Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 1 of 40 PageID 48839
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`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF TEXAS
`DALLAS DIVISION
`
`THERMOTEK, INC.,
`
`Plaintiff-counterdefendant,
`
`Civil Action 3:11-CV-0870-D
`(consolidated with
`Civil Action No. 3:10-CV-2618-D)
`
` §
` §
` §
` §
` §
` §
` §
` §
`ORTHOFLEX, INC. d/b/a
` §
`INTEGRATED ORTHOPEDICS,
`MOTION MEDICAL TECHNOLOGIES, § *This memorandum opinion and order was originally filed
` § under seal on August 15, 2016. It was filed
`LLC, and
`
`WABASH MEDICAL COMPANY, LLC,§unsealed on September 7, 2016, after the parties agreed
` § that no part needed to remain under seal.
`Defendants-counterplaintiffs, §
` §
` §
` §
` §
` §
` §
` §
` §
` §
`
`VS.
`
`and
`
`MIKE WILFORD,
`THERMO COMPRESSION
`SOLUTIONS, LLC, and
`TRI 3 ENTERPRISES, LLC,
`
`Defendants.
`
`MEMORANDUM OPINION
` AND ORDER
`
`After extensive pretrial proceedings, plaintiff-counterdefendant ThermoTek, Inc.
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`(“ThermoTek”), defendants-counterplaintiffs Orthoflex, Inc. d/b/a Integrated Orthopedics
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`(“Orthoflex”),1 Motion Medical Technologies, LLC (“Motion Medical”), Wabash Medical
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`Company, LLC (“Wabash Medical”), and defendants Mike Wilford (“Wilford”), Thermo
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`1Orthoflex is only a counterplaintiff. For ease of reference, the court refers to
`Orthoflex as a defendant-counterplaintiff.
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 2 of 40 PageID 48840
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`Compression Solutions, LLC (“Thermo”), and Tri 3 Enterprises, LLC (“Tri 3”) tried to a jury
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`ThermoTek’s remaining claims for fraud, unfair competition, and breach of contract, and
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`Orthoflex, Motion Medical, and Wabash Medical’s counterclaim for breach of express
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`warranty.2 The jury returned a verdict in favor of ThermoTek, finding, in pertinent part, that
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`Wilford committed fraud against ThermoTek, and that Wilford and Thermo unfairly
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`competed with ThermoTek through common law misappropriation, and it awarded
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`compensatory damages on both claims. The court entered judgment for ThermoTek in
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`accordance with the jury verdict.
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`Defendants now move under Fed. R. Civ. P. 50(b) for judgment as a matter of law on
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`ThermoTek’s fraud and unfair competition claims, and, in the alternative, for a new trial
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`under Rule 59. ThermoTek moves under Rule 25 to substitute CMW Partners, LLC
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`(“CMW”) and WMI Enterprises, LLC (“WMI”) for Thermo, or to join CMW and WMI as
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`defendants for purposes of enforcing the judgment. For the reasons that follow, the court
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`grants defendants’ motion for judgment as a matter of law, conditionally denies their motion
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`for a new trial, and denies as moot ThermoTek’s Rule 25 motion to substitute or join CMW
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`and WMI. The court is entering today an amended judgment dismissing the claims and
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`counterclaims of all parties with prejudice.3
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`2Unless otherwise specified, the court will refer to Orthoflex, Motion Medical, and
`WMI collectively as the “Orthoflex companies.” Depending on the context, the court
`sometimes refers to Wilford and Thermo collectively as “defendants.”
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`3ThermoTek has pending a motion to determine the amount of attorney’s fees and
`expenses owed to ThermoTek as discovery sanctions. The granting of the motion for
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 3 of 40 PageID 48841
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`I
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`Because this case is the subject of multiple prior opinions,4 the court will recount only
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`the background facts and procedural history necessary to understand the present decision.
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`ThermoTek designed and developed the VascuTherm System, which is a medical device
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`intended to be used in conjunction with specially-designed wraps. Together, the
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`VascuTherm System and wraps transfer pressure, heat, and cold to various body parts during
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`medical therapy. ThermoTek sells its products to a network of distributors and
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`nondistributors who then sell or lease the equipment to hospitals and clinics. They in turn
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`provide the products to patients—the end-users.
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`Wilford is an executive of several medical supply companies, including Orthoflex,
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`Motion Medical, and Wabash Medical, which are durable medical equipment providers that
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`invest in and lease capital medical equipment. Tri 3 is a limited liability holding company
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`for Motion Medical and Wabash Medical. Wilford is, in effect, the Chief Operating Officer
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`of Wabash Medical and Motion Medical. Thermo is a medical sales company that Wilford
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`also controls.
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`judgment as a matter of law does not adversely affect ThermoTek’s recovery of such
`sanctions.
`4See, e.g.,Orthoflex, Inc. v. ThermoTek, Inc., 2013 WL 4045206, at *1 (N.D. Tex.
`Aug. 9, 2013) (Fitzwater, C.J.) (granting in part and denying in part ThermoTek’s motion for
`summary judgment); Orthoflex, Inc. v. ThermoTek, Inc., 983 F.Supp.2d 866, 869 (N.D. Tex.
`2013) (Fitzwater, C.J.) (granting in part and denying in part the motions for summary
`judgment of Motion Medical, Wabash Medical, Wilford, Thermo, and Tri 3); Orthoflex, Inc.
`v. ThermoTek, Inc., 2014 WL 320155, at *2 (N.D. Tex. Jan. 29, 2014) (Fitzwater, J.)
`(granting motion to realign the parties).  
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 4 of 40 PageID 48842
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`Beginning in 2008, Wilford purchased large quantities of VascuTherm System units
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`and wraps on behalf of his companies, including Motion Medical, Wabash Medical, and,
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`eventually, Orthoflex. In his role as a distributor for ThermoTek, Wilford received from
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`ThermoTek various types of information belonging to ThermoTek, such as billing codes and
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`product manuals, and he visited the ThermoTek facilities at least twice. Wilford also
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`reported various problems with the VascuTherm units and wraps and requested information
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`about product design, manufacturing processes, and repairs. ThermoTek terminated its
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`agreement with Wilford in August 2010. Wilford later developed and sold his own system
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`(Recovery+) and wraps.
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`In March 2010 Orthoflex, Motion Medical, and Wabash Medical sued ThermoTek in
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`the Northern District of Illinois. In November 2010 ThermoTek sued Wilford and WMI in
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`Texas state court. ThermoTek’s case was removed to this court and was consolidated with
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`the Orthoflex case. The parties all moved for summary judgment or partial summary
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`judgment, and the court granted in part and denied in part those motions. Before trial, the
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`court realigned the parties.
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`Based on rulings of the court and refined pleadings, the parties tried the following
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`claims and counterclaims to a jury: (1) Orthoflex, Motion Medical, and Wabash Medical’s
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`counterclaim against ThermoTek for breach of express warranty; (2) ThermoTek’s claim
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`against Wilford for fraud; (3) ThermoTek’s claim against Motion Medical, Wabash Medical,
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`and Tri 3 for breach of contract; and (4) ThermoTek’s claim against Wilford and Thermo for
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`unfair competition. The jury returned a verdict in favor of ThermoTek on its claim against
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 5 of 40 PageID 48843
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`Wilford for fraud and its claim against Wilford and Thermo for unfair competition. The jury
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`found that Motion Medical, Wabash Medical, and Tri 3 had breached the Distributor
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`Agreement with ThermoTek, but it found no damages. And the jury found against Orthoflex,
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`Motion Medical, and Wabash Medical on their counterclaim for breach of express warranty.
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`On ThermoTek’s fraud claim against Wilford, the jury awarded lost profits damages
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`in five subcategories: $770,000 for lost profits from VascuTherm wrap sales, $500,000 for
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`lost profits from VascuTherm unit sales, $193,000 for lost profits from additional expenses
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`for VascuTherm unit repairs, $90,000 for lost profits from additional engineering costs, and
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`$13,000 for lost profits for additional evaluation and tooling costs. On ThermoTek’s unfair
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`competition claim against Wilford and Thermo, the jury awarded $4 million in lost profits
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`as measured by infringing VascuTherm unit sales and $2 million in lost profits as measured
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`by infringing wrap sales.
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`Defendants now move for judgment as a matter of law under Rule 50, and,
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`alternatively, for a new trial under Rule 59. ThermoTek moves under Rule 25 to substitute
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`or join parties. The court has heard oral argument on both motions.
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`II
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`The court first addresses defendants’ Rule 50(b) motion for judgment as a matter of
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`law on ThermoTek’s unfair competition and fraud claims. Defendants contend that
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`ThermoTek’s unfair competition claim is preempted by federal copyright and patent law, and
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`that the evidence is legally insufficient to support the jury’s award of damages on either
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`claim.
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 6 of 40 PageID 48844
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`“A motion for judgment as a matter of law ‘challenges the legal sufficiency of the
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`evidence to support the verdict.’” Jacobs v. Tapscott, 516 F.Supp.2d 639, 643 (N.D. Tex.
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`2007) (Fitzwater, J.) (quoting Hodges v. Mack Trucks, Inc., 474 F.3d 188, 195 (5th Cir.
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`2006)), aff’d, 277 Fed. Appx. 483 (5th Cir. 2008).
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`Judgment as a matter of law is appropriate with respect to an
`issue if there is no legally sufficient evidentiary basis for a
`reasonable jury to find for a party on that issue. This occurs
`when
`the facts and
`inferences point so strongly and
`overwhelmingly in the movant’s favor that reasonable jurors
`could not reach a contrary verdict. In considering a Rule 50
`motion, the court must review all of the evidence in the record,
`drawing all reasonable inferences in favor of the nonmoving
`party; the court may not make credibility determinations or
`weigh the evidence, because these are jury functions. In
`reviewing the record as a whole, the court must disregard all
`evidence favorable to the moving party that the jury is not
`required to believe. That is, the court should give credence to
`the evidence favoring the nonmovant as well as that evidence
`supporting the moving party that is uncontradicted and
`unimpeached, at least to the extent that this evidence comes
`from disinterested witnesses.
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`Id. (quoting Brennan’s Inc. v. Dickie Brennan & Co., 376 F.3d 356, 362 (5th Cir. 2004)).
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`The court will “‘uphold a jury verdict unless the facts and inferences point so strongly and
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`so overwhelmingly in favor of one party that reasonable [jurors] could not arrive at any
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`verdict to the contrary.’” Goodner v. Hyundai Motor Co., 650 F.3d 1034, 1039 (5th Cir.
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`2011) (quoting Cousin v. Trans Union Corp., 246 F.3d 359, 366 (5th Cir. 2001)). “In other
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`words, the ‘jury verdict must be upheld unless there is no legally sufficient evidentiary basis
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`for a reasonable jury to find as the jury did.’” Id. at 1039-40 (quoting Foradori v. Harris,
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`523 F.3d 477, 485 (5th Cir. 2008)).
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 7 of 40 PageID 48845
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`III
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`Defendants maintain that ThermoTek’s unfair competition claim is entirely preempted
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`by federal copyright and patent law. They contend that, at trial, ThermoTek adduced
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`evidence and argued that Wilford and Thermo misappropriated information that is within the
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`scope of copyright protection—such as emails, website information, product codes,
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`drawings, FDA filings, and reports—and functional aspects of articles of manufacture that
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`are within the scope of patent protection—the VascuTerm machine and wraps.
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`A
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`The court must first decide whether Wilford and Thermo have waived their
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`preemption defense by not pleading preemption as an affirmative defense.
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`Defendants contend that the preemption defense is timely because Wilford and
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`Thermo expressly raised it before and during trial: in summary judgment briefing, in the
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`Pretrial Order, and in arguing the jury charge. ThermoTek responds that Wilford and
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`Thermo waived their preemption defense because they did not plead preemption as an
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`affirmative defense. ThermoTek acknowledges that defendants argued preemption in a
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`footnote in their summary judgment briefing and in a motion for reconsideration of the
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`court’s summary judgment ruling, but it argues that Wilford and Thermo did not reassert
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`preemption until after ThermoTek presented its case at trial.
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`Defendants reply that the failure to plead preemption in a responsive pleading is not
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`fatal because Wilford and Thermo raised preemption at a pragmatically sufficient time and
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`in a manner that does not result in unfair surprise.
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 8 of 40 PageID 48846
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`B
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`Under Rule 8(c), preemption is an affirmative defense that must be pleaded. But an
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`affirmative defense not asserted in responsive pleadings is not waived if it is asserted at a
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`pragmatically sufficient time and the nonmovant is not prejudiced in its ability to respond.
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`Lee v. Tyco Elecs. Power Sys., Inc., 2006 WL 1722569, at *2-3 (N.D. Tex. June 20, 2006)
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`(Fitzwater, J.) (citing Lafreniere Park Found. v. Broussard, 221 F.3d 804, 808 (5th Cir.
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`2000)). In Lee this court held that the affirmative defense of conflict preemption under
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`ERISA was not waived where the defendant raised the defense for the first time in summary
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`judgment briefing. Id. Likewise, in United States v. Shanbaum, 10 F.3d 305, 312 (5th Cir.
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`1994), the Fifth Circuit held that the government did not waive the affirmative defense of res
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`judicata when it raised the defense for the first time on the day the pretrial order was filed.
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`The panel explained that the parties had adequate time to address the applicability of res
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`judicata in their post-trial briefs. Id.
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`In this case, defendants raised their preemption defense at a pragmatically sufficient
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`time. Although they did not plead preemption as an affirmative defense, they raised it before
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`trial in their reply brief in support of the motion for summary judgment of Motion Medical,
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`Wabash Medical, Wilford, Thermo, and Tri 3, Ds. 8/28/13 Mot. Summ. J. Reply Br. at 5 n.7
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`& 15 n.26; in their motion for reconsideration of the court’s ruling on that summary judgment
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`motion, Ds. 11/14/13 Mot. for Recons. at 3-6; in the Pretrial Order, Pretrial Order at 14-15;
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`at trial in their motion for judgment as a matter of law, Trial Tr. 8:271-274; and during the
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`charge conference, id. at 10:243. At the charge conference, defendants argued that the jury
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 9 of 40 PageID 48847
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`should be asked whether Wilford and Thermo had misappropriated each product or type of
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`information at issue so that the court could later determine whether each misappropriated
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`product or type of information fell within the scope of copyright or patent protection.
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`ThermoTek did not agree to list individually in the jury charge the products and types of
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`information that were allegedly misappropriated.
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`Moreover, ThermoTek has not demonstrated prejudice resulting from defendants’
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`failure to plead preemption as an affirmative defense. In response to defendants’ motion for
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`judgment as a matter of law, ThermoTek suggests that it would have altered its trial strategy
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`to avoid preemption of its unfair competition claim, but it does not specify what steps it
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`would have taken to avoid preemption, including what evidence it would have developed or
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`introduced, or argument it would have made, to avoid the preemptive effect of federal
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`copyright or patent law. And when asked during the oral argument of the parties’ post-
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`judgment motions to identify specific prejudice, ThermoTek could not identify anything that
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`it would have done differently had preemption been properly pleaded.
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`Additionally, ThermoTek should have been aware before trial that defendants
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`intended to rely upon preemption. More than two years before trial, the court decided
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`defendants’ motion for summary judgment. Defendants filed a motion for reconsideration
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`based on three grounds, one of which was that ThermoTek’s unfair competition claim was
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`preempted. In denying the motion, the court explained that this defense could be decided
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`post-judgment. See 11/15/13 Order at 2. Defendants raised the preemption defense again
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`several times, both before and during trial. Because ThermoTek has not identified anything
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 10 of 40 PageID 48848
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`that it would have done differently had defendants pleaded the affirmative defense of
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`preemption, ThermoTek has failed to establish prejudice. The court holds that defendants
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`did not waive their preemption defense.
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`IV
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`The court next decides whether ThermoTek’s unfair competition claim is preempted
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`by federal copyright law.
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`A
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`Defendants maintain that ThermoTek’s unfair competition claim is preempted by
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`federal copyright law, 17 U.S.C. § 101, et seq., because the products that ThermoTek claims
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`were misappropriated were reduced to a tangible medium, and the alleged misappropriation
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`would violate both unfair competition law and federal copyright law. According to
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`defendants, in addition to the physical VascuTherm units and wraps, ThermoTek pointed to
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`the following as its misappropriated products: drawings, user manual, wrap insert, safety
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`reports, billing info and codes, Material Safety Data Sheet, FDA 510k documents, and
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`pricing information. Because these products were reduced to writing or embodied in such
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`writings, defendants argue that they are within the scope of federal copyright law.
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`ThermoTek responds that defendants have not demonstrated that the misappropriated
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`information and products constitute original works of authorship, which is necessary to bring
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`them within the scope of federal copyright law. ThermoTek maintains that, because
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`defendants did not raise preemption before trial, the jury did not decide whether
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`ThermoTek’s products fall within the subject matter of copyright. ThermoTek also argues
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 11 of 40 PageID 48849
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`that its unfair competition claim is not preempted because it contains an “extra element” not
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`required for a claim of copyright infringement: an unfair competition claim requires that the
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`misappropriated information be wrongfully obtained.
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`Defendants reply that (1) the only question is whether ThermoTek’s products were
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`reduced to writing; (2) ThermoTek’s products must be original works of authorship because
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`ThermoTek alleges that defendants misappropriated them from ThermoTek; and (3) it is
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`irrelevant that ThermoTek’s products are not actually protected by copyright law.
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`The Copyright Act provides that
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`B
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`all legal or equitable rights that are equivalent to any of the
`exclusive rights within the general scope of copyright as
`specified by section 106 in works of authorship that are fixed in
`a tangible medium of expression and come within the subject
`matter of copyright as specified by sections 102 and 103 . . . are
`governed exclusively by this title.
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`17 U.S.C.§ 301(a). A right granted by state law is preempted by federal copyright law where
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`two conditions are satisfied: (1) “the work in which the right is asserted must come within
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`the subject matter of copyright as defined in sections 102 and 103,” and (2) “the right that
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`the author seeks to protect must be equivalent to any of the exclusive rights within the
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`general scope of copyright as specified by section 106.” Alcatel USA, Inc. v. DGI Techs.,
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`Inc., 166 F.3d 772, 786-86 (5th Cir. 1999).
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 12 of 40 PageID 48850
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`C
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`The first prong of the copyright preemption analysis requires the court to determine
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`whether the works at issue fall within the subject matter of copyright, as defined by 17
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`U.S.C. §102, which covers “original works of authorship fixed in any tangible medium of
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`expression.” The “subject matter of copyright” includes all works of a type covered by
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`sections 102 and 103, “‘even if federal law does not afford protection to them.’” Spear
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`Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586, 596-97 (5th Cir. 2015) (quoting Wrench
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`LLC v. Taco Bell Corp., 256 F.3d 446, 455 (6th Cir. 2001)). In other words, even if works
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`are not actually protected by copyright, if they are the types of works contemplated by
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`copyright, state law cannot extend those works additional protection.
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`Alcatel is instructive. In Alcatel the Fifth Circuit held that written manuals were
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`within the subject matter of copyright for purposes of the preemption analysis. Alcatel, 166
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`F.3d at 786; see also M-I LLC v. Stelly, 733 F.Supp.2d 759, 781 (S.D. Tex. 2010) (holding
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`that plaintiff’s drawings, designs, technical manuals, specifications, and plans fell within the
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`subject matter of copyright). Similarly, ThermoTek’s allegedly misappropriated
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`information—including manuals, reports, billing
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`information, and other written
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`documents—is within the subject matter of copyright because it includes original works of
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`authorship fixed in a tangible medium of expression.
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`ThermoTek does not argue that any of its misappropriated information falls outside
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`the scope of copyright. Instead, ThermoTek maintains that defendants have not proved that
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`ThermoTek’s products are original works. This argument fails for at least two reasons. First,
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 13 of 40 PageID 48851
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`ThermoTek’s unfair competition claim is based on the time, skill, labor, and money that it
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`invested in developing its products; in other words, in attempting to prove its unfair
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`competition claim, ThermoTek necessarily proved that it created its products. Second,
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`ThermoTek has neither provided any evidence nor has it argued that any of this information
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`is outside the scope of copyright protection for any reason.
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`D
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`The second prong of the copyright preemption analysis requires “a comparison of the
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`nature of the rights protected under federal copyright law with the nature of state rights for
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`which [the plaintiff] seeks protection.” Alcatel, 166 F.3d at 787. If the state law rights are
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`equivalent to federal copyright, the state law cause of action is preempted. Id. Equivalency
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`is evaluated under the “‘extra element’” test: “if the act or acts of [the defendant] about
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`which [the plaintiff] complains would violate both misappropriation law and copyright law,
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`then the state right is deemed ‘equivalent to copyright.’” Id. On the other hand, if “one or
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`more qualitatively different elements are required to constitute the state-created cause of
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`action being asserted, then the right granted under state law does not lie ‘within the general
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`scope of copyright,’ and preemption does not occur.” Id.
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`Under Texas law, a cause of action for unfair competition based on misappropriation
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`“is specifically designed to protect the labor—the so-called ‘sweat equity’—that goes into
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`creating a work.” Id. at 788. To prove this common law unfair competition claim, a plaintiff
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`must establish that: (1) it created a product through extensive time, labor, skill and money;
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`(2) the defendant used that product in competition with the plaintiff, thereby giving the
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 14 of 40 PageID 48852
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`defendant a special competitive advantage because it was not burdened with the expense
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`incurred by the plaintiff in the creation of the product; and (3) the plaintiff suffered
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`commercial damage. U.S. Sporting Prods., Inc. v. Johnny Stewart Game Calls, Inc., 865
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`S.W.2d 214, 218 (Tex. App. 1993, writ denied). Similarly, the Copyright Act protects
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`against the reproduction, use, and distribution of certain works. Alcatel, 166 F.3d at 789.
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`In Alcatel the defendant argued that the plaintiff’s unfair competition claim based on
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`misappropriation of sweat equity was preempted by the Copyright Act. The Fifth Circuit
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`explained that the acts that formed the basis for the plaintiff’s misappropriation
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`claim—reproduction, use, and distribution of the plaintiff’s firmware, software, and
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`manuals—touched on interests clearly protected by the Copyright Act. Id. at 789. The
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`plaintiff argued that its misappropriation claim was not preempted because the claim required
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`proof of extra elements: (1) the misappropriated product was created through extensive time,
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`labor, skill and money; and (2) the defendant used the misappropriated product “in
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`competition with” the plaintiff. Id.
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`The Fifth Circuit rejected these arguments. First, the court reasoned that where a
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`work has been granted copyright protection, “the time, labor, skill, and money expended by
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`the author in creating the work are necessarily contemplated in that copyright.” Id. In other
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`words, these “sweat equity” elements of misappropriation are subsumed within a claim for
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`copyright infringement. Id. Second, where a copyrighted work is used in competition with
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`the author, this use would violate both the Copyright Act and state misappropriation law. Id.
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`The Alcatel panel concluded that the plaintiff had failed to identify any element that rendered
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 15 of 40 PageID 48853
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`its rights under state misappropriation law different from its rights under federal copyright
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`law; therefore, the state misappropriation claim was preempted by federal copyright law. Id.;
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`see also Spear Mktg., 791 F.3d at 598 (holding that claim brought under Texas Theft
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`Liability Act (“TTLA”) was preempted by the Copyright Act because the alleged copying,
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`communicating, and transmitting of confidential information contemplated by the TTLA was
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`equivalent to reproducing and distributing that information, contemplated by the Copyright
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`Act); Ultraflo Corp. v. Pelican Tank Parts, Inc., 823 F.Supp.2d 578, 586-87 (S.D. Tex. 2011)
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`(holding that, under Alcatel, the plaintiff’s common law misappropriation claim was
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`preempted where the plaintiff failed to show any difference between the two claims); M-I
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`LLC, 733 F.Supp.2d at 791-92 (same).
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`ThermoTek has similarly failed to identify any extra element that distinguishes its
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`claim for unfair competition based on misappropriation from a claim for copyright
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`infringement. ThermoTek argues that it was required to prove that defendants improperly
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`obtained ThermoTek’s products, pointing to this instruction in the court’s charge:
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`[a] person does not improperly use a product or improperly gain
`a special advantage in competition if he develops a competing
`product through inspection, analysis, or reverse engineering
`applied to publicly available information or to another’s finished
`product, or through independent research, skill and know-how.
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`Court’s Charge at 14. But ThermoTek overlooks the fact that, to find that defendants
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`unfairly competed with ThermoTek, the jury was only required to find three elements,
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`enumerated in the charge: (1) ThermoTek created a product through extensive time, labor,
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`skill, and money; (2) Wilford and Thermo used the product in competition with ThermoTek;
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` Case 3:11-cv-00870-D Document 807 Filed 09/07/16 Page 16 of 40 PageID 48854
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`and (3) ThermoTek was injured as a result. The jury was not required to find that Wilford
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`and Thermo wrongfully obtained ThermoTek’s information; put differently, the jury was not
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`required to decide any “extra element” above and beyond the reproduction, use, or
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`distribution of ThermoTek’s products and information.
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`ThermoTek appears to confuse its claim for unfair competition through common law
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`misappropriation with a different claim: unfair competition through trade secret
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`misappropriation.5 Trade secret misappropriation is not necessarily preempted by federal
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`copyright law because it “requires either a breach of confidential relationship or discovery
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`by improper means.” M-I LLC, 733 F.Supp.2d at 785. This extra element, which is not
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`required for a misappropriation claim, renders a trade secret claim “qualitatively different
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`than the conduct regulated by copyright law.” Id. Although ThermoTek cites a number of
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`cases analyzing claims for trade secret misappropriation, ThermoTek’s claim is for common
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`law misappropriation, which is not qualitatively different from copyright infringement.
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`Accordingly, the court holds that, to the extent ThermoTek’s claim is based on
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`manuals, reports, billing information, and other forms of authorship fixed in a tangible
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`medium of expression, the claim is preempted.
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`5ThermoTek originally asserted a trade secret misappropriation claim, but at an early
`stage of the litigation it moved to voluntarily dismiss that claim, or, alternatively, for leave
`to file an amended complaint that omitted the claim. See Orthoflex, Inc. v. ThermoTek, Inc.,
`2011 WL 4398279, at *2 (N.D. Tex. Sept. 21, 2011) (Fitzwater, C.J.) (granting ThermoTek’s
`alternative motion for leave to amend for purposes of omitting claim for misappropriation
`of trade secrets).
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`V
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`The court next decides whether ThermoTek’s claim for unfair competition through
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`common law misappropriation is preempted by federal patent law.
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`A
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`Defendants maintain that the allegedly misappropriated ThermoTek products—the
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`VascuTherm machine and wraps—are within the subject matter governed by federal patent
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`law. According to defendants, ThermoTek has sought patent protection for its VascuTherm
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`units and wraps. Defendants posit that federal patent law preempts state law to the extent
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`state law is used to protect functional aspects of any product, including patented products,
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`unpatented products, and unpatentable products.
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`ThermoTek appears to concede that the VascuTherm units and wraps are within the
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`scope of federal patent law, see P. 1/15/16 Mot. J. Matter of Law Resp. Br. at 15-16, but it
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`argues that patent law does not preempt its claim for unfair competition through common law
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`misappropriation because the claim serves a different purpose from a patent infringement
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`claim. According to ThermoTek, its unfair competition claim does not impede the public use
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`of an otherwise unprotected design; therefore, the claim is not preempted by patent law.
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`B
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`“[W]hen an article is unprotected by a patent or a copyright, state law may not forbid
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`others to copy that article.” Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 237
`
`(1964) (citing Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964)). In other words, a
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`state-law claim that forbids copying an article that is within the scope of patent law
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`impermissibly interferes with federal policy of “allowing free access to copy whatever the
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`federal patent and copyright laws leave in the public domain.” Id.
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`Federal patent law preempts state law to the extent state law is used to protect
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`functional aspects of a product; state misappropriation claims can only go as far as to protect
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`nonfunctional aspects of a product. See Bonito Boats, Inc. v. Thunde