Ecolab Inc. v. IBA, Inc.

CourtDistrict Court, D. Minnesota
DecidedJuly 17, 2024
Docket0:22-cv-00479
StatusUnknown

This text of Ecolab Inc. v. IBA, Inc. (Ecolab Inc. v. IBA, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ecolab Inc. v. IBA, Inc., (mnd 2024).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Ecolab Inc., and Ecolab USA Inc., File No. 22-cv-479 (ECT/DTS)

Plaintiffs,

v. OPINION AND ORDER

IBA, Inc.,

Defendant.

________________________________________________________________________ Rachel Zimmerman Scobie, Paige S. Stradley, Gabrielle Kiefer, and Anneliese S. Mayer, Merchant & Gould P.C., Minneapolis, MN, for Plaintiffs Ecolab Inc. and Ecolab USA Inc.

Caitlinrose H. Fisher and Robert J. Gilbertson, Forsgren Fisher McCalmont DeMarea Tysver LLP, Minneapolis, MN, for Defendant IBA, Inc.

Plaintiffs—who, following their lead, will be referred to collectively as “Ecolab”— moved to compel discovery from Defendant IBA. Magistrate Judge David T. Schultz gave Ecolab some of the discovery it wanted, but not everything. One category of discovery Ecolab wanted but did not get concerned IBA’s alleged use of Ecolab’s trade secrets to develop and manufacture non-Ecolab-branded acidified sodium chlorite (or “ASC”) bovine teat-dip products.1 IBA obtained Ecolab’s trade secrets

1 These products are applied to the teats of lactating cows to control the spread of mastitis. “Bovine mastitis is an inflammation of the mammary gland caused from trauma or an infection, leading to abnormal and decreased milk production.” Bovine Mastitis, Cornell University College of Veterinary Medicine, https://www.vet.cornell.edu/departments-centers-and-institutes/baker-institute/our- research/bovine-mastitis (last visited July 17, 2024). under a license agreement (“Agreement”) that authorized IBA to manufacture and market Ecolab-branded products. Ecolab believes it asserted breach-of-contract and trade-secret claims arising from IBA’s development and manufacture of IBA’s own competing

products, and Ecolab wanted to know how IBA produced these products. Judge Schultz denied Ecolab’s request for this information because, among other reasons, he determined that Ecolab’s operative Amended Complaint asserts no claim based on IBA’s use of Ecolab’s trade secrets to develop or manufacture IBA’s products. Ecolab objects to this aspect of Judge Schultz’s order.

A second category of discovery Ecolab wanted but did not get concerned IBA’s marketing and sale of IBA’s products after January 6, 2022. Ecolab claimed that IBA’s ongoing marketing and sales of these products breached provisions in the Agreement that survived the Agreement’s termination, and Ecolab wanted to know the extent of the breach. Judge Schultz denied Ecolab’s request for this information on the legal conclusion that the

claim-supporting contract provision did not survive the Agreement’s termination. Ecolab objects to this legal conclusion. Ecolab’s objection to Judge Schultz’s decision on the first category will be overruled. The better answer—and the one Judge Schultz reached—is that the Amended Complaint does not assert a claim based on IBA’s development or manufacture of its own

teat-dip products. Without that claim, the discovery Ecolab seeks seems irrelevant; it is at least disproportional to the case’s needs. Ecolab’s objection to Judge Schultz’s decision on the second category will be sustained. Judge Schultz’s take on the legal issue is certainly reasonable, and it may turn out to be correct. The difficulty is that the issue has not been briefed or presented in a way that reasonably permits resolution of the dispositive contract-interpretation issue once and for all in the context of this discovery dispute. I

BACKGROUND FACTS AND ECOLAB’S CLAIMS Ecolab’s predecessor in interest, Alcide Corporation, and IBA executed a license agreement. See ECF No. 61-1 (“Agreement”). The Agreement is dated April 26, 2002. Id. At that time, Alcide possessed intellectual property “and information relating to products intended for use in the prevention of mastitis in dairy cattle.” Id. at 2, ¶ A.2 Under

the Agreement, Alcide granted IBA “a non-exclusive license . . . to make, have made, use, sell and import” “external udder care products” in consideration for a licensing fee to be paid by IBA. Id. ¶¶ 2.1 (granting non-exclusive license in “the Product”); 1.2 (defining “Product” to mean “Alcide® external udder care products”); 3.1 (describing licensing fee). The Agreement originally had a five-year term. Id. ¶ 1.1. During that term, the Agreement

forbade IBA from manufacturing or marketing “an acidified sodium chlorite teat dip product other than” Alcide’s products.3 Id. ¶ 2.5b; see id. ¶ 2.1 (prohibiting IBA from manufacturing external udder care products “for a third party”). And in the Agreement, IBA “covenant[ed] that it [would] advise Alcide one year in advance of the set termination

2 Page citations are to CM/ECF pagination appearing in a document’s upper right corner, not to a document’s original pagination.

3 As I understand it, the parties use the term “Covered Products” to refer to Ecolab-branded teat-dip products manufactured or marketed pursuant to the Agreement during and after the Agreement’s term (whatever that term might be). The parties use the term “Non-Covered Products” to refer to IBA’s own non-Ecolab-branded teat-dip products. For precision’s sake, this order does not follow this convention. date of this Agreement of its intention to market an acidified sodium chlorite teat dip product.” Id. ¶ 2.5b. The Agreement included a confidentiality provision governing each party’s handling of the other’s confidential information. See id. ¶ 7. The confidentiality

provision, among others, “survive[d] termination or expiration of” the Agreement, along with “any accrued obligations.” Id. ¶ 5.6. Ecolab succeeded Alcide, and Ecolab and IBA amended the Agreement. At some point between the Agreement’s April 26, 2002 effective date and November 1, 2004, Ecolab became “the successor in interest by way of merger to Alcide.” ECF No. 61-2.

Following this merger, Ecolab and IBA executed four amendments to the Agreement. As relevant here, the first amendment reflected the Ecolab/Alcide merger and extended the Agreement’s term to May 31, 2009. Id. at 2 (introductory paragraph) and ¶ 1. The second amendment replaced Washington law with Minnesota’s as the parties’ choice of governing law and extended the Agreement’s term to May 31, 2014. ECF No. 61-3 ¶¶ 1, 3.9.11. The

third amendment extended the Agreement’s term to May 31, 2019. ECF No. 61-4 ¶ 2. The fourth amendment addressed a license-fee-rebate provision that is not relevant to this specific discovery dispute. ECF No. 61-5. Several core allegations underpin Ecolab’s claims in the Amended Complaint. Ecolab alleges that “a vast quantity of technical information was disclosed by Alcide to

IBA under the License Agreement, including, but not limited to trade secrets, technical reports, and proprietary data relating to formulations, test results, and manufacturing know-how.” Am. Compl. [ECF No. 61] ¶ 17. Ecolab alleges the information Alcide disclosed was subject to the Agreement’s confidentiality terms “which prevented IBA from using any confidential, proprietary, or trade secret information disclosed by Alcide for any purpose other than fulfilling the relationship established by the License Agreement.” Id. ¶ 18. Ecolab and IBA attempted without success to negotiate a formal extension of the

Agreement beyond its termination date of May 31, 2019. Id. ¶ 27; see ECF No. 61-4 ¶ 2. After that date, “Ecolab continued to conform its conduct to the terms of the License Agreement,” and IBA represented it was doing the same. Am. Compl. ¶¶ 28–29. Ecolab alleges that “by implication due to the parties’ continued course of conduct,” the Agreement was extended to January 6, 2022. Id. ¶ 39.

Ecolab asserts a breach-of-contract claim. Id. ¶¶ 36–53 (Count I).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
Ecolab Inc. v. IBA, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/ecolab-inc-v-iba-inc-mnd-2024.