In August, 1991, defendant PLI ordered a Diamond workstation and peripherals through Select. The total amount of the purchase was $ 332,195.00, of which plaintiff claims $ 108,900.00 is still owing. PLI was not satisfied with the Diamond's performance, claiming that it was slower than advertised. It seeks a return of the work station and/or credits of $ 19,595.00 for return of the tape drive and exabyte, $ 37,000 for Fire 1000, filesilver and $ 13,000 for software never received against its payment of $ 218,000.
Plaintiff obtained a preliminary injunction barring defendants from distributing or marketing an electronic photographic retouching and imaging system called the Edge, having convinced the court that it was a copy of the Diamond which defendants had constructed by misappropriation of plaintiff's proprietary trade secrets involved in the development of the JRL Diamond. Plaintiff seek a permanent injunction barring the Select defendants for a term of years from marketing, selling or promoting any PC-based electronic photographic retouching and imaging system, and from using or disclosing the configuration of the Diamond workstation and from using or disclosing the unique training, techniques or procedures in the operation of the Diamond. Plaintiff also seeks judgment against Select of $ 50,000.00 for training of Linford in the operation of the Diamond and judgment against PLI for unpaid balance due of $ 108,900 on its purchase of the Diamond.
As they have maintained at the preliminary injunction hearing, defendants in the trial on the merits argue that no trade secrets or proprietary information was misappropriated by them from plaintiff because there were none; that Select owed no fiduciary duty to plaintiff; that their relationship was at will and plaintiff never sought nor secured from them a confidentiality agreement as to any proprietary information concerning the Diamond. Defendants seek vacation of the preliminary injunction and dismissal of the complaint. PLI seeks to repossess its benchmark from plaintiff and to return the Diamond. In the alternative, it seeks credits against the purchase price of various components not received or purchased elsewhere.
A trade secret can be anything used in one's business which gives an advantage over competitors who do not know or use it. Rapco Form Inc. v. Scientific Applications Inc., 479 F. Supp. 1027, 1029 (S.D.N.Y. 1979) (Sofaer, J). A plaintiff must prove it possessed a trade secret and that a defendant used that secret in breach of an agreement, confidence or duty or as result of illicit discovery. Integrated Cash Management Services, Inc. v. Digital Transactions, Inc., 732 F. Supp. 370, 375 (S.D.N.Y. 1989) (Ward,J), aff'd 920 F.2d 171 (2d Cir. 1990); Chicago Lock Co. v. Fanberg, 676 F.2d 400 (9th Cir. 1982); Computer Assoc. International, Inc. v. Bryan, 784 F. Supp. 982, 987-88 (E.D.N.Y. 1992); Diamond v. Oreamuno, 24 N.Y.2d 494, 301 N.Y.S.2d 78, 80, 248 N.E.2d 910 (1969). Disclosure through fair discovery is not actionable.
The definition of a trade secret has been adopted as the law of New York from the Restatement of Torts § 757, comment b which provides:
A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.
Integrated Cash Mgmt. Services, Inc v. Digital Transactions, Inc., 920 F.2d 171, 173 (2d Cir. 1990).
At the hearing on the preliminary injunction plaintiff put on as its first witness Eric Sandel, the integrator responsible for developing the Edge, and elicited from him what he had done and the ingredients he had used in constructing the Edge. The next day Loeb Julie took the stand and presented an exhibit called the "THE CHOICE MATRIX" which is set out below.
THE CHOICE MATRIX
FOR DESIGNING A RETOUCHING/IMAGING SYSTEM FROM SCRATCH
1. CHOOSE 1 OUT OF 9 HP XXX, DEC VAX, SUN, SILICON GRAPHICS,
CPU TYPES DATA GENERAL, IBM PC, APPLE MAC, NEXT,
2. CHOOSE 1 OUT OF 3 80286, 80386, 80486
3. CHOOSE 1 OUT OF 3 MCA, EISA, ISA
COMPUTER BUS TYPES
4. CHOOSE 1 OUT OF 8 UNIX, WINDOWS, OS/2, DOS 3,4 OR 5;DR DOS
OPERATING SYSTEMS 5 OR 6
5. CHOOSE 1 OUT OF 2(3) NORMAL HARD DISK, LARGE RAM, (XXX)
IMAGE MEMORY TYPES
6. CHOOSE 1 OUT OF 5 ESDI, MFM, SCSI, RLL, IDE
DISK DRIVE TYPES
7. CHOOSE 1 OUT OF 11 MATROX, DATA TECHNOLOGY, TARGA 16
IMAGE DISPLAY BOARDS TARGA 24, TARGA 32, TARGA PLUS, VISTA,
DATA TRANSLATION, OPTA, EVEREX, NEW MEDIA
8. CHOOSE 1 OUT OF 12 LUMENA, NPS, IMAGE-IN, PHOTOSTYLER, TIPS,
IMAGING/RETOUCHING WINRIX, QFX, PAINTBRUSH, RIO, TEMPRA,
SOFTWARE PROGRAMS SABLE, GIANT PAINT
9. CHOOSE 1 OUT OF 5 MOUSE, TRACKBALL, TOUCHSCREEN, TABLET,
POINTING DEVICE TYPES LIGHT PEN
10. CHOOSE 1 OUT OF 7 HOUSTON, SUMMAGRAPHIC, HITACHI, SEIKO,
TABLETS WACOM, CALCOMP, KURTA
11. CHOOSE 1 OUT OF 6 DAT, 1/4 INCH TAPE, 9-TRACK, WORM, OFF-
LINE STORAGE EXABYTE, ERASEABLE OPTICAL
12. CHOOSE 1 OUT OF 4 CDS, ASPI, NOVASTOR, SYTOS
© 1992-2004 VersusLaw Inc.