SI Handling Systems, Inc. v. Heisley

ADAMS, Circuit Judge,

concurring.

Although I concur with the result reached by the majority, I believe that a number of the contentions raised in this appeal are sufficiently important to warrant additional comment.

When deciding the equitable issues surrounding the request for a trade secret injunction, it would seem that a court cannot act as a pure engineer or scientist, assessing the technical import of the information in question. Rather, the court must *1267 also consider economic factors, since the very definition of “trade secret” requires an assessment of the competitive advantage a particular item of information affords to a business. Similarly, among the elements to be weighed in determining trade secret status are the value of the information to its owner and to competitors, and the ease or difficulty with which the information may be properly acquired or duplicated. International Election Systems Corp. v. Shoup, 452 F.Supp. 684, 706 (E.D.Pa.1978), aff’d, 595 F.2d 1212 (3d Cir.1979) (applying Pennsylvania law of trade secrets).

While the majority may be correct in suggesting that the trial court need not always “engage in extended analysis of the public interest,” the court on occasion must apply the elements of sociology. This is so since trade secret cases frequently implicate the important countervailing policies served on one hand by protecting a business person from unfair competition stemming from the usurpation of trade secrets, and on the other by permitting an individual to pursue unhampered the occupation for which he or she is best suited. See Wexler v. Greenberg, 399 Pa. 569 , 160 A.2d 430 (1960). “Trade secrets are not ... so important to society that the interests of employees, competitors and competition should automatically be relegated to a lower position whenever trade secrets are proved to exist.” Robison, The Confidence Game: An Approach to the Law About Trade Secrets, 25 Ariz.L.Rev. 347, 382 (1983).

These observations take on more force, I believe, when a case such as the present one involves the concept of “know-how.” Under Pennsylvania law an employee’s general knowledge, skill, and experience are not trade secrets. E.g., Van Products Co. v. General Welding & Fabricating Co., 419 Pa. 248, 260-61 , 213 A.2d 769, 777 (1965). Thus in theory an employer generally may not inhibit the manner in which an employee uses his or her knowledge, skill, and experience — even if these were acquired during employment. See id.; Pittsburgh Cut Wire Co. v. Sufrin, 350 Pa. 31 , 38 A.2d 33 (1944). When these attributes of the employee are inextricably related to the information or process that constitutes an employer’s competitive advantage — as increasingly seems to be the case in newer, high-technology industries, see generally Note, Trade Secrets and the Skilled Employee in the Computer Industry, 61 Wash.U.L.Q. 823 (1983) — the legal questions confronting the court necessarily become bound up with competing public policies.

It is noteworthy that in such cases the balance struck by the Pennsylvania courts apparently has favored greater freedom for employees to pursue a chosen profession. See Comment, The Trade Secret Quagmire in Pennsylvania: A Mandate for Statutory Clarification, 86 Dick.L. Rev. 137 (1981). The courts have recognized that someone who has worked in a particular field cannot be expected to fore-go the accumulated skills, knowledge, and experience gained before the employee changes jobs. Such qualifications are obviously very valuable to an employee seeking to sell his services in the marketplace. A person leaving one employer and going into the marketplace will seek to compete in the area of his or her greatest aptitude. In light of the highly mobile nature of our society, and as the economy becomes increasingly comprised of highly skilled or high-tech jobs, the individual’s economic interests will more and more be buffeted by employers’ perceived needs to maintain their competitive advantage. Courts must be cautious not to strike a balance that unduly disadvantages the individual worker.

In achieving a proper balance, courts should be guarded in their use of older precedents. Perhaps the most “influential Pennsylvania holdings in the field of trade secrets” were decided in the early 1960’s. See Comment, supra, 86 Dick.L.Rev. at 148. Yet, quite significantly, those eases pre-date the rapid growth of several high- *1268 tech industries and the innovations which those industries have spawned. 1

Furthermore, society has a fundamental interest in allowing an individual reasonable freedom to change his or her job and fo make full use of acquired skills and Experience for new employment. Reasonable movement promotes competition and the dissemination of ideas, which in turn llenefit the consumer. Accord ILG Industries, Inc. v. Scott, 49 Ill.2d 88 , 273 N.E.2d 393 (1971). Important values are served when the resources of skill and information are allocated in such a manner that they are utilized most efficiently to produce goods and services. See Robison, supra, 25 Ariz.L.Rev. at 362.

Another point, mentioned by the majority lmt worth emphasizing, is that when an injunction is to issue in cases involving the '¡extraordinarily difficult” concept of trade secrets, Greenberg v. Croydon Plastics Co., 378 F.Supp. 806, 812 (E.D.Pa.1974), and the “fuzzy” notion of know-how, Van Products, 419 Pa. at 263 , 213 A.2d at 777 , it is incumbent upon a court to frame its injunction in terms as specific as possible, fairness to the parties requires that a court do more than permit in general terms the use of employee know-how, and forbid the use of various trade secrets, without defining with some precision the boundaries of those areas as determined by the facts of the case. An employee may be aware of an obligation to respect a former employer’s trade secrets but may have no (Satisfactory way to distinguish the information he or she must not disclose from that which may be employed. Robison, supra, 25 Ariz.L.Rev. at 348. In this respect I specifically endorse the majority’s admonition against the use of a term such as “concepting,” which is inherently vague and difficult to enforce when incorporated into an injunction.

Finally, I would highlight the concern that an important consideration for the district court on remand should be the effective life-span of any injunction that may issue. Appellants Scheel, Gutekunst, and Ziegenfus left SI in February 1983, an event followed closely by the institution of this lawsuit in March 1983. When the district court issued its injunction in March 1984, over one year had passed since the departure of those three employees. In addition, six years had passed since the departure of appellant Heisley, almost three years since the departure of appellant Hughes, and almost two years since the departure of appellant Dentner. It might be questioned whether, had the ap-pellee sought to restrain these employees for such lengthy periods of time, pursuant to explicit non-competition agreements, such agreements would be upheld as reasonable. See generally Morgan’s Home Equipment Corp. v. Martucci, 390 Pa. 618, 632 , 136 A.2d 838, 846 (1957); Blake, Employee Agreements Not to Compete, 73 Harv.L.Rev. 625 (1960).

In my view a proper injunction necessarily would impose the minimum restraint upon the free utilization of employee skill consistent with denying unfaithful employees an advantage from misappropriation of information. See Trade Secrets: How Long Should an Injunction Last?, 26 UCLA L.Rev. 203 (1978). Thus, as I see it, the district court, on remand, should fash *1269 ion an injunction that extends only so long as is essential to negate any unfair advantage that may have been gained by the appellants.

. For example, before 1969 computer manufacturers apparently gave away "software” programs as part of their packaged product. Since then the estimated value of computer programs in use has surpassed $100 billion, and there is now an acute shortage of personnel capable of creating and improving computer programs. See Note, supra, 61 Wash.U.L.Q. at 836. The status of a particular program in trade secret law is often extremely difficult to assess, partly because the programs do not blend easily into a framework that utilizes such concepts as know-how and reverse engineering. Compare, e.g., Structural Dynamics Research Corp. v. Engineer ing Mechanics Research Corp., 401 F.Supp. 1102 (E.D.Mich.1975) (software a trade secret) with, e.g., Electronic Data Systems Corp. v. Kinder, 360 F.Supp. 1044, 1049 (N.D.Tex.1973), aff’d, 497 F.2d. 222 (5th Cir.1974) (not a trade secret). In Pennsylvania, the idea of putting together computer programs to achieve a specific result and the expertise necessary to develop the programs are not subject to trade secret protection, but the specific programs developed to accomplish the purpose may be protected. See Computer Print Systems, Inc. v. Lewis, 281 Pa.Super. 240 , 250 n. 3, 422 A.2d 148 , 153 n. 3 (1980).