyors,
elevators, stacks and robotic arms." J. App'x at
2606. This software was stored on each station's
programmable logic controller and could be downloaded on site
by physically connecting a computer to the station and
downloading the source code. Id. at 1299-1300,
1480-81, 1532-34. The server software, on the other hand, was
the "brains of the operation," id. at 988,
which "synchronized the activities of the hardware and
software" and was "responsible for coordinating the
movement of the module trays," id. at 2606. The
source code for the server could not be downloaded in the
same way as the station software, and under the EPA,
Universal was under no obligation to provide the server
source code to MSEI. Id. at 2344 (providing that
"source code will not be provided"). The parties
agreed, however, in their Final Customer Acceptance letter
(the "FCA") that Universal would provide MSEI with
a copy of the server source code at the time of delivery. The
THS was delivered in October 2008.
2009, MSEI solicited bids for the next phase
("THS2"). The bid documents for THS2 indicated that
MSEI had the responsibility to provide the software for the
station and server source code to be used in the project. In
April 2010, MSEI awarded the project to MTA, a competitor of
Universal, which submitted a lower bid for the project. On
April 8, 2010, MSEI and MTA entered into an agreement (the
"MTA Agreement"). On April 16, Universal and MTA
were notified by email that MSEI had "awarded the
business to MTA for the THS line two project." J.
App'x at 2878. MTA subsequently sought to purchase
Polaris stations from Universal for use in THS2, but on
August 4, 2010, Universal declined to sell them to MTA.
Thereafter, MSEI downloaded the source code from the
individual Polaris stations and the server source code that
Universal gave to MSEI on delivery of phase one; it then gave
the code to MTA to use in the production of THS2. MSEI and
MTA subsequently modified the server source code to meet the
requirements of THS2.
contains several provisions relating to the
parties-intellectual property rights. Section 8 is entitled
"Intellectual Property." Section 8.2(d) provides
[i]f [Universal] uses any Pre-Existing Intellectual Property
in connection with this Agreement, [Universal] hereby grants
MSEI, MSEI's subcontractors, or suppliers, a
non-exclusive, royalty-free, worldwide, perpetual license, to
use, reproduce, display, of the Pre-Existing Intellectual
Property for MSEI's internal use only.
App'x at 2336. "Pre-Existing Intellectual
Property" is defined as "any trade secret,
invention, work of authorship, mask work or protectable
design that has already been conceived or developed by anyone
other than MSEI before [Universal] renders any services under
the Agreement." Id.
E to the EPA, entitled "Equipment Acceptance Form,"
contained a blank form for the parties to fill in upon final
delivery and acceptance.
October 31, 2008, Universal and MSEI signed a negotiated
"Final Customer Acceptance" letter, which stated,
among other things, that Universal
agrees to provide the THS server code as is with the
understanding that MSEI assumes the risk of invalidating the
warranty in the event a change made by MSEI to the source
code causes damage to any of the THS line hardware.
J. App'x at 2361.
15, 2013, Universal brought this action against MSEI and MTA
in the Northern District of New York, alleging copyright
infringement, misappropriation of trade secrets, breach of
contract, unfair competition, unjust enrichment, and
promissory estoppel. On February 24, 2017, the district court
granted judgment on the pleadings and dismissed Universals
claim for promissory estoppel and its claims against MSEI for
unjust enrichment and unfair competition. Universal does not
challenge those rulings on appeal.
and August of 2017, the parties proceeded to trial before a
jury on the remaining claims - breach of
contract, copyright infringement, misappropriation of trade
secrets, and as to MTA only, unjust enrichment and unfair
competition. After the close of Universals case-in-chief, the
district court reserved judgment on defendants' motion
for judgment as a matter of law. After six days of trial and
following the close of the evidence on August 7, the district
court orally granted defendants' renewed motions for
judgment as a matter of law. As the district court explained:
"The whole issue here is whether or not under the
arrangements between the parties, contractual and otherwise,
MSEI had permission and/or ownership in the property that was
transmitted to them." Spec. App'x at 3. The district
found as a matter of law that Universal (1) had a protected
intellectually property interest in the system source code,
(2) transferred copies of that property to MSEI, and (3)
offered no evidence that MSEI had exceeded the scope of its
license under the EPA by giving MTA the intellectual
property. These findings were dispositive of all claims. The
court reaffirmed its ruling in a nine-page order issued the
following day. It entered judgment August 9, 2017.
argues that the district court erred in granting
defendants-renewed motion for judgment as a matter of law. In
short, it contends that the district court's construction
of the EPA is incorrect as a matter of law and that it