Appendix — Novicky v. Syntex Ophthalmics, Inc.

met b 2 a - p / ‘a — :

” Supreme Court. U.S.

| FILED

No. ' DEC 27 1985

: . : a oa a ome oe UR

‘ : CLERK

5n the ve

Supreme Court of the Cited States

Octroper Term, 1985

NICK N. NOVICKY

Petitioner.

v8.

SYNTEX OPHTHALMICS, INC. and

ARAPAHOE CHEMIC ALS, INC.

(now SYNTEX CHEMICALS, INC.),

Respondents.

NICK N. NOVICKY,

Petitioner,

vs,

GEORGE F. TSUETAKT and FUSED KONTACTS

OF CHICAGO, INC.,

Respondents.

SUPPLEMENTAL APPENDIX

Keita V. Rockey

135 South L«Salle Street

Chicago, Illinois 60605

(312) 346-0338

Attorney for Petitioner

The Scheffer Press, Inc.—(312) 263-6850

INDEX TO SUPPLEMENTAL APPENDIX

Page

Verified Answer And Counterclaim

of Defendant Nick N. Novicky

To Verified Complaint For

Injunction And Other Relief,

Filed in the State Court Action ....Al

Opinion of the Illinois Appellate

Court In Tsuetaki et al. v.

Novicky, Entered December 7,

6: ee oe ee a a a ee ee ee

Opinion of the United States Court

Of Appeals For the Federal

Circuit In Syntex Ophthalmics

et al. v. Novicky, Dated July

10, 29G3% © swe es © we oe we we oe ew oh ct KOS

Order denying Petition for

Rehearing and Suggestion

for Rehearing in Banc in

Syntex Ophthalmics et al.

v. Novicky, Dated October

kc Se ee a ee * ee ee oe CO

A-1

IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS

COUNTY DEPARTMENT CHANCERY DIVISION

GEORGE F. TSUETAKI and

FUSED KONTACTS OF CHICAGO, INC.

an Illinois Corporation,

Plaintiffs,

Vs.

NICK N. NOVICKY, NO. 80

Defendant,

and

NICK N. NOVICKY,

Counter-Plaintiff,

VS.

GEORGE F. TSUETAKI and

FUSED KONTACTS OF CHICAGO, INC.,

an Illinois Corporation,

Counter-Defendant. )

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) CH 4724

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VERIFIED ANSWER AND

COUNTERCLAIM OF DEFENDANT

NICK N. NOVICKY TO VERIFIED COMPLAINT

FOR INJUNCTION AND OTHER RELIEF

Defendant and Counter-Plaintiff, NICK N.

NOVICKY, by his attorneys, KECK, MAHIN &

CATE, answers the Verified Complaint For

Injunction and Other Relief of the Plaintiffs

and Counter-Defendants, GEORGE F. TSUETAKI

A-2

and FUSED KONTACTS OF CHICAGO, INC. and

counter claims against said Plaintiffs and

Counter-Defendants as follows:

COUNT I

1. Defendant and Counter-Plaintiff NICK

N. NOVICKY (hereinafter "NOVICKY"), does not

possess sufficient knowledge to form a belief

as tc the truth or falsity of the allegations

contained in paragraph 1 of Count I of the

Verified Complaint for Injunction and Other

Relief (herein-after the "Complaint") of the

Plaintiffs and Counter-Defendants, GEORGE F.

TSUETAKI (hereinafter "TSUETAKI") and FUSED

CONTACTS OF CHICAGO, INC. (hereinafter "FUSED")

and therefore demands strict proof thereof.

Ye NOVICKY admits the allegations con-

tained in paragarph 2 of Count I of the Com-

plaint.

36 NOVICKY admits the allegations con-

tained in paragraph 3 of Count I of the Com-

plaint.

A-3

4. NOVICKY denies the allecations con-

tained in paragraph 4 of Count I of the Com-

plaint. Furthering answer said allegations,

NOVICKY states that in August, 1978 he did

contact TSUETAKI and FUSED concerning the

business of manufacturing and selling gas

permeable contact lens and materials used for

making gas permeable contact lens and other

lens devices and that NOVICKY did sign the

contract dated August 31, 1978, a copy of

which is attached to the Complaint as Exhibit

| ae

- NOVICKY denies the allegations con-

tained in paragraph 5 of Count I of the Com-

plaint. Further answering said allegations,

NOVICKY states the terms of the contract

attached to the Complaint as Exhibit "A" did

provide, inter alia, that NOVICKY shall be

employed by TSEUTAKI (or FUSED, at TSUETAKI's

convenience) for research and development

work and for the purpose of developing ma-

terials and techniques useful in the produc-

A-4

tion of contact lens, contact lens blanks,

materials used to make such lenses and blanks,

chemical formulations and compositions used

as ingredients or components of such lenses

or lens blanks, and other materials.

6. NOVICKY admits the allegations con-

tained in paragarph 6 of Count I of the Com-

plaint.

7. NOVICKY denies the allegations con-

tained in Paragraph 7 of Count I of the Com-

plaint. Further answering said allegations

NOVICKY states that FUSED did rent a facility

in Northbrook, Illinois, and that TSUETAKI

and FUSED established a division known as G &

N Research Laboratories.

8. NOVICKY denies the allegations con-

tained in Paragraph 8 of Count I of the Com-

plaint. Further answering said allegations,

NOVICKY states that after August 3l, 1978,

NOVICKY did conduct research and development

in the field of plastics for developing formu-

lations and techniques for producing plastic

A=)

contact lens and lens blanks and that during

the course of his employment he did develop

certain materials which appeared to be satis-

for governmental approval.

9. NOVICKY admits the allegations con-

tained in paragraph 9 of Count I of the Com-

10. NOVICKY does not possess sufficient

information to form a belief as to the truth

Or falsity of the allegations contained in

paragraph 10 of Count I of the Complaint and

therefore demands proof thereof.

his NOVICKY denies the allegations con-

tained in Paragraph 11 of Count I of the Com-

plaint. Further answering said allegations,

NOVICKY states that he cooperated with TSUE-

TAKI's attorney, James Fitzgibbon, in the

filing of a patent application (S.N. 081,682)

for an invention conceived during NOVICKY's

employment by TSUETAKI and FUSED.

A va

Fs Sad ©

12. NOVICKY cenies the allegations

tained in paragraph 12 of Count I of the

plaint.

13. NOVICKY denies the allegations

tained in paragraph 13 of Count I of the

plaint.

14, NOVICKY denies the allegations

tained in paragraph 14 of Count I of the

plaint.

L5- NOVICKY denies the allegations

tained in paragraph 15 of Count I of the

plaint.

16. NOVICKY denies the allegations

tained in Paragraph 16 of Count I of the

plaint.

5 i a NOVICKY denies the allegations

tained in paragraph 17 of Count I of the

con-

Com-

con-

a)

con-

Com-

con=-

Com-

con-

Com-

con-

Com-

plaint. Further answering said allegations,

NOVICKY states that on June 18, 1980 he did

Submit a letter of resignation attached to

the Complaint as Exhibit "G".

18. NOVICKY denies the allegations con-

tained in paragraph 18 of Count I of the Com-

plaint.

19. NOVICKY denies the allegations con-

tained in paragraph 19 of Count I of the Conm-

plaint.

20. NOVICKY does not possess sufficient

knowledge to form a belief as to the truth or

fasity of the allegations contained in para-

graph 20 of Count I of the Complaint and there-

fore demands strict proof thereof. Further

answering said allegations, NOVICKY stated

that:

(1) he did speak to TSUETAKI on

June 27, 1980, and did inform him Mr. Stage-

meyer was in the office at the G&N premises

in Northbrook, but that NOVICKY never permit-

ted Mr. Stagemeyer access to the laboratory

located on the G&N premises in Northbrook;

(ii) on June 30, 1980, he informed

TSUETAKI that he was too ill to report to

O

-.

A-6

(iil) he arrived at the G & N prem-

ises at approximately 12:30 that day to pick

up his mail; and

(iv) On said date, TSUETAKI and

FUSED demanded that NOVICKY deliver over all

of the books and records allegedly belongings

to TSUETAKI and FUSED and that NOVICKY deliver

over all keys to the premises and that he

vacate the premises.

21. NOVICKY denies the allegations con-

tained in paragraph 21 of Count I of the Com-

plaint.

22. NOVICKY denies iia ailecations con-

tained in paragraph 22 of Count I of the Com-

plaint.

23. NOVICKY denies the allegations con-

tained in paragraph 23 of Count I of the Com-

plaint.

WHEREFORE, Defendant and Counter-Plaintiff,

NICK N. NOVICKY, requests that Count I of

Plaintiffs' and Counter-Defendants', GEORGE

A-9

F. TSUETAKI and FUSED KONTACTS OF CHICAGO,

INC., Verified Complaint for Injunction and

Other Relief be dismissed and that Defendant

and Counter-Plaintiff, NICK N. NOVICKY, be

granted his costs and such other relief as

this Court deems equitable.

COUNT II

i-22. NOVICKY repeats and realleges

paragraphs 1 through 22 of Count II as though

restated herein for his answer to paragraph

1-22 of Count II of the Complaint.

23 NOVICKY denies the allegations

contained in paragrapy 23 of Count II of the

Complaint.

WHEREFORE, Defendant and Counter-Plaintiff,

NICK N. NOVICKY, requests that Count II of

Plaintiffs' and Counter-Defendants', GEORGE

FF. TSUETAKI and FUSED KONTACTS OF CHICAGO,

rr

INC., Verified Complaint for Injunction and

, 7

Other Relief be dismissed and that Defendant

and Counter-Plaintiff, NICK N. NOVICKY, be

granted his costs and such other relief as

this Court deems equitable.

COUNT III

1-22. NOVICKY repeats and realleges

paragraphs 1 through 22 of Count I as though

restated herein for the answers to paragraphs

1-22 of Count III of the Complaint.

23. NOVICKY denies the allegations

contained in paragraph 23 of Count III of the

Complaint.

24. NOVICKY denies the allegations

contained in paragraph 24 of Count III of the

Complaint. Further answering said allega-

tions NOVICKY states that, pursuant to TSUE-

TAKI's instructions or with TSUETAKI's knowl-

edge, he has filed certain patent applica-

tions, S.N. 066,054 and S.N. 074,427 in the

United States Patent Office.

WHEREFORE, Defendant and Counter-Plaintiff,

NICK N. NOVICKY, requests that Count III of

Plaintiffs' and Counter-Defendants', GEORGE

INC., Verified Complaint for Injunction and

Other Relief be dismissed and that Defendant

and Counter-Plaintiff, NICK N. NOVICKY, be

granted his costs and such other relief as

FIRST AFFIRMATIVE DEFE

WY

e3)

NOVICKY states as his first affirmative

defense that TSUETAKI and FUSED by false

TS

rromises and other deceptive practices fraudu-

lently induced NOVICKY to enter into the

>

e)

ry

(D

@

3

D

oe

ct

attached to the Complaint as Exhi-

bit A. Because of such fraudulent conduct by

TSUETAKI and FUSED, NOVICKY is entitled to

rescission and said Agreement is void and

unenforceable.

BS.

WHEREFORE, Defendant and Counter-Plain-

tiff, NICK N. NOVICKY, requests that Plaintiffs'

and Counter~-Defendants', GEORGE F. TSUETAKI

and FUSED KONTACTS OF CHICAGO, INC., Verified

Complaint for Injunction and Other Relief be

dismissed and that Defendant and Counter-Plain-

tiff, NICK N. NOVICKY, be granted his costs

and such other relief at this Court deems

equitable.

SECOND AFFIRMATIVE DEFENSE

NOVICKY states as his second affirmative

defense that COUNT I of the Complaint fails

to allege specific facts concerning the

alleged confidential information which was

revealed to or developed by NOVICKY during

the course of his emplcyment by TSUETAKI

and/or FUSED, but rather only alleges vague

legal conclusions.

WHEREFORE, Defendant and Counter-Plain-

tiff, NICK N. NOVICKY, requests that the

injunctive relief requested in paragraphs A,

B and C of Count I of the Complaint be denied.

THIRD AFFIRMATIVE DEFENSE

NOVICKY states as his third affirmative

defense that it was never the intent of the

parties that NOVICKY's patent claims which

are the subject of Patent Applications S.N.

066,054 and S.N. 74,427 be sold to TSUETAKI

and/or FUSED pursuant to the August 3l, 1978

Agreement and that TSUETAKI acknowledged such

fact and waived and released any claim to

NOVICKY's patent rights accruing from patent

applications S.N. 066,054 and S.N. 74,427 in

his letter to NOVICKY dated January 31, 1980

and attached to the Complaint as Exhibit "C".

WHEREFORE, Defendant and Counter-Plain-

tiff, NICK N. NOVICKY, requests that the

relief requested by Plaintiffs and Counter

Defendants, GEORGE F. TSUETAKI and FUSED

KONTACTS OF CHICAGO, INC., in Count III of

the Complaint be denied.

t-

i

COUNTER CLAIM

COUNT I

FRAUD IN THE INDUCEMENT

1. In approximately the beginning of

August, 1978, NOVICKY contacted TSUETAKI and

FUSED concerning the sale of a certain inven-

tion gas permeable contact lens material

(hereinafter referred to as Fusefocon GN-l

material) developed by NOVICKY prior to that

date.

26 After this initial contact, there

were several later discussions between TSUE-

TAKI and NOVICKY concerning said invention

and the employment of NOVICKY by TSUETAKI or

one of his companies in order to complete the

development of said Fusefocon GN-1 material.

3. During the course of these discus-

Sions, TSUETAKI offered to purchase said

invention from NOVICKY and to employ NOVICKY

to develop said material on the following

terms:

A-15

(i) a three year employment con-

tract with an initial base salary of $22,500

per annum;

(1i) a $10,000 payment which was to

be paid upon the date on which a patent appli-

cation for the Fusefocon GN-1l material was

filed, and an additional $10,000 payment

which was to be paid upon the date on which a

patent was granted persuant to said applica-

tion;

(iii) a percentage of the profits

from the sales of the Fusefocon GN-1l material

and from the sales of any other material

developed by NOVICKY; and

(iv) employee perquisites such as a

company paid travel to European customers and

cash bonuses.

4. On August 30, 1978, TSUETAKI and one

of his attorneys, James Fitzgibbon, travelled

to NOVICKY's apartment in Wheaton, Illinois

and presented NOVICKY with the first written

proposal which purported to embody the terms

of NOVICKY'S negotiations with TSUETAKI.

- Said written proposal did not con-

tain any provisions which related to the

share of the profits on the sales of the

Fusefocon GN-l material or other material

developed by NOVICKY which TSUETAKI had

promised NOVICKY he would receive if he sold

Said invention to TSUETAKI, or which related

to the employee perquisites which TSUETAKI

had promised to NOVICKY.

6. At that date TSUETAKI stated to

NOVICKY that it was not necessary to include

in the written agreement specific provisions

concerning NOVICKY'S share of the profits and

his employee perquisites, since such items

would be paid to NOVICKY persuant to para-

graph 8 of the agreement or granted to him

pursuant to TSUETAKI'S oral promises. Para-

graph 8 provided for a "discretionary bonus"

to be paid to NOVICKY by TSUETAKI at times

and in amounts to be determined in TSUETAKI'S

sole discretion.

¥« NOVICKY, a relatively recent immi-

grant to the United States (from Czechoslo-

vakia in 1970), did not have a sophisticated

knowledge of either the English language or

contract law. As a result of such lack of

sophistication NOVICKY did not understand the

terms of the Agreement attached to the Com-

plaint as Exhibit A or the legal ramifica-

tions thereof. NOVICKY, at all times there-

in, believed that TSUETAKI was legally bound

to fulfill his oral promises to pay NOVICKY a

percentage of the profits on the saies of the

material developed from NOVICKY's inventions,

including, but not limited to, Fusefocon GN-l

material and to provide him with employee

perquisites.

8. After NOVICKY requested that one

minor change be made in the agreement, TSUE-

TAKI and his attorney, James Fitzgibbon,

urned to NOVICKY'S apartment on August 3l,

1978, with a second version of the written

TSUETAKI and NOVICK Said agreemen was

identical to the one proposed on the previous

day, except that the miror change requested

by NOVICKY was made and that TSUETAKI, with-

out consulting NOVICKY, had extended the term

of the agreement from three to four years.

9. NOVICKY discovered the change in the

length of the term of the agreement but after

a discussion with TSUETAKI during which TSUF-

TAKI further assured NOVICKY that TSUETAKI

would keep his oral promises, NOVICKY exe-

cuted the agreement which is attached to the

Complaint as Exhibit "A" (hereinafter "Agree-

\

ment").

10. At no time during the course of

NOVICKY'S negotiations with TSUETAKI- and

FUSED did NOVICKY consult or have access to

~

A-1Y

ll. TSUETAKI and FUSED knew or should

have known that NOVICKY did not have a sophis-

ticated knowledge of either the English lan-

guage or American law. In spite of this

knowledge, TSUETAKI and FUSED did not suggest

to NOVICKY that he consult an attorney, but

rather stated to him that it was rot neces-

Sary to consult an attorney because NOVICKY

could "trust" TSUETAKI to fulfill his oral

promises and obligations thereunder.

12. TSUETAKI also took active steps to

prevent NOVICKY from having a chance to con-

Sult an attorney by stating several times

that if NOVICKY did not immediately accept

TSUETAKI'S offer as embodied in the Agree-

ment, then such offer would terminate.

13 « NOVICKY, in reliance on TSUETAKI's

Oral promises that TSUETAKI would pay to

NOVICKY a percentage of the profits resulting

from the sale of the Fusefocon GN-1l material

and NOVICKY'S other inventions and research,

A-20

and that NOVICKY would be entitled to certain

employee perquisities, executed in the Employ-

ment Agreement on August 31, 1978.

14. TSUETAKI at all times during said

negotiations knew that the written Agreement

did not contain any specific terms which re-

gGuired him to pay NOVICKY any portion of the

profits from the sales of Fusefocon GN-1l mater-

lal or any other material developed by NOVICKY

Or which required FUSED anc/or TSUETAKI to

provide NOVICKY with company paid travel and

Other employee perquisites. TSUETAKI fraudu-

lently made such oral promises, with knowledge

that NOVICKY was unsophisticated in his under-

taking of the English language and American

law, for the purpose of obtaining NOVICKY's

inventions and research capabilities and with

no intentions of honoring such promises.

15. During the first several months of

the term of the Employment Agreement, TSUE-

TAKI continued to make further oral promises

to NOVICKY that he would receive a share of

the profits resulting from the sales of the

products produced from NOVICKY'S inventions

and research, including but not limited to

the Fusefocon GN-1 material.

16. During said time period, TSUETAKI

established a division of FUSED entitled G&N

Research Laboratories, Inc. The G&N stood

for "George" and "Nick" and the division was

so entitled to create the impression in

NOVICKY'S mind that he was a partner with

TSUETAKI and as such would be entitled to a

portion of the profits of their common enter-

prise.

17. Induced by TSUETAKI'S oral promises

that he would receive a portion of the pro-

fits resulting from the sales of materials

produced and developed by him, NOVICKY -dili-

gently fulfilled the obligations of the Employ-

ment from August 31, 1978 until June 30,

1980. During said time period, NOVICKY de-

veloped the production process for Fusefocon

GN-l material.

A-22

18. In addition, during the period from

August 31, 1978 until June 30, 1980 NOVICKY,

based on research conducted by NOVICKY prior

to his employement by TSUETAKI and FUSED

developed materials which are the subject of

two other patent applications, 072,449 and

103,408. NOVICKY also developed the material

which was the subject of another patent appli-

cation, 081,682. Such material was a refine-

ment of a competitor's product. All such

applications were assigned by NOVICKY to

TSUETAKI, pursuant to the terms of the Agree-

ment.

19. Production and sales of the mater-

ials produced as a result of NOVICKY'S inven-

tions and research began in approximately

April, 1979.

20. TSUETAKI, in spite of numerous

requests by NOVICKY, did not fulfill his oral

promises and obligations to pay to NOVICKY

any portion of the profits from the sales of

such materials.

A-23

21. On May 16, 1980, TSUETAKI, pursuant

to a letter attached to the Complaint as

Exhibit F, finally offered to pay to NOVICKY

the sum of $1.00 for each standard rod of

Fusefocon GN-l material produced. TSUETAKI,

however, failed to comply with the terms of

said offer and did not pay to NOVICKY the sum

of $1.00 for each standard rod of Fusefocon

GN-1l material.

22. TSUETAKI also failed to fulfill his

promises to provide NOVICKY with company-paid

travel to European customers; but rather

actively prevented Novicky from having contact

with said customers by refusing to disclose

to NOVICKY the identity of said customers and

by forbidding NOVICKY to attend trade meetings

involving the contact lens industry and from

entering science contests in the contact lens

industry.

23% During the course of NOVICKY'S

employment with FUSED and TSUETAKI, TSUETAKI

A-24

continued to attempt to take advantage of

NOVICKY'S lack of legal sophistication. In

April of 1980, TSUETAKI presented NOVICKY with

a "Supplemental Agreement", a true and cor-

rect copy of which is attached hereto as

Exhibit .*i*. Among the onerous and uncon-

scionable privisions contained therein were

two paragraphs, 3 and 46, which purported to

permit TSUETAKI to require NOVICKY to work

for TSUETAKI for the rest of his life, yet

permitted TSUETAKI to terminate the Agreement

and the Supplemental Agreement without notice.

24. At all times herein:

(1) NOVICKY acted in reliance on

TSUETAKI'S promises that NOVICKY would be

paid a portion of profits resulting from the

sales of materials produced from his inven-

tions and would be given employee perquisites;

(ii) TSUETAKI knew he should have

Known that NOVICKY was acting in reliance on

such promises;

A-25

(111) TSUETAKI had no intention of

paying to NOVICKY any portion of the profits

resulting from sales of Fusefocon GN-1l mater-

ial or any other material produced or devel-

oped by NOVICKY;

(iv) NOVICKY would not have agreed

to enter into the Agreement except for TSUE-

TAKI'S promises that NOVICKY would be paid a

portion of the profits rsulting from sales of

materials produced from his inventions and

that NOVICKY would be entitled to employee

perguisites; and

(v) NOVICKY was materially damaged

by the failure to TSUETAKI to fulfill such

promises.

WHEEFORE, the Defendant and Counter-

Plaintiff, NICK N. NOVICKY, requests the

following relief:

a. For an order declaring the

Agreement to be null and void for failure of

consideration and fraud.

b. For an order requiring the

Plaintiffs and Counter-Defendants to reassign

to the Defendant and Counter-Plaintiff the

following patent or patent applications:

(i) 006725;

(ii) 072,449; and

(iii) 103,408.

Ce For an order requiring Plain-

tiffs and Counter-Defendants to submit to

Defendant and Counter-Plaintiff an accounting

of all sales of any material or item which is

based on or composed of the materials which

are the subject of the patent applications

listed in (b) above and to pay the Defendant

and Counter-Plaintiff all profits resulting

d. For an order declaring that

Plaintiffs and C ter-Defendants have

rialntl ~— ana Oun er eren an a) na — no

le or interest in patent applica-

tions 66054 and 74427;

e. For punitive damages in the

amount of $250,000.00; and

c. For such other relief as this

Court deems just and equitable.

COUNT II

BREACH OF CONTRACT

1-22. NOVICKY realleges and restates

paragraphs 1 through 22 enclusive of Count I

of the Counterclaim as paragraphs 1 through

22 enclusive of Court III of the Counterclaim.

23. At no time between August 31, 1978

and the date hereof has TSUETAKI ever paid

NOVICKY any portion of the profits resulting

from the sales of Fusefocon GN-1l material or

any other material developed by NOVICKY

during the period between August 3l, 1978 and

June 30, 1980.

24. Pursuant to TSUETAKI'S promises to

NOVICKY, NOVICKY is entitled to a reasonable

portion of such profits.

A-28

25. A reasonable portion of such pro-

fits is equal to five percent (5%) of the

sales price of all item produced from Fuse-

focon GN-1l material or any material which is

the subject of patent applications 072,449

and 103,408.

WHEREFORE, the Defendant and Counter-

Plaintiff, NICK N. NOVICKY, requests’ the

following ,celief:

(a) For an order requiring the Plain-

tiffs and Counter-Defendants to submit to

Defendant and Counter-Plaintiff an accounting

of all sales of any mateiral or item which is

based on or composed of any of the Fusefocon

GN-l material in the materials which are the

Subject of patent applications 072,449 and

103,408.

(b) For an order requiring the Plain-

tiffs and Counter-Defendants to pay to the

Defendant and Counter-Plaintiff the sum equal

to five percent (5%) of the gross sales price

of all such sales as shown by the accounting

requested in (a) above.

(c) For an order requiring the Plain-

tiffs and Counter-Defendants to pay to Defen-

dant and Counter-Plaintiff a sum equal to

five percent (5%) of the gross sales price of

all future sales of any such materials.

(d) For such other relief as this Court

deems fair and equitable.

COUNT III

BREACH OF CONTRACT

1-22. NOVICKY realleges and restates

paragraph 1 through 22 inclusive of Count I

of the. Counterclaim as paragraphs 1 through

22 inclusive of Count III of the Counter-

claim.

23 « TSUETAKI and FUSED failed to ful-

fill their obligation to pay NOVICKY $1.00

per each rod of Fusefocon GN-l material which

met the specifications stated in the document

attached to the Complaint as Exhibit "F".

A-30

WHEREFORE, the defendant and counter-

plaintiff prays for the following relief:

(a) For an order requiring TSUETAKI and

FUSED to submit to NOVICKY an accounting of

all rods produced between May 16, 1980 and

June 30, 1980 by FUSED, TSUETAKI or any cor-

poration or business entity controlled by

TSUETAKI or in which TSUETAKI has an interest.

(b) For an order requiring TSUETAKI and

FUSED to pay to NOVICKY the sum of $1.00 for

each rod so produced by FUSED, TSUETAKI or

any corporation or business entity controlled

by TSUETAKI or in which TSUETAKI has an

interest.

(c) For such other relief as this Court

deems fair and equitable.

KECK, MAHIN & CATE, Attorneys

for Defendant and Counter-Plaintiff

NICK N. NOVICKY

OF COUNSEL:

James G. Hiering

John T. McEnroe

8300 Sears Tower

233 South Wacker

Chicago, Illinois 60606

(312) 876-3400

A-31

VERIFICATION

I, Nick N. Novicky being first duly

sworn, on oath depose and state that I have

read the foregoing answer and counterclaim;

that the allegations therein contained are

true in substance and in fact; that with

regard to the allegations made upon informa-

tion, I am informed and do believe the truth

such allegations; and that the statements

contained therein that I am without suffi-

cient information to answer the allegations

contained in Paragraphs 1, 10, 20 of Counts

I, II and III of the Plaintiffs' and Counter-

defendants' complaint are true.

Nick N. Novicky

SUBSCRIBED AND SWORN TO

before me this 3lst day of

July, 1980

NOTARY PUBLIC

>

Ay 2£

THIRD DIVISJON

DECEMBER 7, 1983

81-1727/

81-2857

GEORGE F. TSUETAKI

and FUSED KONTACTS

OF CHICAGO, INC.,

an Illinois corp-

Oration,

APPEAL FROM THE

CIRCUIT COURT OF

COOK COUNTY.

Plaintiffs-

Appellees, HONORABLE REGINALD

J. HOLZER, JUDGE

vs. PRESIDING.

NICK N. NOVICKY,

Defendant-

Appellant.

eee ee ee

JUSTICE McGILLICUDDY delivered the opinion

of the court:

Following a bench trial, defendant,

Nick Novicky (Novicky), was found to have

breached his employment contract with plain-

tiffs, George F. Tsuetaki and Fused Kontacts

of Chicago, Inc. (Tsuetaki). The trial court

also found that modifications of the contract

i.

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>

i

Ww

WwW

were void for duress, fraud and lack of con-

sideration. An order was entered granting

the injunctive relief sought by Tsuetaki, and

ordering Novicky to return sums of money re-

ceived pursuant to the contract modifica-

tions.

On appeal Novicky asserts (1) the injunc-

tion is overly broad, permanently precluding

him from disseminating any and all informa-

tion relating to the manufactur.ng of gas

permeable contact lenses, thus effectively

precluding him from pursuing his career; (2)

tne modifications of his employment contract

were valid and not obtained by duress or fraud;

(3) the order of the circuit court is void

for failure to join an indispensable party to

the litigation; and (4) the circuit court

erred in dismissing Novicky's petition for

rehearing based on section 72 of the Civil

Practice Act (Ill. Rev. Stat. 1979, ch. 110,

par. 72), now codified as section 2-1401 of

the Code of Civil Procedure (Ill. Rev. Stat.

1981, ch. 110, par. 2-1401).

At trial, Tsuetaki testified that he

was a doctor of optometry doing business as

Fused Kontacts, Inc. The corporation makes

contact lenses for sale to doctors, labs and

patients. In August 1978, Novicky, a chemist,

stated to Tsuetaki that he had developed a

new composition for gas permeable contact

lenses that he wanted to sell to him. suetaki

Signed a security agreement, providing that

he would not analyze materials received from

Novicky at that time, but that, if a business

arrangement were reached, all technology would

become the property of Tsuetaki.

Subsequently, Tsuetaki and Novicky met

with Tsuetaki's patent attorney regarding tke

new composition for gas permeable contact

lenses. Although Novicky had previously been

employed as a chemist by Syntex Opthalmics,

Inc., and/or Arapahoe Chemicals, Inc., (col-

A-35

lectively Syntex), a manufacturer of gas per-

meable contact lenses, Novicky maintained

that he had developed the material offered to

Tsuetaki after leaving Syntex and while working

on his master degree at the University of

Denver. Novicky represented that his invention

did not infringe any patent owned by Syntex.

Tsuetaki and Novicky entered into an

employment agreement for the period from September

1, 1978 to August 31, 1982, providing that

Novicky would be employed to develop material

and techniques useful for the production of

contact lenses and related items. He was to

be paid an annual salary of $22,500 adjusted

annually to reflect increases in the cost of

living and a discretionary bonus. In addition,

in exchange for a present assignment of all

rights to any inventions previously made by

Novicky, he was to receive (1) $10,000 for

each patent application covering developments

made by Novicky for use in making contact

A-36

lenses and related items, approved by Tsuetaki

and filed in the United States Patent Office;

and (2) an additional $10,000 when and if a

United States patent was issued on the appli-

cation.

In return, Novicky assigned all inventions,

developments and improvements to be made in

the future to Tsuetaki during his life of the

agreement plus six months thereafter. Novicky

also agreed to keep the subject of his work

"confidential" as long as such information

had value to Tsuetaki or was still confiden-

tial.

The employment contract was signed on

August 31, 1978, and Novicky began work in a

laboratory provided by Tsuetaki. Novicky

made rods of material from which his employer

cut discs to make contact lenses. Tsuetaki

tested the lenses by wearing them himself.

He would then suggest to Novicky changes that

might be made to improve the lenses. Eventually

A-37

they developed a material which they called

"GN-l1," and patent application serial number

6752 was filed in Novicky's name covering the

GN-l material. Pursuant to the agreement,

Novicky was paid $10,000 at filing and $10,000

when the patent was officially allowed.

After the 6752 application was filed,

Novicky filed two more applications for other

inventions of which Tsuetaki was advised and

which Novicky agrees belong to Tsuetaki.

Novicky also filed three additional patent

applications for other inventions, two of

which he refers to as “private patents".

Novicky testified that Tsuetaki was uninterested

in these two patents and freely signed a state-

ment in January 1980, waiving all rights to

them. Tsuetaki, however, testified that he

Signed the waiver under duress and fraud and

without consideration. The alleged duress

was a backlog of orders which could only be

filled by the production of the rods by Novicky.

A-38 \

The alleged fraud was Novicky's assurance

that the two private patents were inferior

to, andthus not competitive with, those assigned

to Tsuetaki. However, following expert testimony,

the trial court found that the private patents

were competitive with GN-l. The court also

found that Tsuetaki had signed the waiver

under duress Since the alternative was a complete

shutdown of operations because of the stoppage

of the production of the rods by Novicky.

The employment contract was further

modified in May 1980, when Tsuetaki agreed to

pay Novicky a royalty of $1.00 per rod for

all GN-1l material produced. Tsuetaki testified

that this agreement, too, was the product of

duress. Novicky had started a production

slowdown. Tsuetaki allegedly had a backlog

of orders for 42,000 GN-1l blanks or 1900 rods

and no personnel other than Novicky to produce

them. t approximately the same time Novicky

also requested and received from Tsuetaki an

A-39

additional $3,000 for preparation of a United

States Food and Drug Administration file seeking

approval of the GN-1l material. Again, Tsuetaki

testified that he acted under duress. In

June 1980, Novicky tendered his resignation

to Tsuetaki.

The trial court found that Novicky had

violated his employment agreement and on January

13, 1981, entered judgment for Tsuetaki, ordering

Novicky to repay the $3,000. The judgment

order also included an injunction which pro-

vided:

*(4) NICK N. NOVICKY is hereby

enjoined from disclosing to any

person or entity the contents in

whole or in part of any laboratory

books and records dealing with

the experiments, research, progress

and development of the technology

involved in the manufacture of

contact lenses, including, but

not limited to, those which could,

would or did lead to the filing

of letters patent. NICK N. NOVICKY

is also enjoined from otherwise

disseminating matters confidential

to GEORGE TSUETAKI and/or FUSED

KONTACTS OF CHICAGO".

A-40

On October 24, 1980, Syntex had requested

permission to monitor the circuit court proceed-

ings. Tsuetaki and Novicky objected. The

trial court denied the request. On November

19, 1980, Syntex filed suit against Tsuetaki

and Novicky in the United States District

Court for the Northern District of Illinois

alleging that Tsuetaki had wrongfully obtained

Syntex's trade secrets from Novicky.

On February 18, 1981, Novicky filed a

post-trial motion seeking modification of the

judgment of January 13, 1981. Novicky contended

that the injunction in paragraph (4) was overly

broad, and that it was anomalous since Novicky

was not precluded from manufacturing contact

lenses using confidential information and

processes belonging to Tsuetaki, as long as

that information or process was not disclosed

to any other person or entity.

Tsuetaki filed a petition for Rule to

Show Cause on February 11, 1981, contending

A-41

that Novicky had improperly conferred with an

attorney for Syntex, regarding the case in

Federal court in which Novicky was appearing

pro se. In response to the petition for Rule

to Show Cause and in support of its own cross-

petition for a stay of the injunction entered

by the circuit court on January 13, 1981,

Syntex submitted a memorandum stating that

Novicky had agreed not to disclose or use

contact lens-related trade secrets learned

during the five years he had worked for Syntex.

While Novicky worked for Syntex he had allegedly

developed methods of making contact lenses,

generating a Patent Disclosure executed on

December 15, 1977, by three Syntex employees.

Although this patent belonged to Syntex, it

was allegedly substantially similar to the

patent awarded to Tsuetaki in the January 13,

1981 judgment. Further, the judgment required

Novicky to transfer to Tsuetaki documents

allegedly belonging to Syntex and drafted by

A-42

Novicky during his employment there. Syntex

requested the trial court to enter a protective

order staying certain paragraphs of its order

pending the decision of the Federal court

regarding the rights of the parties.

On February 24, 1981, Syntex filed a

Special and Limited Appearance to contest

personal jurisdiction of the state court. On

July 10, 1981, the trial court held that Syntex,

by filing its cross-petition and its response

to the petition for Rule to Show Cause, had

made a general appearance thereby submitting

itself to the jurisdiction of the trial court.

The court, further, denied Syntex's petition

for a protective order. Novicky's post-trial

motion was also denied.

Novicky appeals the January 13, 1981

and July 10, 1981 decision of the circuit

court. In addition, he filed a petition pur-

Suant to section 72 of the Civil Practice

Act (Ill. Rev. Stat. 1979, ch. 110, par. 72),

A-43

now codified as section 2-1401 of the Code of

Civil Procedure (Ill. Rev. Stat. 1981, ch.

110, par. 2-1401), on the basis of testimony

given by Tsuetaki and by Fused's comptroller,

in the Federal case against both Tsuetaki and

Novicky. Novicky asserted in his petition

that (1) evidence given by Tsuetaki and the

comptroller in the Federal case directly con-

tradicted testimony relied upon by the circuit

court in its resolution of the case in the

Circuit court; and (2) evidence in the Federal

case established that Syntex was an indispensable

party who should have been joined to the circuit

court action. Tsuetaki filed a motion to

Strike the section 72 petition. The court

granted the motion to strike. Novicky also

appeals this order.

I.

We first address the issue of the dismissal

of the section 72 petition which alleged that

the evidence given by Tsuetaki in the circuit

A- 44

court was contradicted by subsequent depositions

given by Tsuetaki in the Syntex case in the

Federal court. Tsuetaki and his comptroller,

Bill Vranas (Vranas), testified in the trial

of the instant case in support of Tsuetaki's

claim of coercion and duress chat Tsuetaki

had not been able to fill his orders for lenses

during the summer of 1980 because otf Novicky's

refusal to produce sufficient material and

his lack of other personnel to manufacture

the material. However, according to their

depositions in the Federal case, not only had

Tsuetaki been abie to fill his orders on July

3, 1980 and July 15, 1980, from material made

by Novicky before his resignation, but Vranas

testified further that sales were in fact

"bad" during the summer of 1980 and that when

Tsuetaki resumed production without Novicky

he still had an inventory over 1,000 "buttons"

produced by Novicky. This is inconsistent

with Vranas' and Tsuetaki's testimony in the

Circuit court.

A-45

Concerning Novicky's so-called "private

patents", Tsuetaki testified in circuit court

in support of his allegation that Novicky had

coerced him into waiving his interest in those

patents:

"I asked Mr. Novicky, what do

you want to do. What do I have

to do in order that we can have

production and satisfy our needs?

*x*x* T had no choice but to sign

this."

However, in his deposition in the Federal

case filed by Syntex, Tsuetaki stated that

about six months after the commencement of

the employment agreement Novicky had offered

him the private paterts for $10,000. Tsuetaki

stated that he simply did not wish to accept

hisoffer. Again this contradicts the testimony

in the instant case.

Further, regarding the alleged duress

resulting from Tsuetaki's complete dependence

On Novicky for the production of lenses due

to a lack of other qualified employees, the

A-46

Federal deposition revealed that Tsuetaki had

actually opened a second laboratory, Paragon

Research Corporation, before Novicky resigned.

In the instant case, on the other hand, Tsuetaki

had testified that he had "no desire" to open

another laboratory facility and that Novicky

would not have permitted him to hire an additional

chemist.

In addition, inthe circuit court, counsel

for Tsuetaki referred to Novicky as having

"extorted" the $3,000 received for preparation

of the United States Food and Drug Administra-

tion file, claiming that the typing bills in

conjunction with the preparation of the file

had amounted to only $54. The actual bills,

disgorged in the Federal court proceeding,

totaled approximately $1,400.

In the section 72 petition Novicky also

alleged that Syntex was an indispensable party

to the circuit court case, »Dased on Syntex's

assertions in the Federal case that it had a

A-47

proprietary interest in the subject matter of

this case. Novicky's section 72 petition was

supported by his affidavit and memorandum.

Tsuetaki filed a motion to dismiss the

section 72 petition alleging that it was insuf-

ficient at law to state a claim for relief.

The circuit court entered an order striking

the section 72 petition on the basis that the

newly discovered evidence could have been

presented at the trial if Novicky had exercised

due diligence.

First, we note that for purposes of a

section 72 petition, as in other pleadings,

failure to answer the allegations of the petition

constitutes an admission. (Campbell v. Kaczmarek

(1976), 39 Ill. App. 3d 465, 350 N.E.2d 97.)

Therefore, we must accept Novicky's allegations

as true and the only issue before this court

ls whether the petition and its supporting

affidavit adequately set forth facts to show

that the trial court abused its discretion in

A-48

denying the petition. (Colletti v. Schrieffer's

Motor Service Inc. (1962), 38 Ill. App. 2d

128, 186 N.E.2d 659.) A court of review may

disturb a trial court's decision regarding a

section 72 petition only if it finds that the

court abused its discretion. Stallworth v.

Thomas (1980), 83 Ill. App. 3d 747, 404 N.E.2d

554.

The criteria for a successful section

72 petition are well established. A party

must demonstrate: (1) the existence of a

meritorious defense or claim; (2) due diligence

in presenting this defense or claim to the

court in the original action; (3) that, through

no fault of his own, an error was made or a

defense or claim was not raised; and (4) due

diligence in filing the petition. In addition,

the petition must set forth specific factual

allegations in support of each element in

Order to prevail. Stallworth v. Thomas.

The purpose of section 72 petition is

to permit the vacation of judgments where

facts exist which, had they been known to the

trial court, would have precluded the judg-

ment. (Diacou v. Palos State Bank (1976), 65

Ill. 2d 304, 357 N.E.2d 518; People v. Hinton

(1972), 52 Ill. 2d 239, 287 N.E.2d 657, cert.

denied (1973), 410 U.S. 940.) It must be a

fact that influenced the court in its judgment

but about which the court was inerror. Further,

the petitioner must demonstrate that through

no fault or neglect of his own the error of

fact could not have been discovered at the

time of the original proceeding. (People v.

Jennings (1971), 48 Ill. 2d 295, 269 N.E.2d

474; People v. Stewart (1978), 66 Ill. App.

3d 342, 383 N.E.2d 1179.) Section 72 is an

appropriate remedy where the omission of a

valid defense was caused by fraud, duress or

excusable mistake. It is not intended to

relieve a party of the consequences of his

A-50

Own negligence or mistake. Diacou v. Palos

State Bank; People v. Stewart.

It is Our Opinion that Novicky has alleged

Specific facts in his petition, recounted

above, which could have led the circuit court

to a different decision regarding the agreement

between him and Tsuetaki, as well as the modifi-

cations of that agreement, had they been known

at the time of judgment. The cornerstone of

Tsuetaki's case was his claim of economic

duress produced by Novicky's alleged refusal

to produce sufficient material to fill Tsuetaki's

Orders for contact lenses. It was on this

basis that the trial court held the modifica-

tions of the employment agreement to have

been made under duress and therefore unenforce-

able. Depositions taken during discovery in

the Syntex Federal case -- the testimony of

Tsuetaki himself as well as that of Bill Vranas,

the two principal witnesses in the action

against Novicky -- refute this. Thus, we

believe that Novicky has presented a meritorious

defense and the initial requirement for a

successful section 72 petition has been satis-

fied.

In his petition Novicky stated, in support

of the due diligence requirement, that these

facts were not brought out at trial because,

as an individual, he was economically precluded

from the scope of discovery available to Syntex,

acorporation. While this may not be sufficient

to establish due diligence in itself, we note

that the equitable powers of the court are

invoked in the consideration of section 72

petitions (Elfman v. Evanston Bus Co. (1963),

27 Ill. 2c 609, 190 N.E.2d 348), and that

section 72 relief is granted to achieve justice,

and that a liberal construction is used to

achieve that end. (Elfman v. Evanston Bus

Co.} Electrical Wholesalers, Inc. v. Silverstein

(1977), 47 Ill. App. 3d 689, 365 N.E.3d 375.)

The requirement of due diligence need not be

A-52

rigidly enforced when fraud or unconscionable

behavior is' shown. (Department of Public

Works & Building v. O'Hare International Bank

(1976), 44 Ill. App. 3d 934, 358 N.E.2d 1308;

see Esczuk v. Chicago Transit Authority (1968),

39 Ill. 2d 464, 236 N.E.2d 719.) We believe

that the apparently false testimony given by

Tsuetaki and Vranas may fairly be characterized

as fraud.

Further, itis our opinion that Tsuetaki's

self-serving testimony, depending upon the

court in which he had been called to testify

Or to give a deposition, constituted unconscion-

able behavior. Since it can hardly be attributed

to any fault on Novicky's part that Tsuetaki

and Vranas did not testify truthfully, we

conclude that the requirement of due diligence

has been satisfied and that the trial court

abused its discretion in dismissing Novicky's

section 72 petition. Thus, the judgment of

the trial court is vacated and this matter is

remanded for further proceedings.

If.

We next address the issue of Syntex as

a necessary party. We first note that we do

not believe that Syntex should be joined on

the basis of the section 72 petition, since

as Syntex's former employee any fault for the

failure to join Syntex originally must be

attributed to Novicky. Relief pursuant to

section 72 is not designed to remedy the con-

sequences of a party's own negligence. Diacou

ve. Palos State Bank (1976), 65 Ill. 2d 304,

357 N.E.2d 518.

However, it is well established that if

a complete determination of a controversy

cannot be had without the presence of a party,

Or if a person, not a party, has a property

interest which a judgment may affect, the

court on application shall direct him to be

made a party. (Ill. Rev. Stat. 1979, ch. 110,

par. 25(1), now codified as section 2-406 (a)

of the Code of Civil Procedure (Ill. Rev.

A-54

Stat. 1981, ch. 110, par. 2-406€(a)); (Lain

ve. John Hancock Mutual LIfe Insurance Co.

(1979), 79 Ill. App. 3d 264, 398 N.E.2d 278;

Lerner v. Zipperman (1979), 69 Ill. App. 3d

620, 387 N.E.2d 946.) This is required by

fundamental principles of due process, since

a court is without jurisdiction to enter a

decree or judgment which affects a right or

interest of someone not before that court.

(Lerner v. Zipperman.) The requirement of

joinder of necessary parties is absolute and

inflexible and therefore an appellate court

has a duty to enforce the principle of law

requiring the joinder of parties sua sponte

as soon as it is brought to its attention.

Lerner v. Zipperman.

In our opinion due process requires

that Syntex be joined to this action upon

remand. Syntex is clearly a necessary party

since it is manifest from the record as well

as the parties' briefs on appeal that, as

A=-55

Novicky's former employer, Syntex has claimed

a property interest in the same alleged trade

secrets and patented processes that are the

Subject matter of the controversy between

Novicky and Tsuetaki. A judgment enjoining

Novicky from the use or dissemination of this

information, while allowing Tsuetaki to proceed

freely, could infringe the rights of Syntex,

as could a contrary disposition. Therefore,

we hold that upon remand Syntex must be joined

as a necessary party.

IIl.

Finally, since the issue is likely to

arise again upon remand, we address the scope

of the injunction against Novicky. An injunc-

tion should be reasonable and should only be

as broad as is essential to safeguard the

rights of the plaintiff. (Village of Wilsonville

vy. SCA Services, Inc. (1981), 86 Ill. 2d l,

426 N.E.2d 824.) Furthermore, as a general

rule, an injunctive order should not be broader

A-56

in scope than the relief sought in the plead-

ings. (Cook County v. Rosen & Shane Wine &

Spirits, Inc. (1978), 58 Ill. App. 3d 744,

374 N.E.2d 838; Schlicksup Drug Co., Inc. v.

Schlicksup (1970), 129, Ill. App. 2d 181, 262

N.E.2d 713.) We agree with Novicky that the

apparently perpetual injunction entered by

the trial court essentially enjoining him

from disclosing any and all information relat-

ing to the manufacture of contact lenses,

including but not limited to information which

could, would or did lead to the filing of

applications for letters patent, is too broad.

The granting of the injunction is reversed.

To aid in the enforceability of any possible

future injunction, the trial court should

delineate with greater specificity precisely

which information may not be disclosed or

used, and for what period of time.

4—-) /

sa j

For the foregoing reasons, the judgment

of the circuit court of Cook County is reversed

and remanded for a new trial.

Reversed and remanded.

MCNAMARA, P.J., and RIZZI, J., concur.

A-58

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

SYNTEX OPHTHALMICS,

INC., et al.,

Appellees, Appeal No.

)

)

)

) 83-838

V. )

)

NICK N. NOVICKY, et al., )

Appellants. )

GEORGE F. TSUETAKI,

et al.,*

Appellees, Appeal No.

V. 84-857

NICK N. NOVICKY, et al.,

Appellants.

— ee ee" 8 SS

DECIDED: July 18, 1985

Before DAVIS, Circuit Judge, NICHOLS, Senior

Circuit Judge, and BALDWIN, Circuit Judae.

PER CURIAM.

This case is back on remand from the

Supreme Court. Our original opinion issued

* As in our original consideration of the

case, Tsuetaki et al. did not participate in

the proceedings on remand. Also as before,

we treat this as one appeal.

A-59

on October 3, 1984, 745 F.2d 1423, 223 USPQ

695, and we shall not restate its contents.

Novicky filed a petition for certiorari,

mainly relating to the effect we gave to the

Illinois state judgment. On March 18, 1985

the Supreme Court granted certiorari, vacated

Our judgment, and remanded the case "for fur-

ther consideration in light of Marrese v.

American Academy of Orthopaedic Surgeons, 470

U.S. _ - {2985)<" 53 U.S.L.W. 3668. We

asked Novicky and Syntex for supplemental

briefs on the single question of the effect

of Marrese on our prior decision in this case.

Those briefs have been filed and the case is

now ready again for disposition.

I.

We are not certain whether the Supreme

Court vacated our entire judgment (including

those portions as to which certiorari was not

sought). See O'Connor v. Donaldson, (422

U.S. 563, 577 n.12 (1975). Because such a

A-60

full vacation may have occurred, we now rein-

state, without more, the parts of our opinion

and judgment (a) remanding to the District

Court the question of Syntex's title to the

'483 and '983 patents (the "private patents"),

(b) reversing the District Court's dismissal

of Novicky's counterclaim for fraud and un-

just enrichment regarding those patents, (c)

affirming the District Court's judgment that

Novicky misappropriated Syntex's trade secrets,

(d) reversing the District Court's final in-

junction and remanding for further considera-

tion of the duration and terms of that injunc-

tion in accordance with our opinion of October

3, 1984, and (e) affirming the denial of No-

vicky's motion to remand the state action

back to the state court. Those parts of our

prior judgment and opinion have nothing to do

with the Supreme Court's Marrese decision and

Opinion, and are in no way affected by either.

—————oO

Il.

The Supreme Court's Marrese decision, 53

U.S.L.W. 4265, does relate to our holding

that the state courts’ decision that Tsuetaki

(now Syntex) owns the "non-private" patents

is entitled to preclusive effect in the pre-

sent federal case. See 745 F.2d at 1431-33,

223 USPQ at 701-702. Accordingly, we have

reexamined that conclusion in the light of

the Marrese holding that, where a prior state

court judgment is involved in a federal suit,

federal courts should apply the state's pre-

clusion rules on issues of res judicata.

Illinois applies the same principles of

claim preclusion as does the federal law

cited in our prior opinion. 745 F.2d at

1432, 223 USPQ at 702. A recent Illinois

Supreme Court decision stated: "{A] final

judgment rendered by a court of competent

jurisdiction on the merits is conclusive of

the rights of the parties and their privies,

A-62

and, as to them, constitutes an absolute bar

to a subsequent action involving the same

Claim, demand or cause of action." Spiller

v. Continental Tube Co., 95 Ill. 2d 423, 447

N.E.2d 834, 838 (1983). The same rule was

applied by the Illinois Appellate Court in

holding that a prior decision of a federal

bankruptcy court precluded a later Illinois

Suit on the same claim: "The value of a plea

of res judicata is not determined by the rea-

sons given by a court in support of that judg-

ment nor is it mitigated by the fact that it

rests upon an erroneous view of the law.

[Citations omitted.] Consequently, a cause

of action by a court of competent jurisdic-

tion [sic] cannot be tried again in new pro-

ceedings before the same or a different tri-

bunal, except in a direct action to set aside

the prior adjudication." In re Donnellan, 90

Ill. App. 3d 1032, 414 N.E.2d 167, 171

(1980). It follows that, under Illinois pre-

A-63

clusion law (as under federal law), the deci-

Sions of the state trial court and of the

Appellate Court that Novicky did not own the

"non-private" patents (see 745 F.2d at 1431-

32, 223 USPQ at 701-702) "are entitled to

preclusive effect." 745 F.20 at 1432, 223

USPQ at 701.+/

Novicky tells us that these general Illi-

nois preclusion rules are overborne by another

supposed rule, i.e., that an appellate court's

mandate of remand is treated by Illinois law

as determinative "as distinguished from its

Opinion." (Brief of Defendant-Appellant

Novicky on Remand, p.6.) This supposed rule

is invoked because the Illinois Appellate

1’ as we previously said (745 F.2d

at 1432 n.17, 223 USPQ at 701-702 n.17), the

fact that a rehearing petition appears to be

still pending in the state appellate -court

does not prevent that court's judgment from

having conclusive effect. See Sixty-Third &

Halsted Realty Co. v. Goldblatt Bros., 342

Ill. App. 389, 96 N.E.2d 838, 843, aff'd 410

Ill. 468, 102 N.E.2d Ill. 2d 291, 427 N.E.2d

563, 570 (1981).

A-64

Court ended its opinion as follows: "For the

foregoing reasons, the judgment of the circuit

court of Cook County is reversed and remanded

for a new trial." That mandate is said wholly

to wipe out the state trial court's decision,

even though the Appellate Court's opinion

indicates that it accepted the part of the

trial decision bearing on the ownership of

the "non-private" patents. But the two Illinois

decisions Novicky cites (in support of his

argument) stand for quite a different general

Principle -- that the mandate should be con-

strued in the light of the opinion and the

trial court should abide by that mandate and

not act beyond its dictates. PSL Realty Co.

¥. Granite Inv. Co., 86 Ill. 2d 291, 427 N.E.

2d 563, 571 (1981) ("In construing the lan-

guage [of the mandate] matters which are im-

plied may be considered embraced by the man-

date. (Citations omitted.] The trial court

may only do those things directed in the man-

date. [Citation omitted.] The trial court

A-65

has no authority to act beyond the dictates

of the mandate."); Bradley v. Howard Hembrough

Volkswagen, Inc., 89 Ill. App. 3d 121, 124,

411 N.E.2d 535, 537 ("When a trial court's

judgment is reversed, the trial court is clearly

bound by the appellate court's determination

of all questions decided and can only act in

such proceedings in a manner as conforms to

the appellate court's judgment") .2/

2/ Other Illinois opinions (not cited

by Novicky) contain comparable (and even more

explicit) language. See Pittsburgh, C., C. &

St. L. Ry. Co. v. Gage, 286 Ill. 213, 217,

121 N.E. 582, 584 (1918) ("Where a judgment

is reversed by an appellate court, the judgment

of the appellate court is final upon all ques-

tions decided, and those questions are no

longer open to consideration. If the cause

has been remanded, the court to which it is

remanded can take only such proceedings as

conform to the judgment of the appellate court.

If specific directions are given, the court

can do nothing but carry out the specific

directions. If specific directions are not

given, it must be determined from the nature

of the case what further proceedings are proper,

and it is the duty of the court to which the

cause is remanded to examine the opinion and

proceed in conformity with it."); Shlensky v.

South Parkway Building Corp., 44 Ill. App. 2d

135, 194 N.E.2d 35, 38 (1963) ("It was the

duty of the Circuit Court to examine the opinion

of the Supreme Court and proceed in conformity

with it.*).

A-66

Here, it is clear that the Illinois Appel-

late Court reversed and remanded for a new

trial on aspects of the case other than the

ownership of the "non-private" patents (the

aspects on which remand was ordered were

treated at length in the appellate opinion)

and that that specific direction to the trial

court was incorporated in the initiai phrase

of the mandate, "For the foregoing reasons,

the judgment .. . is reversed and remanded."

Conversely, under [Illinois law, the unre-

versed parts of the trial court judgment (in

particular, the decision as to the ownership

cof the "non-private" patents) remained out-

Standing, unaffected by the reversal/remand,

and formed a part of the Appellate Court's

mandate. In short, Novicky has no viable

exception to the Illinois preclusion rules on

which to rest. |

III.

Novicky asks us, at this late stage, to

A-67

order the District Court to abstain from fur-

ther proceedings, at least until the state

court proceeding is completed. This is a new

argument and we decline to consider it now.

We have very little information on the cur-

rent status of the proceedings below, or of

those in the state courts -- and we have no

basis whatever for any judgment of our own on

appropriateness, convenience, or other fac-

tors bearing on possible abstention. The

matter is left open for the District Court if

Novicky decides to make an abstention request

to that tribunal.

The result is that, after further consi-

deration as directed by the Supreme Court, we

reinstate Part VI ("Conclusion") of our pre-

vious opinion, 745 F.2d at 1437, 223 USPQ at

706, and reach the same conclusion.

Affirmed in part, Modified in part, Re-

versed in part, and Remanded.

A-68

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

SYNTEX OPHTHALMICS, INC.,

ARAPAHOE CHEMICALS, INC.,

Appellees,

No.

NICK N. NOVICKY, GEORGE

F. TSUETAKI, RUSED KONTACTS

OF CHICAGO, INC.,

Appellants

)

)

)

)

V. ) 84-838/857

)

)

)

)

)

ORDER

A petition for rehearing and a sugges-

tion for rehearing in banc having been filed

in this case,

UPON CONSIDERATION THEREOF, it is Ordered

by the court that the petition for rehearing

be, and the same is hereby, Denied.

The suggestion for rehearing in banc is

declined.

FOR THE COURT

Francis X. Gindhart, Clerk

October 2, 1985

Date

cc: Keith V. Rockey

James W. Gould