The opinion of the court was delivered by: DEARIE
Plaintiff Flexible Technologies, Inc. ("Flexible") seeks a preliminary injunction to prevent defendant World Tubing Corporation ("World Tubing") from shipping a hose-making machine, the focus of this litigation, to Scotland. World Tubing moves to transfer the case to the District of Connecticut where related litigation is now pending. The Court grants the preliminary injunction and transfers the action to the District of Connecticut.
This case involves allegations of theft of plaintiff's trade secrets and their mechanical embodiment by plaintiff's former employees. Plaintiff's suit in the District of Connecticut charges its former employees with misappropriating its trade secrets. Those individuals are the founders of World Tubing, the defendant in this action, and allegedly the beneficiary of the theft. Plaintiff sought injunctive relief in this Court upon learning that the machine allegedly built with stolen trade secrets was being shipped overseas for sale to a third party. Surprisingly, many facts are not in dispute.
Flexible is a South Carolina corporation that has manufactured vacuum hoses for over 40 years. During the 1950s, Marcus Hall, a defendant in the related action, worked for one of Flexible's predecessors in Connecticut. As part of his employment, Hall worked on developing hose-making machines. When the company relocated to South Carolina in the late 1950s, Hall stopped working for the company. Thereafter, Hall and Flexible entered into a series of consulting agreements under which Hall built hose-making machines exclusively for Flexible. The most recent of these agreements terminated on March 1, 1991. The agreements contained a confidentiality clause that provided, "Hall will not at any time during the term of this agreement or thereafter reveal to any person (unless previously authorized in writing by [Flexible]) any Confidential Information." Plaintiff's motion, Exhibit 5. In 1991, Hall declined to continue his consulting arrangement with Flexible.
World Tubing, a Canadian corporation with its principal place of business in Branford, Connecticut, is owned by four former Flexible employees, Marcus Hall, David Lawrence, Eckard Fahnrich, and Bruce Miller. David Lawrence, the president of World Tubing, was a sales representative for Flexible from 1977 until 1987. Bruce Miller was at one time the technical director of Flexible Ducting, Flexible's sister company in Great Britain, and Eckard Fahnrich was formerly employed by Flexible Ducting Limited, the German affiliate of Flexible Ducting.
After his consulting agreement with Flexible expired in March 1991, Hall built a hose-making machine for World Tubing. Flexible argues that this hose-making machine incorporates numerous trade secrets of Flexible. World Tubing maintains that Hall built the machine using expired patents and general engineering skills. Flexible counters that, in the thirty years since the patents were issued, no one else has made a similar hose-making machine. Flexible relies on the October 17, 1995 affidavit of its technical expert, John Cearny, in which he states that the World Tubing machine uses trade secrets of Flexible as described in his report dated May 17, 1995. Plaintiff's motion, Exhibit 2.
In that report, Cearny maintains that the expired patents do not provide sufficient detail for a third person to build a hose-making machine like Flexible's without the expenditure of substantial time, research, and expense unless the third person had prior knowledge of the Flexible machine. Plaintiff's motion, Exhibit 2 at 10-11. Cearny also concludes that it is highly unlikely that an experienced technical person "would independently develop certain required features utilized in the World Tubing Machine of such similarity to the Flexible Technologies machine, solely from a review and study of applicable patents." Id. At the time of his report, Cearny had not examined the World Tubing machine.
Flexible also relies on various portions of Hall's deposition. When Hall built hose-making machines for Flexible, he hired Harmon Scovil to produce the tips and cams of the mandrel for the machines. Hall stated that he hired Scovil to make the tips and cams for the World Tubing machine and conceded that Scovil was the logical person to go to because he had built the tips and cams for the Flexible machines. Plaintiff's motion, Exhibit 3 at 309-310.
Flexible understandably emphasizes that Hall travelled to Poland to inspect a machine that he had made earlier for Flexible. When asked why he went to Poland, Hall admitted, "We were about to consider making a machine for World Tubing and we wanted to look at the details of that machine." Plaintiff's motion, Exhibit 7 at 45-46. Significantly, Hall secured access to the machine in Poland apparently by misrepresenting to the Polish owner of the machine that he was licensed by Flexible Ducting. Zygmunt Marchlik, a mechanical engineer at the Polish company, stated in his deposition that, as far as he could remember, the World Tubing visitors told him that they were licensed by "the Flexi company." Plaintiff's motion, Exhibit 10. World Tubing does not deny these allegations. Flexible also alleges that Hall had drawings of its hose-making machine at the time he started to build a machine for World Tubing and that he did not return the drawings to Flexible until September 5, 1991, more than six months after the termination of the last consulting agreement between, Hall and Flexible. Again, there is no denial.
On May 15, 1992, Flexible filed a breach of contract suit against Hall and Lawrence in federal district court in South Carolina, alleging breaches of confidentiality agreements. This action was subsequently transferred to the District of Connecticut. World Tubing is not a party to the Connecticut suit. On October 30, 1992, Flexible filed this action in the Eastern District of New York against World Tubing, asserting claims for trade dress infringement and false designation of origin under 15 U.S.C. § 1125(a). On January 23, 1993, World Tubing brought a counterclaim against Flexible in the New York action seeking a declaration that Flexible has no protectable trade secrets in the hose-making machine or the products made by the machine.
On October 17, 1995, Flexible moved this Court for a temporary restraining order enjoining World Tubing from shipping overseas and selling its hose-making machine. Flexible maintained that it had recently learned that World Tubing was planning to ship the machine to Primaflex Limited ("Primaflex") in Scotland and that the machine was going to be operational in Scotland by November 1, 1995. World Tubing argued that Flexible was not entitled to injunctive relief on the trade secrets issue because Flexible did not assert a trade secrets cause of action in its Eastern ...