# Petition for Writ of Certiorari — Space Aero Products Co. v. R. E. Darling Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0792%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1965 - **Citation:** 382 U.S. 843 ## Text . : | ‘INDEX f hiss oe eae . ; : ‘Page - . - Opinions Below ...... pagenkc§hsasaavaekancuereelad me Jurisdiction ........ Oe ‘cin ves ere verre re a Questions Presented -... ; Pere Tr ty Troi TT oe 2 Constitutional Provisions and Statutes Involved segue © Statement of Facts s.c..6eseeeees (Stn devi deeds eae Reasons for Granting the WEE cites we Conclusion aE ae mere asennad shgas Antes ki “26 vasiaeina . | A. Constitutional and Statutory 1 Provisions . din kao la ms 4 Opinion of the Court of Appeals of Maryland... lla. C. Mandate of the Ocari of Appeals of Maryland. . 43a - ' D. Opinion sna Order of the Court of Appeals. of « Maryland Denying Motion for Modification ft = Opinion and -Rearguyent noneaed eek wveggecs Ge , ~E. Opinion of the’ ‘Circuit Court: for Montgoniery County, Maryland ° ceecccesececsccsesecccceces 498 F. Order of the Circuit Court for ‘Montgomery : | | County, Maryland ......... Peer Perere eee , 68a @. Modified Order of the Cirenit Court for Mont- gee County, ee wee eceeeegefecccecs 66a an \ cad aa? . - Index Continued (CITATIONS, tae - Cases: aS ; epee, Page Artype, Tne: ¥. Zappalls 298 F. 2a 695 (2a Cir. 1956)! 24 Carondelet Canal & Nay. Co. v. Louisiana, 233 U.S. 362 ME i eta do ada Fi Ueuuessaucee dua ekunen seks oe ae Compco Corp. v. ‘Day Brite Lighting, Inc., 376-U. "ae S36). ) Peeererererercr rr a era 2-10, 12, 16 Dent v, West Virginia,.129 U S14 (1889) PE neat epee ne 24 E. I. Du Pont de NemoursPowder Co. y. Masland, 244 - | US. 100,(1917)- ..... EE SSRN SPE A ree Forgay-v. Contad, 6 How. 201 (1848); .. thaied vigenes’ eo: ~ Franke v. Wiltschek, 209 F. 2d 493 (2d Cir. 1953). eee Es: Grannis v. Ordean, 234 U.S. 385 (1914) ../...... ee cils 11 Great Atl. & Pac. Tea Co. v. Supermarket Equip, Corp. be | SAD U.S. 147 (1950). 52.0... ceeds eceeececseses 15 | . Greene v. McElroy, 360 U.S. 474 (1959) ..e....2.....5524 | .. * Harrisonville v.. W. S. Dickey Clay Mfg. Oo., 289 U.S. ar ENE UG 5 vckda sd nd nub seelns sss eihevieienue 24 Head Ski Co. v. Kam Sti Co, ee oe : MU OE Go Siw cae acuwended oh ees\eeeces evans os Wt Hecht Co. v: Bowles, 321 US. 321 (1944) ....... vee 24 ’ Herndon v. Georgia, 295 U.S. 441(1935) ......0..... 1 Jungersen v. aw, & Barton Co. 3 335 Uz S. 560 (1949) - . 14, 15 Local, 438, Constr. & adecal Laborers? Union v. Curry,” : 371 U.S. 542 (1963) ELS oe ATER AD ED ED 9 : Northwestern Bell Telephoné Co. v. Railway Comm bad ; SOT TB G71 CABGED 5. os Es ccc ec dc tccecvaces a Paul v. United States, 371 U.S. 245 (1963) .......... - 20 Radio Station wow, Inc. v. Johnson, , 326 US. 120 7 “fi (1945) oe cee ARRAS ee ee PS Oe eR 9 Richmond | Raia Anchor Co. Vv. ‘United States, 275 : WU NN ooo cci ca M Ccccsdeiceeeceis 21 Schriber-Schroth Co. 'v. Cleveland Trust Co., 305 U.S. 47 $a de KGiNecceds ieketaswesetaas aekivaese ds 18 6 - . ; _ facturing Co. pray that a Writ ‘ofGertiorari issue to — _review the judgment of the Court of Appeals of Mary- land 3 in the above entitled case... OPINIONS. BELOW “The opinion of the Court of Appeals of Marylapd is reported at.238 Md. 93, 208 “A.2d 74 (1965),°and is — reprinted in the Appendix. p. lla, infra. The“per curiam opinion of that court on petitioners’ motion for® ~ . . = » d - . $ Y . ‘ ‘ ' 7 ’ * e : 2 ’ ° . ° ‘ A A ‘ * e »r\ ‘ * -? ° : ee ' a A aD On AD She SS ial ee ~ ij r se , . NRA i AM a a Cis WORRY ee Prt amen ty Reh geen eee Tee tae oe i : > ° ‘ A ‘ re . . J a ‘pope VA ANE dhe => Ne “ Ke - . e 4 . \ : 2 ‘ we ‘reargument is reported at 238 Md. 129, 208'A.2d 699 - (1965), and is reprinted i in the Appendix, p. #5a, wnfra, The opinion of the ‘Cireuit' Court for Montgomery: County, Maryland, is not reported. It is ee in S -— oe P. 49a, infra. oat “JURISDICTION = | ' The judgment of the Court of Appeals of Maryland ‘was entered on March 12; 1965.' (Appendix, p. 44a, . infra). A timely Motion for Reargument was deniéd on April 12, 1965. (Appendix, p. _ 44a, infra). The | jurisdiction of this Court is invoked pursuant to 28 U.S.C. § 1257(3), since petitioners claim that the deci- sion of the Court of Appeals of Maryland conflicts with the federal scheme of patent regulation established by . the Constitution and the federal patent \laws, and has deprived them of their property and freedom without due process of law in contravention of the Fourteenth — _ Amendment of the Constitution of the United States. QUESTIONS PRESENTED m, @ 1. Whether, consistently with the federal scheme of patent regulation embodied in Article I, Section. 8, Clause 8, of the Constitution and the federal patent laws, a state court, which, found that petitioners had misappropriated: res ‘dent’s secret process of manu- facture, may invoke the state law of unfair competition and trade secrets as a basis for permanently enjoin- . ing petitioners from manufacturing and selling an un- . patented and unpatentable ay regardless of the ‘process of manufacture emp oyed, 2. Whether, consistently with the guarantes: of the ~ Fourteenth Amendment that no State shall ‘deprive head person of sit salad or property, without due. ~ . - 4 P me 2 process of law,’’ the individual petitioners may be per- manently enjoined from working in their chosen field of endeavor merely because they were found to have competed unfairly with respondent by manufacturing an unpatented and unpatentable product, using an un- patented and unpatentable process developed by re- - spondent and found by the lower courts to ers a _ trade secret. | - ~ CONSTITUTIONAL PROVISIONS AND STATUTES INVOLVED This case involves Article: I, Section 8, Clause 8; Article VI, Clause 2; and the Fourteenth Atnendment, - Section 1 of the Constitution ; Sections 101, 102, 103, . 112, 154, 173 and 283 of the Patent Code of 1952, 35 U. S. ©. §§ 101-03, 112, 154, 173, 283; 28 U.S.C. §§ 1338, 1498; and 10 U.S.C. "§ 2304. These provisions are set | forth in the Appendix, beginning at p. la, infra. STATEMENT OF FACTS The respondent, R. E. Darling, Co., Inc., is a manu- facturer of oxygeh breathing hose. (E. 452).’~ This hose is a highly specialized product used primarily for v military and space projects, and until the formation of 1The record references are to the four-volume printed recdtd extract prepared for the Court of Appeals of Maryland., Volume I (pp. E. 1-E. 696) contains the pleadings, orders and opinion of _ the circuit court, and portions of the testimony printed for the Court of Appeals; Volume II (pp. E. 697-E. 1278) contains addi- tional portions of the testimony printed for the Court of Appeals; _ Volume III (pp. E. 1279-1908) contains additional portions of the testimony printed for the Court of Appeals; Volume IV (pp. E. 1909-E. 2050) contains the exhibits which were introduced in the circuit court. We have filed ‘nine copies of this record extract ~’ with the Petition. ¢ DROS cidiwraed ts: ie: petitioner Space Aero, Darling was the Government's sole source of supply for much of it. (HE. 474). The individual petitioners, with the exception of Brandenburg, worked for Darling in various-capacities and for various periods of time.? ‘In December, 1960, © these individuals became dissatisfied with their em- ployment by Darling and left Darling’s employ. They - then formed Space Aero Products Co., Inc. for the pur- pose of manufacturing oxygen breathing hose assem- blies and entered its employ. (E. 81, 113-14). This - company was partially financed by petitioner Norris Manufacturing Co., which had for many years sup- ‘plied silicone material to Darling for use in the manu- facture.of Darling’s hoses, and.by petitioner Branden- burg, the President of Norris and a research chemist thoroughly versed in the techniques of manufacturing pressure hose assemblies. (H. 97-100, 110). In 1954 and 1955, the United States Navy and onc- of its prime contractors, Douglas Aircraft Co., were engaged in perfecting a seat pan assembly for use in a high-speed jet aircraft, the A4D. (E. 1547). One of the elements of this assembly is an oxygen air hose system: used to supply oxygen to the pilot during flight 2 Jackson went to work for Darling in 1956, and- dbring most : of his tenure was an account specialist. (E. 93). Douglas Creger was first hired by Darling in 1954 as-a hose assembler and later _ became foreman of one of the shops. (E. 392-93). Fasano was employed by respondent in 1957 as a production supervisor. (E. 451). Mrs. Douglas Creger was employed by Darling as a hose * builder. (EZ. 304).. Quinter came to work for Darling in 1957 as a@bookkeeper. (E. 150). Wilkinson was employed intermittently by Darling as an engineering draftsman. (E. 127). _ None of these individuals had an employment contract which imposed upon him any obligation of secrecy regarding matters which might come to his attention during the course of his employment, and each could have been discharged by Darling at will. . 5 and during descent in the event of emergency ejection. - (KE. 1248, 1251). In April, 1960, after the assembly had been ‘parfected, the Navy issued Military Specifica- | _tion H-22489, which.described the type of oxygen hose to be used in'the assembly and indicated how the hose was to be qualified for acceptance by the Government. ' (EH. 1910-1927). The issuance of such a specification is standard procédure as a prelude to formally adver- tised, competitive bid procurement by the Government.’ On June 23, 1960, the Navy sent a copy of the specifica- tion to Darling and solicited samples. (E. 2011). Simi- lar letters were sent to all hose manufacturers known to'the Navy at that time. (E. 1573-74, 1612). Space | ‘Aero and Darling each submitted an oxygen breathing hose to the Navy for. qualification under specification -- /° - H-22489. (KH. 1575-98).° Both hoses were ‘‘qualified’’ by the Navy. Thereafter, as a result of advertised pro- curements in which it was low bidder, Space Aero en- tered into. several prime contracts with the Navy, and . also obtained certain prime subcontracts, to supply hoses complying with specification H1-22489. (KE. 164). It also subsequently entered into contracts to develop and supply umbilical. hoses for use in the Apollo space- craft, similar to the hose used-by astronaut White dur- ‘ing his recent ‘‘walk in space’’. These hoses are in many respects similar to - hoses called for a speci- _ fication H-22489. On February 27, 1961, ‘Darling initiated this litiga- tion, alleging that its former employees learned how to make oxygen breathing hoses while working for the respondent, that this sist was based largely upon . See 32 C.F.R. §§ 2.501 to 2. 503 for a complete description of the ‘*Qualified Products List’’ procurement aaa used in situa- tions ” the a here involved. 6 cortain trade secrets developed by the respondent, that these secrets were used by petitioners to compete un- fairly with respondent, and that petitioners Norris and Brandenburg conspired with respondent’s former. em- ‘ployees to encourage and effectuate a plan whereby | Space Aero could compete unfairly with respondent. . (K. 7). . Darling prayed for conventional ‘‘trade se- eret’’ relief, including, among other things, a perma- ~ nent injunction prohibiting petitioners from using any part of the trade secrets allegedly obtained from Dar- ling; an accounting for such damages as Darling may have incurred as a result of the alleged wrongdoing; and an order requiring petitioners to ‘deliver to the court for destruction documents and materials relat- ing to, containing disclosures of, or produced with the benefit of respondent’s trade secrets. (E. 15+16). After a lengthy trial, most of which was conducted in camera, and at which the facts were strongly con-_ tested as to whether Darling’s processes were in fact ‘*trade secrets’? and whether there was any improper _ ane 2 appropriation of them, findings were made adverse to petitioners. The trial judge—while not describing even the broad perimeters of the alleged ‘‘trade secrets’”— found that Space Aero’s personnel had used those secrets in producing oxygen breathing hoses, and that petitioners Norris and Brandenburg had illegally -par- ticipated in this use by assisting respondent’s former employees to establish a competing enterprise. (E. 34). Thereupon, the cireuit court proceeded to issue an order containing an injunction much broader than was even prayed for in the complaint. In the fashion of a decree appropriate in a patent infringement suit, the order permanently enjoins petitioners, ‘‘their agents, servants, employees, successors and assigns’? from — * 7 ‘further manufacture and/or sale of high or low pres- sure hose assemblies’” which are ‘‘of like or similar construction. to hose assemblies manufactured to. the requirements of United States Military Specification Mil H-22489,” regardless. of the process used in such manufacture. (E. 67). It also directs petitioners to deliver to the court for destruction all documents, drawings, manuals and other material in their posses- sion which describe the equipment, components, meth- ~ ods or techniques used in the manufacture of. hose assemblies manufactured to the requirements of speci- fication H-22489, regardless of the process used in such manufacture. (K. 68). Finally, the court retained jurisdiction to determine the respondent’s rights to an accounting and d unages. (EH. 68). : The Court ‘of. Appeals of Maryland affirmed, but . ordered that the injunction be modified in certain re- spects not pertinent here. The court rejected peti- tioners’ argument_that-the-injunction should merely prohibit use of Darling’s secret process, and not the manufacture of the end product itself, saying that ‘‘Darling’s trade secret consists too largely of the or- | dered’ relationship and combination of various and devices, some in themselves quite simple in nature, ‘to make a prohibition of specific steps or processes * The court ordered that the injunction be modified (1) to permit termination of its prohibitions if,and when the ‘‘methods and processes’’ used by Darling in the manufacture of hoses become generally known to the public (Appendix, p. 38a, infra) ; (2) to exclude‘from its coverage one of the components listed in tion H-22489 (Appendix, p. 39a, infra) ; and (3) to permit com- : ‘pletion of three specific contracts between Space Aero and the Government and of certain other subcontracts between Space Aero and prime Navy contractors, if it can be shown that completion . of such subcontracts is in the interest of national defense (Ap- pendix, p. 42a, infra). PO to 8 practical’, (Appendix, p. 39a, infra).° A motion for: ' yeargument was denied by the Court of. Appeals. , The Court of Appeals remanded the case to the fia} court for modification of the injunction and for sub- ’” sequent proceedings to determine the damages, if any, - sustained by. Darling. On remand, the trial judgé. _ entered the modifications ordered by the Court of Ap- peals, and granted ‘petitioners permission to complete _ certain specified Government contracts and prime sub- contracts. (Appendix, p. 66a, infra)." — 5 As pointed out, the Injunction did not: ‘cooly merely to the ‘‘secret process,’” no matter how ‘simple in nature’? most of its — components were; but, rather,.to the manufacture and sale of the: end product itself, regardiogs of the process used. SS In its opinion accomp ying the denial of petitioners’ motion for reargument, the Court of Appeals directed the trial judge to insert the following additional modifications in the’ injunction: -(1) a provision -permitting petitioners to complete any contracts or subcontracts entered into pendente lite providing the Govern- ‘ment can demonstrate that such completion is necessary in the - national interest. (Appendix, p. 47a, infra); and (2) a provision indicating that employees of petitioners ‘(but not the individual _ petitioners themselves) ‘‘are not to be prohibited from using their . skills and from working for any other company in the manufacture or sale of pressure hose assemblies, if such hose assemblies have a construction different from that used by Darling and if such manufacture or sale does not use Datling ’getrade secret methods and proteéss’’ (Appendix, p. 48a, infra). “Re 7 Petitioners recognize that the trial court has retained jurisdic- tion and that further state court proceedings to determine possible damages are contemplated: However, they assert that the decision of the Court of Appeals is sufficiently final as to the federal ques- tions involved to permit review by this — — 28. U.S.C. § 1257(3). The federal question raised by this Petition concerning the lower court’s unconstitutional encroachment upon the federal patent system, pp. 12-22, infra, cannot be affected by any prospec- ‘tive state court proceedings, since that portion of the injunction £ ° ; : gle . The Raising and Disposition Below of the Federal Questions—-In their brief in the Court of Appeals, petitioners cited this Court’s decisions -in “Sears Roebuck & Co. v. Stiffel, 376 U.S. 225 (1964), and which gives rise to the federal question has been affirmed by the ' Court of Appeals and is in no way touched by the modifications which have been decreed. Neither can it be affected by the pro- ceedings to determine damages. : . In: addition, petitioners’. Fourteenth Amendment claim will be unaffected by further state court proceedings and calls for prompt review. The essence of that claim, as will be shown below, pp. 23-26, infra, is that the injunction is so unreasonably broad: as to deprive petitioners of liberty and property without due. process of law.- This claim rests not only on the fact that the injunction prohibits them from manufacturing oxygen breathir hoses: by any process, even one totally dissimilar from respondent’s, but also on‘the fact that the injunction requires petitioners, immedi- . _ ately upon completion of pending Government contracts, to deliver to the circuit court for destruction documents and materials coni- pletely unrelated to respondent’s. process of manufacture. It is apparent, therefore, that if petitioners must abstain from their chosen field of employment and submit valuable documents and materials for destruction while awaiting the termination of ancil- lary and non-depositive issues in the state courts, and before ob- taining review of their separate and distinct federal claims in this Court, they are likely to be irreparably injured. Only recently, the Court recognized that in situations such as this, unless a prompt review of the federal claims is permitted, ‘the injunction ‘*may effectively dispose of petitioner’s rights and render entirely illusory his right to review here.’’ Local 438, Constr. & General Laborers’ Umon v. Curry, 371 U.S. 542, 550- (1963). Moreover, the Court’ has consistently held that a ‘Judgment requiring an ‘‘immediate ' delivery of physical property,’’ as the injunction ‘in this case does, ““is reviewable and is to be deemed disassociated from a provision for an accounting even though that is decreed in the same order.’’ Radio Station WOW, Inc. v. Johnson, 326 U.S. 120, 126 (1945); - Carondelet Canal & Nav. Co. v. Louisiana, 233 U.S. 362 (1914) ; Forgay v. Conrad, 6 How. 201 (1848). _ In short, petitioners’ federal claims cannot: be affected by any . further state court proceedings now contemplated, and are there- fore ripe for review. a: 10 Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. . _ 234 (1964), and suggested that the breadth of the in- junction constituted an improper extension of the pat- ent monopoly to an ee product. (Brief of | Appellants, p. 48). They also argued that the trial court’s findings did - not justify an injunction so broad as to exclude them permanently. from manufacturing hoses by processes totally different from that embodied in respondent’s . ‘ alleged trade secrets.° Though not agreeing with peti- — ’ tioners’ argument, the Court of Appeals did recognize - the distinction between ‘‘the use of an injunction to protect proper lawful interests and its use as 4 pen- alty’? (Appendix, pp. 36a-37a, infra), and did rely on that distinction in suggesting that the injunction might be lifted if and when the respondent’s trade secrets ‘“become generally known to the anal ee p. 38a, infra). * Fearing that their federal ‘daims had not ies spe- cifically considered and passed upon by the Court of — Appeals, petitioners, in their motion for reargument, - contended that: oe exclusion of iets ‘and all of their em- ployees from the manufacttire of any oxygen’ breathing hoses ‘is an unlawful restraint upon . their, freedom to pursue a lawful occupation as . guaranteed by the Fifth and Fourteenth Amend- ments to the Constitution of the United States. of America, and: is in conflict with the Federal _ Patent. laws and violates Article I, Sec. 8, cl: 2. 8 Petitioners’ complaint at this stage was not specifically couched in language alleging a violation of their Constitutional rights. . However, they did assert that the trial court’s order was basically unfair because it: would ‘‘ permanently exclude al] appellants from . the oxygen breathing hose business.’’ (Brief of Appellants, p. 57). a . we derrcachiine ai | 11 regardless of the process of manufacture employed. ».Thus, even if petitioners were able to produce these hoses by a process totally dissimilar from that encom- . passed in respondent’s alleged trade secret—as they 1 With Franke v. Wiltschek, 209 F.2d 493 (2a Cir. 1953), and | Head Ski Co. v. Kam Ski Co., 158 F. Supp..919 (D. Md. 1958), this case stands alone for the proposition that the misuse of a trade secret relating to a process of manufacture justifies — an injunetion which not’ only prohibits further misuse of the ' trade secret, but also prohibits the: manufacture, by any method; and the sale of the unpatented’ end product itself. _However, it should be noted that the specific federal ‘question ‘here. presented: concerning an unconstitutional encroachment upon the federal patent system was not considered in either of the above- cited cases, though Judge Frank’s dissenting opinion in Franke v. -Wiltschek, supra, at 500, persuasively analyzes other reasons for pre- cluding the type of relief granted by the court below in-trade secret >. -14 °° _— now in fact can do—the injunction prohibits them.from | making the benefits of this new process available to-the _, Government or any other prospective purchaser. As we will show, this board proscription amounts to an imper- - missible encroachment by the state courts upon the sen-. “ sitive and closely circumscribed federal, patent system, ‘in which uniform federal standards are carefully ysed . to promote inventton while dt the same time preserving free competition.” Sears, Roebuck &: Co. v. Stiffel Co., supra, at 230-31, © | The very essence of the federal sia sonia is that the promotion of those inventions or discoveries which’ - ~ demonstrate ‘‘inventive genius,’’ Jungersen v. Ostby ' & Barton Co.; 335 U.S. 560, 566 (1949), should be en- couraged. by: the granting of a patent monopoly for a specified term. 35 U.S.C. §§ 101-03, 154, 173. The patent monopoly i is a precise one: that tire patentee or his assigns has, for the term of the patent, ‘‘the right to exclude others from making, using, or selling the in- _ vention throughout the United States, referring to the specification for the particulars thereof.’’ 35 U.S.C. § 154. In similar fashion, as a matter of federal law, this “right to exclude others from making, using or - selling”’ an article does not extend to. products which do not contain an ‘“‘invention” or“‘discoyery,”’ as those terms are used in the patent laws and construed by the / fas. decisions of this Court. Such unpatentable or un- . ° patented items—like the hose assembly called for by Specification H-22489—as a. matter 5f federal law, are ‘‘in the public domain and‘may be made and sold by ‘whoever chodses to do so.” Sears, Roebuck & Co. v. Stiffel Co., supra, at 231. The question of what developments in manufacture include a patentable ‘‘invention’’ or “‘discovery’’ Sal ‘matter purely of federal law. Before there is any question of the grant of the. ‘monopoly ‘to exclude % -§ 15 others from making, using, or selling’ a device, the procedures specified in the Patent Code fo¥ the issu- ance of a patent must be followed and a patent obtained. - Then, the question of the validity of the patent—includ- ing the question whether in fact it embraces an ‘‘inven- tion’’ or ‘‘diseovery’’—is open to litigation in the fed- eral courts. See Great Atl. d& Pac. Tea Co. v. Super- : Market Equip. Corp., 340 U.S. 147 (1950). Repeated decisions of this Court teach that the patent. monopoly ‘‘to éexclude others: from making, using, or selling’’ de- - vices, as a matter of federal law, may riet, be extended to. devices:which do not embrace an ‘‘invention”’ or ‘‘dis- covery.”’ Great, Atl. & Pac. Tea Co. v. Supermarket — Equip. Corp., supra; Jungersen v. Ostby & Barton Co.; “supra. The exclusivity of the federal interest in.de- ‘termining which devices are entitled to the patent monopoly of excluding ‘‘others from making, using, or selling’’ them, and which devices are to be free to be ‘made, used, or sold by anyone is underscored by the fact that Congress has followed the unusual course of expressly excluding the courts of the‘states from any concurrent jurisdiction. in patent matters. 28 U:8.C. ‘§ 1338. a To be sure, saat from the rules of the federal patent _ system, there i is an area of the law of unfair competitiom and ‘trade secrets in which the states may take a hand. Based on éommon law principles of ‘contract and of fiduciary duty, the law of unfair competition and trade secrets has properly imposed certain narrowly defined restrictions on the public’s otherwise unlimited right to manufacture and to sell an unpatented item. Thus, the law imposes liability upon a person who uses trade secrets obtained through-a confidential’ relationship with another to copy the other. person’s unpatented _ _ articles. E.I. Du Pont de Nemours Powder Co. v. Mas-~ land, 244 U.S. 100.(1917). See also Turner, The Law of \ ~~ 16 | Trade Secrets (1962); Note, Protection and Use of Trade Secrets, 64 Harv. L. Rev. 976 (1951). - A typical form of relief in such a case is an injunc- . tion directed specifically against the use of the misapporpriated trade secret. See Turner, op.. cit. - supra, at 427-58. Cf. William R. Warner & Co. v. Eli - Lilly Co. , 265 U.S. 526 (1924). But, as this Court took pains to point out only last year; the state law of unfair competition cannot be used to frustrate the federal - policy as to which items’shall.enjoy the monopoly of manufacture, use, and sale provided for by the federal - | patent system, and which shall not. Nor can it, | consistently with the Constitution and the antitrust — laws, be used to expand the narrowly circumscribed patent monopoly which Congress has established as ° an exception to the antitrust laws.- Sears, Roebuck _& Co. v. Stiffel Co., supra, at 230-33; Compco Corp. v. . Day-+Brite Lighting, Inc., supra, at 238. Petitioners contend that the court below failed to recognize the basic differences in scope and objective between the patent laws and the laws of unfair competi- tion, and accordingly sustained a trial court injunction which would be proper in a patent infringement case, - .35 U.S.C. § 283," put not in a case based upon the 12 Phe relief sanctioned below is quite similar to the type that. would have been embraced in an injunction granted under the patent laws. The parallels are arresting. The state court, in effect, undertook to use the Government procurement specification as the description of the extent of the respondent’s monopoly, just as a patent granted in accordance with the patent’ laws ‘‘refer[s] to the specification [of the letters patent] for the particulars’’ of the monopoly. 35 U.S.C. § 154. In fact, the trial court undertook not only to enjoin the defendants named in the suit from the “making, using, or selling’’ of the device covered by the Government’s speci- fication, but to enjoin all the employees of petitioner Space Aero as well. However, as already indicated, supra, p. 8, n. 6, the Court of Appeals subsequently modifie? the —e against the ij ~ Note, The Supreme Court, 17 - misappropriation of alleged trade secrets. Thus, the state courts here, in effect, extended the patent . monopoly to.an.unpatented and unpatentable device, and, in so doing, have restrained the free and open ° competition which the antitrust laws require, and which Congress and this Court have said may be restricted for 14 or 17 years only if a person has made an inven- tion or discovery demonstrating sufficient ‘‘inventive genius”’ to warrant the issuance of a patent. . If the court below had merely prohibited petitioners » from-using respondent’s allegedly secret process in manufacturing hose dssemblies, that relief would have been consistent with. the trial court” Ss finding that peti- tioners had violated their’ confidential relationships . with respondent, and: would have protected society ’s interest in the preservation of good faith dealings in the business community." However, by extending the prohibition from a specific process of manufacture to the end product itself, the court. completely ignored society’s equally strong interest in permitting the pub- employees by limiting it to a prohibition against their misappro- priation of Darling’s secret process. . 18 One commentator has suggested that ie Stiffel and Compco cases cast doubt upon the validity of an. injunction directed only against further misappro} riation of a trade seeret, since there. is even some “similarity of r ‘emedy’’ between such an injunction and the relief that would be decreed in a patent infringement case. 963.Term, 78 Harv. Li. Rev. 143 311-12 (1964). ‘This conclusion ig not unreasonable, since in many situa- _ tions, unlike the one presented by this case, a secret process may -encompass the only available method of manufacture, and an ‘in- junction prohibiting the use of the secret. process is therefore tantamount to a proscription against competitive manufacture of _ the unpatented end product itself. It may well be that any : injunction, the effect of which is to prohibit the manufacture of an unpatented article, is inconsistent with the federal patent and anti- trust laws, and that damages should:be the sole relief available to the owner of a trade secret for any injury resulting from the tortious misappropriation of that secret. . 18 lic at large to manufacture and sell unpatented articles, — and bestowed upon the respondent, vis-a-vis petitioners, -at least the equivalent of a patent monopoly on its un- . patented and unpatentable hose assemblies.“ Moreover, the exclusive right of manufacture granted to respondent by the state courts here was granted without receipt of the consideration that the federal patent laws demand of a patentee. For a patent must. publicly disclose and teach the process which it covers, so that a person of ordinary skill in the art might prac- tice it on the basis of the information contained in the patent papers. 35 U.S.C. §112; United Carbon Co. v. Binney & Smith Co., 317 U.S. 228 (1942) ; Schriber- Schroth Co. v. Cleveland Trust Co., 305 U.S, 47 (1938). - Thus the public is free to use the teaching of the patent as a point of departure into other fields of discovery, and, of course, is instructed in the practice of the patent itself, without cost, at the expiration of the statutory period. But in exchange for the exclusive rights vested * in respondent here, the public has. received no such information. Respondent’s so-called ‘‘secret lal remains clad in obscurity. This Court has long recognized that reliefof the nature sanctioned below is totally inappropriate as a’ remedy for acts of unfair competition. In a landmark ease in the field, the Court indicated that ‘‘the right to which respondent. is entitled is that of being protected against unfair competition, not of having the aid of a 14 The patent laws at least place a 14 or 17 year limitation upon the duration of the monopoly conferred thereunder. The monopoly given to the respondent by the injunction in this case may be perpetual, however, since it can be terminated only when respond- ent’s trade secret is disclosed. to. the public ee event which need never occur. 19 decree ‘to create or support, or assist in creating or. supporting, a monopoly of the sale of a preparation which everyone, including petitioner, is free to make _ and vend.”’ William R. Warner & Co. v. Eli oe Co. aor supra, at 532. _ Henee, the state courts here, inition the guise of the state law regulating unfair competition and trade secrets, have given“ Mr. Roosevelt. . The existing law provides that when the Government wrong- ‘fully uses a patent: the. remedy of the patentee shall be to sue the Government. The conditions now are such that it becomes necessary for the Government to have contracts with various private. manufacturers and for them to use these patents where’ dispute may arise over the use of the patent. | Now, if the Government itself is manufacturing, they cannot . enjoin the Government, but under - ‘existing law must sue in the Court of Claims for the recovery of their rights under the use of tlie patent. If a man makes a contract with the Govern- ment to perform the work, the patentee can enjoin the a seontractor and the private manufacturer from doing the ernment work. Now, the only change that is made’is to p . vide that the private contractor who is doing the Government ’ work under contract with the Government shall be placed 99 Thus, if respondent could have aionted its hose assemblies and had done so, and if petitioners had infringed the -patent, the respondent could not have sued petitioners for infringement; and. could. not have obtained an injunction against their fyrther production of hose’ assemblies for the Government. - Respondent would have been limited to a suit against the Government for damages in ‘the form of a rea- . sonable royalty, and the Government would still have _had the benefit of an alternative sowrce of supply. - But here the Government is, paradoxically, excluded from contracting with petitioners, even though no. patent is involved, through the application of the extraordinary monopoly granted to respondent under eolor of state law. We submit that this disruption of the relationships b@tween the federal system for the protection of inventions and the system of Govern- ment procurement, sanctioned by the court below, is a further reason for the grant of certiorari. é on the same basis and shall bring suit against the Government of the United States to recover certain:compensation from the use of their patent, or such damage for the use of the patent, - _as they could recover if the Government-of the United States was doing the work itself. Thereby it would prevent the in- junction process from the courts being used to prevent private manufacturers doing Government work. That is the whole change made in the law and the conditions are such as to - require that it should be done.”’ 56 5 Cope. Rec. 7960-61 (1018) ( Emphasis added). ee also Wood v. Atlantic Gulf & Pac. Co., 296 Fed. 718 (SD. Ala. " 1924), for a comprehensive analysis of the Congressional history . of the Act. 23 ' *¥- | By Practically Excluding Them From Their Chetan Calling, the Manufacture of Oxygen Breathing Hose Assemblies, the Decision of the Court Below Deprives the Individual Petitioners of Their Liberty and Property Without. Due | Process of Law in Violation of the Fourteenth Amendment. - As has been indicated, the individual petitioners have for many years earned their livelihood in a technical: and specialized industry. Their chosen field — of endeavor is the manufacture of oxygen breathing hose ‘assemblies, a commodity which is used primarily by the Government for highly sophisticated aeronauti- — eal systems, such as that i in relation to which specifica- tion H-22489 was issued. By enjoining the petitioners. from manufacturing or selling hose assemblies ‘‘of like or similar construction to hose assemblies. manu- _ factured to the requirements of United States Military ‘ _ Specification Mil H-22489,’’ and by requiring them to deliver to the trial court for destruction documents — - and materials unrelated “to respondent’s process of manufacture, the court below has unreasonably de- prived the individual petitioners of ‘the right to engage in their chosen occupation. Thus, for example, peti- tioner Brandenburg, who has been in the rubber and | silicone hose business since 1947, and who, -as both the circuit court and the Court of "Appeals recognized, had the know-how to build oxygen breathing’ hoses independently of any knowledge acquired from Dar-. ling (Appendix, pp. 23a, 31a, 39a, infra), is now en- joined from engaging in the manufacture or sale of most such hoses currently in. demand. This court has long recognized that ‘“‘the right to hold specific private employment and. to follow a chosen profession free from unreasonable governmental in- terference comes within the ‘liberty’ and ‘property’ 24 concepts of the Fifth Arepndenctk % Greene v. - McElroy, 360 U.S. 474, 492 (1959): See also:Schware v. Board of Bar Examiners, 353 U.S. 232 (1957); Wieman v. Updegraff, 344 U.S. 183 (1952) ; Dent v. West Virginia, 129 U.S. 114 (1889). The injunction issued by the court below can hardly be deemed a reasonable or necessary interference with petitioners’ right to engage in their chosen occupation. ’ It purports to. restrict them from making oxygen breathing ‘hose assemblies meeting the Government’s specification, or hoses “like or similar’’. thereto, regardless of the method of manufacture. Thus, — it bears no relation to ‘the relief requested by respondent; it bears no relation to the relief which would be necessary and appropriate to protect re- spondent from the alleged misusé of its trade secret; and it obviously reflects no concern for: petitioners’ constitutional rights. In short, the injunction issued in this case is punitive rather than remedial. _ It is well-known that ‘‘an injunction is not a remedy which issues as of-course’’ Harrisonville v. W. S. Dickey Clay’ Mfg. Co., 289 U.S. 334, 337-38 (1933) ; that when it does issue, it is ‘designed to. deter, not to punish,’? Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944); and, therefore, that a court of equity ‘‘will shape the remedy. so as to do as little injury to the defendant as is necessary in order to insure ade- quate protection to the plaintiff,’’ Artype, Inc.. v. * Zappulla, 228 F.2d 695, 698 (2d Cir. 1956) (per L. — Hand, J.). See also Smith v. Dravo Corp., 203 F.2d 369, 378 (7th Cir. 1953) ; ‘Turner, The Law eal Trade | Secrets (1962), Pp. 454. : There can be little doubt that the court ie ignored these long-established principles. The only justifica- 25 ° tion ines by. the court for tbe unreasonable: breadth -” of the injunction is that Darling’s secret process con- sists ‘‘too largely of the ordered relationship and com- bination of- various steps. and devices, some in them- . selves quite simple in nature, to make a prohibition of specific steps or processes practical.’ ”” (Appendix, p. 39a, infra). Yet, in its opinion denying the mo- tion for reargument, the Court of Appeals ordered the injunction ‘modified to permit petitioners’ em-- _ployees (but not petitioners themselves). to use their skills in manufacturing oxygen breathing hose as- semblies as long as those ‘‘hose assemblies have - a construction different from that used by Darling — and if such manufacture . .. + does not use Dar- ling’s trade secret methods and processes.’?**- (Ap- pendix, p. 48a, wmfra). Surely, if Darling’s trade ~ secret is sufficiently. specific to permit a narrow pro- 7 hibition against its use by petitioners’ employees, itis ~~ sufficiently specific to permit an equally narrow injune- tion against petitioners. The punitive nature of the injunction—which went beyond even the prayers of respondent’s complaint— is thus made manifest. Fhe restraint placed upon the — individual petitioners’ freedom to engage in their - chosen occupation accordingly transcends any ‘‘rational . connection,” Schware v. Board of. Examiners, supra, at 239, to the legally protectible rights of respondent. We submit that; as applied to the individual peti- 18 Petitioners’ endliiias oe an jail iw a sweeping clause © in the injunction issued by the trial court making its prohibitions applicable to the petitioners, ‘‘their agents, servants, employees, Successors and assigns, and all persons, firms, or corporations hold- - ing by, under, or through them, and any and all persons acting. in aid of or in conjunction with them.’”’ (Appendix, p. 64a, infra). : ‘ eee tioners, the injunction, ‘in view of its impacfupon their livelihoods, is inconsistent with the Syarantoes of _ the Fourteenth Amendment. einai iii For the foregoing reasons, this petition for a writ of certiorari should be granted. Li "Respectfully submitted, “ABE ‘dine Dennis G. Lyons Murray H. Brina 1229 Nineteenth Street, N. W. Washington, D. C. 20036 JOSEPH SHERBOW Epwarp F’. SHEA, JR. 10 Light § Street Baltimore, Maryland 91202 | _ Attorneys for Petitioners Of Counsel: an ARNOLD, Fortas & Porter | Washington, D.C. . ae - “SHersow, SHEA & Dovie Baltimore, Maryland RourkE J. SHEEHAN - | Rockville, —: July, 1965 « aovig’ x ae we ii he BS LN TO thik HEP. a ry «) : : ‘ la APPENDIX A Pare Constitutional and Statutory Provisions 1.. Article’ I, Section 8, Clause 8, of the Constitution provides: The Congress shall have Power... | ; * * 4 * To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors. the exclusive Right to their respective _ and Discoveries ree 2. Article VI, Clause 2 of the Constitution vipetves. This Constitution, and the Laws of the United States - which shall be made in Pursuance thereof; and all Treaties -made, or which shall be made, under the Authority of the United States, shall be the supreme © Law of the Land; and the J udges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding. , 3. The Fourteenth Amendment, _— 1 to the Consti- tution provides: All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the _ United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. 4. Sections 101, 102, 103, 154, 173, and 283 of the Patent Code of 1952 provide (35 U.S.C. §§ se = 173, 283) : § 101. Inventions patentable Whoever invents. or discovers any new and useful process, machine, manufacture, or composition of Fee ae | 2a ; matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to we conditions and requirements of this title. § 102. Conditions for patentability: novelty and loss of right to patent ‘A person shall be entitled to a patent unless— - (a) the invention was known or ‘used by others in this country, or patented or described in a printed publication in this or a foreign country, before the in- vention thereof by the applicant for patent, or (b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date as the eae for patent in * the United States, or: (c) he has abandoned the. ‘veiled or (d) the invention was first patented or caused to be patented by the applicant or his legal. representatives ©* assigns in a foreign country prior to the date of the application for paterit in this country on an application filed more than twelve months before the ee of the application in the United States, or — (e). the invention was described in a patent granted on an application for patent by another filed in the United States before the invention thereof al the: ap- plicant for patent, or (f) he did. not himself invent the subject matter sought to be pafented, or (g) before the applicant’s invention thereof the in- vention was made in this country by another who had not abandoned, suppressed, or concealed it. In deter- mining priority of invention there shall be considered not only the respective dates of conception and reduc- — eee 3a tion to praetice of the invention, but also the reasonable * diligence of one who was first.to conceive and last to reduce to practice, from a time in to a by the other. © $103. Conditions for patentability: non init subject matter A patent may not be obtained though the invention is not identically disclosed or described as set forth in ~ section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was mace to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made. : § 112. Specification The specification shall contain a written description’ of the invention, and. of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly con- nected, to make and use the same, and shall set forth the.best mode contemplated by the inventor of carrying out his invention. The. specification shall cuntiale with one or more claims particularly pointing out and distinctly claim- ing the subject matter which the applicant — as his invention. An element in a claim for a combination may be ex- pressed as a means or step for performing a specified _ function without the recital of. structure, material, or acts in support thereof, and such claim shall be con- strued to cover the corresponding structure, material, or acts described in the specification and equivalents thereof. . ae § 154, Contents and term of patent Every patent shall contain a. short title of the ‘in- vention and a grant to the patentee, his heirs or assigns, for the term of seventeen years, of the right to exclude others from making, using, or selling the invention throughout the United States, referring to the specifica- — tion for the particulars thereof. A copy of the specifi- -_ ~ eation and drawings shall be annexed to the patent and be a part thereof. § 173. Term of design patent Patents for designs may be granted for the term of three years and six months, or for seven years, or for fourteen years, as the applicant, in his application, elects. § 283. Injunction - The. several courts having jurisdiction of cases under this title may grant injunctions.in accordance with the ‘principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable. ‘ 5. Sections 1338 and 1498 of the Judicial Code provide (28 U.S.C, §§ 1338, 1498) : § 1338. Patents, copyrights, trade-marks, and unfair com- petition (a) The district courts shall have citeiess jurisdic- tion of any civil action arising undersany Act of Con- . gress relating to patents, copyrights and trade-marks. ‘Such jurisdiction shall be exclusive of the courts of the states in. patent and copyright cases. 3 (b) The district courts shall have original jurisdic- tion of any civil action asserting a claim of unfair competition when joined with a substantial and related _ claim under the copyright, patent or trade-mark laws. | 5a § 1498.. Patent and copyright cases (a) Whenever an invention described in and covered. by a patent of the United States is used or manu- | factured by or for the United States without license of the owner thereof or lawful right to use or manu- facture the same, the owner’s remedy shall be by action against the United States in the Court of Claims for ' the recovery of his reasonable and. entire compensation for such use and manufacture. 7 For the purposes of this section, the use or manu- facture of an invention described in and covered by a patent of the United States by a contractor, a subcon- tractor, or any person, firm, or corporation for the - Government and with the authorization or consent of the Government, shall be construed as use or manu- facture for the United States: ee The court shall not award compensation under this section if the claim is based on the use or manufacture “by or for the United States of any article owned, leased, ‘used by,.or in the possession of the United States prior a to July 1, 1918. A Government employee shall have the right to bring - suit against the Government under this section except where he was in a position to order, influence, or induce use of the invention by the Government. This section - shall not confer a right of action on any patentee or any. assignee of such patentee with respect to any in- | vention discovered or invented by a person while in the employment or service of the United States, where. the invention was related to the official functions of .the employee, in cases in which such functions in- cluded research and development, or in the making of — which Government time, materials or facilities: were used. ; * (b) Hereafter, whenever the copyright in any work protected under the copyright laws ofthe United States. ry i ‘hp 6a shall be infringed by the United States, by a corpora- tion owned or controlled by the United States, or bya contractor, subcontractor, or any person, firm, or cor- poration acting for the Government, and with the au- thorization or consent of the Government, the exclusive remedy of the owner of such copyright shall be by action against the United States:in the Court of Claims. for the recovery of his reasonable and entire compensa- tion as damages for such infringement, including the - minimum statutory damages as set forth in section 101(b) of title 17, United States Code: Provided, That ‘a Government employee shall have a right of action against the Government under this subsection except where he was in a position to order, influence, or in- duce use of the copyrighted work by the Government: Provided, however, That this subsection shal] not con- fer a right of action on any copyright owner or any assignee of such owner with respect to any copyrighted work prepared by a person while in the employment or service of the United’ States, where the copyrighted ‘work was prepared as a part of the official functions of the employee, or in the preparation of which Govern- ment time, material, or facilities were uséd: And pro- vided further, That. before such action against the United States has been instituted the appropriate cor- poration owned or controlled by the United States or the head of.the appropriate department or agency of the Government, as the case may be, is authorized to enter into an agreement with the copyright owner in full settlement and compromise for the damages accru- ing to him by reason of such infringement and to ‘settle the claim ‘administratively out of available ap- propriations, Except as otherwise provided by law, no recovery — shall be had for any infringement of a copyright covered by this subsection committed more than three years prior to the filing of the complaint or counter- é “Ta claim for infringement in the action except that\the period between the date of receipt of a written claim for compensation by the Department or agency of the. Government or corporation owned or controlled by the \ United States, as the case may be, having authority to settle such claim and the date of mailing by the Government of a notice to the claimant that his claim .~ has been denied shall not be counted as a part of the three years, unless suit is brought before the last- mentioned date. (c) The provisions of this section shall not apply to _ any claim arising in a foreign country. 6. Section 2304 of Title 10 of the United States Code - : provides (10 US. C. § 2304): § 2304. Purchases and contracts: formal | advertising ex- ceptions (a) Purchases of ond sosiinaia for property or services covered by this chapter shall be made by formal advertising. However, the head of an agency may negotiate such a purchase or contract, if— (1) it is determined that such’ action is necessary in the public interest during a national emergency declared by Congress or the President; (2): the public exigency will ant permit the delay incident to advertising ; (3) the aggregate amount involved is not more . than $2, 500; (4) the purchase or contract is for personal or - professional services ; (5) the purchase or contract is for any service by a university, college, or other educational in- stitution; _ . (6) the purchase or contract is for property or services to be a and used outside the United 8a | States and the Territories, Commonwealths. and — . possessions ; (7) the purchase or contract i is for medicine or nedical supplies ; « (8) the purchase or contract is for + property for authorized resale; (9) the purchase or contract is for perishable « or nonperishable subsistence supplies; (10) the purchase or contract is for property or services for which it is impracticable to obtain — -eompetition ; © : _ (11) the purchase or contract is for property or services that he determines to be for experimental, ' developmental, or research work, or for making or _ furnishing property for experiment, test, develop- ment, or research ; (12) the purchase or contract is for sncaieeke or . services whose procurement he determines ‘should “not be publicly disclosed because of their character, ingredients, or components ; ; (13) the purchase or contract is for satinaent _ that he determines to be technical equipment whose - standardization and the interchangeability of whose parts are necessary in the public interest and whose proturement by negotiation: is neces- sary to-assure that standardization and inter-’ changeability ; | (14) the purchase or mecnteaiit is for tectinical or - special property that he determinesto require a substantial initial investment or an extended period - ‘of ‘preparation for manufacture, and for which he determines that formal ‘advertising and competi- tive bidding might require duplication of invest- ° - - ment or preparation already made or would unduly delay the procurement of that property; or 9a ‘ (15) the purchase or contract is for property or services for which he determines that the bid prices _ received after formal advertising are unreasonable, as to all or part of the requirements, or were not _ independently réached in open competition, and for which (A) he has notified each responsible bidder of intention to negotiate and given him reasonable opportunity to negotiate; (B) the negotiated price is lower than the lowest rejected bid of any respon- sible bidder, as determined ‘by the head of the. agency; and (C) the negotiated price is the lowest _ negotiated. price offered ba any responsible sup- plier; (16) he Pam Tee that (A) it is in the interest of national defense to have a plant,,mine, or other facility, or, a producer, manufacturer, of other supplier, available for furnishing property or services in case of a national emergency ; or (B) the interest of industrial mobilization in case of such an emergency, or the interest of national . defense in maintaining active engineering, re- search, and development, would otherwise be sub- ° served ; or ) (17) negotiation of the -purchase or contract is otherwise authorized by law. (b) The data conpeeting the negotiation of each pur- chase or contract under clauses (1) and (7)-(17) of sub- section (a) shall be kept by the contracting agency for. six years after the date of final payment on the contract. (c) This. section does not authorize— ‘s (1) the negotiation of a contract to construct or repair any building, road, sidewalk, sewer main, or similar item, unless— . (A) it is made under clauses (1)- (3), (10)- (12), or (15) of subsection (a) ; or 10a -(B) it is to be performed outside the United States; or ‘ ; ‘ (2) the erection, resiait, or. furnishing of any public building or public improvement. | | (d) Whenever the head of the agency determines it to be practicable, such advance publicity as he considers suitable with regard to the property involved and other © _ relevant considerations shall be. given for a period of at least 15 days, before making a purchase of or con- tract for property, or a service, under clause (7) or ’ (8) of subsection (a) involving more than $10,000. ‘ (e) A report shall be made to Congress, on May 19 and N ovember 19 of each year, of the purchases and | contracts made’ under clauses (11) and (16) of subsec- tion. (a) during the period sincé the date of the last — The report shall— ; * (1) name each contractor; (2) state the amount of each contract ; and (3) describe, with consideration of. the national | ‘security, the ey’ and services covered by each contract. (f) For the purposes of. ‘the following laws, pur- chases or contracts negotiated under this section shall ‘ be treated as if. they were made with formal advertis- ing: (1) Sections 35-45 of title 41. (2) Sections 276a-276a-5 of title 40. (3) ‘Sections 324’ and 325a of title 40. lla. APPENDIX B Opinion of the Coirt of Appeals of Maryland. '. IN THE COURT OF APPEALS OF MARYLAND | No. 191 SEPTEMBER TERM, 1964 SPACE ‘Azno Propvcts Co., INO., ET AL. OAL, R. E. Danio Co., Ino. © Prescott, C. J. ' Hammond Horney . - Marbury Oppenheimer, JJ. OPINION BY OPPENHEIMER, J. | Filed: March 12,1965 This case involves the question of whether the court below properly enjoined the defendants from using what the ap- pellee claims to be its trade secret in the building of oxygen breathing hoses. It also involves the scope of the injunc- ~ tion granted and other issues in connection with the conduct of the parties and rulings of the trial judge. The appellee, R. EK. Darling Co., Inc. ( Darling) was founded as an individual business by Mr. Darling in 1948 and began the business of manufacturing oxygen breathing hoses for aircraft personnel, in Bethesda, Maryland. In 1950, Mr. Darling undertook a research and development . program in the course of. which small-bore miniaturized, silicone flexible breathing hoses were produced; these hoses were -sold tothe Douglas Aircraft Company and to the Navy, beginning.in 1953; the hoses were the same general type that are now qualified and referred to in certain 12a military specifications, The business was subsequently in- corporated. Four of the defendants below, Joseph A. Jack- son; Kugene Kf. Fasano; Douglas L. Creger and William Phillips' (sometimes collectively reftrred to as the former employees) worked for Darling in various capacities. Each of them had been with Darling for some years; there was no © formal contract of employment; each could be discharged by Darling at any time and had the right to leave at any time. , In the fall of 1960, these men decided to go into business in competition with Darling. They sought and obtained financial backing-from the appellants; Norris Manufactur- ing-Company (Norris) and William Brandenburg (Brand- enburg), the president of Norris. Norris had supplied silicone products to Darling; but in 1959, the officers of Darling had formed the Materials Testing Company to make silicone compound and tubing. In late 1959 or early 1960, the United States Navy had sent a representative to Darling to discuss new proposed specifications for oxygen breathing hoses of certain types of which Darling had been _ the sole manufacturer and supplier. Thereafter, Military - Specification H-22489 was prepared and issued in April,. 1960. Darling began the study and work to qualify hose under the new specifications. On December 14, 1960, the appellant, Space Aero Products Co., Inc. (Space Aero). was incorporated by the former employees, who had re-. signed from Darling’s employ between December 9 and December 23, 1960. Space Aero commenced businéss opera- tions in Hyattsville, Maryland, in January, 1961. The first hose built by it was the same as the Darling hose and was built by some of the same people who had built-the hose for - —— Space Aero qualified its. _— under » “Military 1 Phillips did not aie from the orders of the lower court. At the trial, he testified for Darling. Phillips had left the employment. — of Space Aero Products Co., Inc. but was still one of its stock- — holders. ; aa 18a Specification H-22489 in the middle of January, 1961; it ‘ . was submitted to the Navy on February 20,1961. Darling : ‘ did not submit any hoses for qualification under this specifi- cation until April 25, 1961. The Navy accepted Space _ Aero’s hose in May, 1961. - Darling filed its suit on February 27, 1961. The appel- lants:filed answers denying that the appellee had a cause of action against any of them: No preliminary injunction was issued. After the.protracted taking of testimony,? Judge Pugh filed an opinion on May 27, 1964 in which, after reviewing what he regarded as the salient features of the testimony, he found from the evidence that the former | - employees ‘‘learned the know-how to set up.a competing business which knowledge was gained by them while in the employ of the plaintiff.’’ He further found that the former employees owed the duty of fidelity and trust to their employer while they were employed and had breached that duty. He found further: ‘‘that other hose manufacturers in this Country have endeavored to produce an oxygen ‘breathing hose which would compete successfully with the plaintiff’s but had failed to do so despite their knowledge and experience but the defendants were able to do so im- mediately and within twenty days after. the charter was granted to its corporation,. all because: of the knowledge. they had gained during their employment by the plaintiff.’’ Brandenburg and. Norris, the court found, had illegally entered into a conspiracy to cause the former employees to cease working for Darling. Other findings of the lower ‘ court will be referred to in the discussion which follows. On June 10, 1964, the lower court entered an order which permanently enjoins and restrains the appellants ‘‘from further manufacture and/or sale’? of oxygen breathing hoses ‘‘of like or similar construction to hose _assemblies 6 2'The trial, held largely im camera, took 38 trial days. .The ex- hibits of both sides exceeded 150. The record abstract before this ‘Court vonsists of over 2000 printed pages. l4a manufactured to the requirements of United States Military Specification Mil H-22489.’? The court further ordered the appellants: ‘‘to immediately deliver up to this | - Court for destruction any and all drawings, manuals, documents and other materials in their possession which describe or disclose the equipment, components, methods or techniques utilized in the manufacture of~ those hose assemblies.”? The defendants were ordered to j pay the costs, and the court retained jurisdiction for the purposes of determining Darling’ S rights to an accounting and for damages. On June 10, 1964, the date of the injunction, the United States. filed a statement as amicus curtae, in which it requested the court to consider the interest of the United States in the scope of the injunction to be entered, as set - forth in the affidavit of Rear Admiral W. T. Hines, attached to and made a part of the statement. This affidavit states, in part: ‘‘[I]t affirmatively appears that the National Defense interest would be adversely affected. in the delay resulting from any inability of Space Aero © ‘Products Co., Inc. to deliver:vitally needed products under Contracts N383-85726A, N383-86598A, and ASO-82299A.”’ . ~The United States asked that an injunction in the case should exclude the performance of the. contracts referred to in Rear Admiral Hinés’ affidavit. On June 17, the - appellants filed#a petition for modificatién of the injunc- - tion, to which the appellee filed an answer. On June 30, ‘the court below, without a hearing, signed an | order denying the petition for modification. The appellants appealed both the orders of June 10 and June 30, 1964. After the appeals, through proceedings _ in this Court and the lower court; the injunction was stayed upon the giving of a bond for damages. The appellants contend that the evidence did not support a finding that the former employees violated: their duty of loyalty and trust in setting up a company to go into | lida, competition with Darling ; that the evidence did not support findings that the appellee did in fact possess trade secrets’ or knowledge proprietary to it and that the appellants - wrongfully misappropriated such trade secrets or ‘pro- prietary knowledge; that the broad scope of the injunction was improper; that the evidence required a finding that Darling had ‘‘unclean hands’’ and should therefore be denied the aid of an equity court; and that the lower court committed reversible error in several of its rulings. We . Shall consider these contentions in a somewhat ‘different order. | a The Existence of a Trade Secret A trade secret is described in Restatement, Torts, § 757, ‘-comment b, as follows: . : 7 ‘‘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. It may be’a formula for a»chemical com- pound, a process of manufacturing, treating or pre- serving materials, a pattern for a machine or other device, or a list of customers.’’. ~-*In an excellent treatise by Turner on. The Law of Trade ‘Secrets (London 1962), which considers the American as well-as the English cases on the subject, the learned author states: : ras ‘The subject-matter capable of protection may be an industrial secret like a secret machine, process, or formula, or it may be industrial know-how (an :in- creasingly important ancillary of patented inventions) ; ‘it may be information of any sort; it may be an idea of a scientific nature, or of a literary nature (such as: the plot of a story or the theme of a television series), or it may be a slogan or suggestion for a method of advertising; lastly, the subject-matter may be the product of work, or expenditure of money, or of trial &y 16a _and error, or the expenditure of time. Secrecy is not necessarily a constituent of a protectable subject- matter, but.when it is, different ps egrees of imperfect » secrecy are sufficient in different. circumstances ‘to make subject-matter capable of. protection.’’ p. 4. * Whether or not there is a trade secret and, if there ‘is, whether its’ owner will be . protected against persons aceused of using it unlawfully, has been considered ‘in’ numerous cases: in federal and state jurisdictions, and in ~ England, as well as by text writers. See inter alia the cases cited in Mycalex Corporation of America_v. Pemco — Corporation, 159 F. 2d 907, 918 (4th Cir. 1947). The - legal principles are not in dispute ; it is their, application — to the particular facts on which, in general, the decisions - turn. — ei As has been done in other cases, we shall summarize what we regard as the salient facts but will not set them out in such detail as to disclose the alleged trade secret, which it is the purpose of this litigation to protect. Head Ski Company v. Kam Ski Company, 158 F. Supp. 919 (D.C. Md. 1958). See also annotation, In Camera Trial of Hearing and Other Procedures to Safeguard Trade Secret or the Like Against Undue Disclosure in Course of Civil Action Involving such Secret, 62 A.L.R. 2d 509, 530-532, and cases therein cited. In reviewing the testimony, it is to be remembered that’ Maryland Rule 886 (a) provides ‘ that, when an action has been tried by the lower court ‘without a jury, the judgment of the lower court will not be set aside on the evidence unless clearly erroneous. _ Wood v. Wood, 227 Md. 211, 176 A. 2d. 229- (1961). Hf there is substantial evidence.to support the lower court’s factual conclusion, that finding must be reviewed in the . light most favorable to the prevailing party- below.. Goodwin v. Luwmbermens Mut. Cas. Co., 199 Md. 121, 128, 85 A. 2d 759 (1952). The conclusions of law based upon the facts, however, a are reviewable by this Court. wy lyler oP 17a | v. Secretary of State; 230 Md. 18, 20, 185 A. 2d 385 (1962). . See Moran v. Moran, 219 Md. 399, 401, 149 A. 2d 399 (1959). There was substantial testimony on behalf of Darling that its manufacture of the hoses involved approximately thirty different steps. Admittedly, some of these steps consisted of simple manual operations and the use of devices 5 uncomplicated machinery which in themselves were known to the industry. It is not any one of the steps but their selection, order and conjunction which ‘Darling contends is its trdde secret. In general, and without going into the details of the testimony, it is the application of ‘the silicone rubber to produce the desired result which _ Darling claims is its own unique secret, based on research and experimentation and embodying the result of years of trial and error béfore the requisite ‘know-how’ was achieved. It is the requisite strength and delicacy of the ‘. ,oxygen breathing: hose for pilots which necessitates the _- numerous paren: Sr techniques which Darling has used. The court below referred to Darling’s “know-how.” A knowledge of the particular process, method, or material which is most appropriate to achieve the desired result may itself be a trade secret. Head Ski Company v. Kam Skt Company, supra, 158 F. Supp. at 923; Manos v. Malton, 358 Mich. 500, 100 N.W. 2d 235 (1960); By-Buk Company | v. Printed Cellophane Tape Company, 163 Cal. App. 2d 157, 329 F. 2d 147 (1958); éf. Mycalez Corporation of America v. Pemco Corporation, 64 F. Supp. 420 (D.C. Md: ' 1946) affirmed 159 F. 2d 907. See Turner, op. cit., at 35-37. : 4 . One of. Darling’s. witnesses, Rothermel, a chemical _ engineer experienced in the manufacture of flexible hose, had been employed by the’ Dayton Rubber Company from — 1936 until 1960. He became a technical superintendent of one of the plants of the Dayton Rubber :Company (now the Dayco Corporation) ; later he became Vice-President and General Manager. of Strato Safety, a wholly owned subsidiary’ of Dayton. Rubber Cuapias in California. From September 1, 1958 until February 1, 1960, his ore assignment was to produce hose that was equivalent or - equal’ to Darling’s hose, which would be accepted by: the customers on an equal basis: Rothermel was directed by . the president of the Dayton Rubber Company; he had the ” full facilities of the laboratory and the knowledge of the suppliers of that company and could draw on all of its -_ equipment. To the best. of Rothermel’s. knowledge, Darling was the sole manufacturer of the hose here in question in 1956 and thereafter; hose of that type, as far as he knew, was not built by anyone other than Darling: He had hoses manufactured by Darling but, in his opinien, it was not possible to produce the hose by, just having a sample of it, except, perhaps, after several years of trial . and error. He did not have Military Specification H-22489 at the time he was working to‘ reproduce. the Darling hose, although he had the specificatiqns within the three ‘months prior to trial, but, in his opinion, he could not have produced the hose even if he had had the specifications. There was other testimony to the effect that these specifications only - gave the details of the particular results’ which were required in the oxygen breathing hose and did not explain how those results were to be obtained. Rothermel testified further that he had difficulty in finding proper silicone rubber compound, in putting in communication wires and other matters necessary for the proper manufacture. of the - . desired product. Opper, a Witness called for the defendants, was alieiaies ‘by the Dayco Corporation since 1950; from 1959 he has -been manager for the Strato Safety Equipment Division; he worked for several years on oxygen breathing hose and obtained a contract from the Navy for the building of small-bore hose from the Military Specification H-22489 on . June 7, 1961, although the company did not qualify until April ef 1963. The hoses produced under Opper’s direction . had different dimensions from those made by Darling and oak 19a _ Space Aero but the specifications under which the Strato Safety hose was manufactured were identical. The appellants contend that Rothermel chose to duplicate the Darling hose unassisted and, as a result, the compound he used refused to stay in place. They produced experts _of their own, including Muller, Director .of Engineering of H. K. Porter Company, one of the. largest industrial © manufacturers in the country, who visited the Space Aero plant and testified that each of the elements he saw and the manner in which’ each step was being performed were __substantially the same as one or another of the processes with which he had_been familiar in the industry. The defendants also offered Professor Charles Alfred Shreeve, head of the mechanical engineering department of the University of Maryland, an expert in mechanical engineer- ing. He testified to the same effect as Muller and. stated further that’ the trade secrets he heard described by Mr. Darling on the stand were neither new, novel or unknown © ‘ but were all obvious mechanical processes. Darling con- . tends that Muller: was unable to recall or describe much ~ of the equipment ‘and many of the process steps utilized at Space Aero; and that Shreeve could not remember many steps and: techniques used in the Space Aero process. None of the appellants’ expert witnesses, other , than Brandenburg, testified he could have: reproduced the ° _ Darling hose wthout having seen it in actual manufacture. Brandenbur®, a research chemis. and maiiefasharer of silicone products, testified he was thoroughly familiar with the Darling hose building process, which he had helped develop, and that éach of the steps was common knowledge in the industry. He admitted,-however, that there were no other companies building the hose. . ., Fhe finding: of the court. that other os oliiibaitiiins in. this country have endeavored to produce ‘an oxygen breathing hose which would compete snecessfully with ¢ a 20a Darling’s but (at least until 1963) have failed to do so, is clearly supported by the testimony. The testimony as to whether Darling’s inetionin and processes were unique,.and, as a composite result, known only to it, or whether they were’ generally known and. in © the pablis domain, is voluminous and ‘conflicting. The record, as a whole, convinces us that the trial judge was not cn exret in his implicit finding that Darling’s ‘‘know-how”’ “in the manufacture of its hoses was the subject matter of a trade secret. © _ : ‘ This holding does not extend. to the male disconnect, referred to at length in the evidence. This disconnect is attached to the hose, and is fitted to a female connector in the plane which leads to the oxygen supply. The testimony shows that. the drawings of the male disconnect, bearing ' standard military specification numbers, were originally obtained from Douglas Aircraft "Company, “which had developed them, and then recopied under Darling’s name.. The disconnect could be ordered asa complete unit merely by using the military specification and order numbers. Several companies listed these numbers in published . catalogues. The male disconnect shown in the drawings — ean be purchased on the open market. Darling shortened . the part as shown in the drawings by half an inch, added — some knurling and rounded the end of the insert portions. - These changes are visible on inspection of the part. None’ of the elements of a trade secret is present in respect of - the male disconnect, nor does the testimony support any design rights of Darling therein. A tradesecret as to the © manufacture of the hoses themselves can exist apart from the disconnect attached to them. Even though a process or method may be the subject of ‘-. a trade secret, a substantial element of secrecy must exist ~ before the owner ‘of the method is entitled to judicial pro- tection. Absolute secrecy is not essential but a substantial i element of secrecy must exist sO _ that there would be P / | . me ! 21a : difficulty in, othérs. properly acquiring ‘the information. | Mycalex Corporation of America v. Peméa>Corporation, | 64 F. Supp. 420, 423 (D.C. Md. 1946); Excelsior Steel — , Furnace Co. v. Williamson Heater Co., 269 Fed. 614, 616 (6th Cir. 1920) ; Turner, op. cit., 71-98; Callmann, Unfair ° Competition and Trate-Marks, §53.3 (e); Ellis, Trade Secrets, §§ 26, 53. A tradésecret owner, however, does not: — - abandon his secret by a limited public publication for a restricted purpose. Abernethy v. Hutchinson, 1 H. & T. W. 28, 3 LJ. (0. 8. ) (Ch.) 209 (1824). The Restatement ‘sets forth some ’ telaana to be con- sidered in determining whether given information i is one’s trade secret. These factors are: ‘‘(1) the extent to which — the information i is known outside of his business; (2) the extent to which it is known by employees and others in- volved in his business; (3) the extént of measures taken ' by him to guard the secrecy of the information; (4) the value of the information to him and fo his competitors; (5) the. amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which .the information could be properly. acquired or _ duplicated by’ others.” *? ~ Restatement, Torts, § 757 -b. @The. testimony was uncontradicted that the Darling process was. the result of years of experimentation’ and research ;. approximately a quarter of a milliqn dollars went into the development of the processes and methods. The value of the information gained in the development of:the hoses to Darling is clear. From a small business in 1948, Darling has. grown to a point where in excess of two hundred: persons are employed and where. it is manu- facturing one hundred or more different types of hoses, with. a, gross of nearly five million dollars a year. The value which the information would have had to other com- panies, if they could have been successful in making a similar type of hose, i is evident if only from the efforts of. ‘Dayco Corporation which tried for years to duplicate the peor method and, — its resources, was unsuccessful ors. " ; ie Darling methods were aera gp and indeed had to + _ be known, to some of its employees, including its former employees who formed Space Aero. The extent of measures taken Bb Darling to guard the secrecy of the ee is in “dispute. As evidence of the requisite secrecy, Darling points t to the “testimony that, during the’ initial stages of the development of the hoses, the activities _ * and process were kept secret even from Darling’s em- ployees. The Instruction Gnide iggued for. training, offered in evidence, states that the me and processes and the manner in which materials“were used must be con- sidered as trade secrets, and that to divulge this informa- tion to any individual outside of the company would - provide’ others with knowledge and’ information detri- mental to the existence of the company. A. lock box was Maintained in the plant for blueprints and a list of authorized«personnel with kéys was carefully maintained. The traidgig of the company’s employees was in a separate area and, according to Darling’s witnesses, the trainees were frequently told that the company had ee of which no one else in the world new. ' The appellants’ testimony presented a quite different picture. A former supervisor ed that she and other . employees were never cautioned,to hold the method of manufacture in confidence. The mutable Phillips testified - that, while he knew there was no one else in the United States making hoses in a method similar to that of Darling, — he did not recall being admonished not” to discuss the | product. | The Darling methods’ were also known to Brandenburg who, through Norris, was involved in Darling’s business. ‘Norris did not manufacture oxygen breathing tubes, but _ its sales of its silicone products to Darling increased from - a volume i a few hundred dollars in 1953 or’ 1954 to - 23a . *. about threé hundred thousand dollars in 1960. During the years of the relationship, Brandenburg made many visits. to the. Darling plant, and testified that he was familiar “ with each step of the process of makingsthe hoses and had | ' been of material help in the entire development. On the - latter point, however, there was conflieting testimony on behalf of Darling, to the effect that Brandenburg had only _ been consulted “in the area of the compounds which he | furnished. Judge Pugh, in his opinion, while making no .. express findings of. fact, referred to the evidence that Brandenburg” had: full and complete knowledge of the - operation of the Darling plant. and that, independently of - this knowledge, Brandenburg had the know-how to build the hose. Whether or not the testimony would have'justified ¢ : a finding to this effect, the relationship of the parties is ‘pertinent. Darling and Norris. were working together, as manufacturer and supplier, in what: was, to some extent at least, a joint enterprise. Brandenburg testified, in — answer to a question by the court, that it was not the policy 7 of ‘his company to ‘‘go around telling other people what some one else is doing.’’ ‘‘There was a certain amount of. - ethics involved.”’ - By Brandenburg’s own testimony, there was some element of confidence and trust in the relation, . ship. ‘Under all.the circumstances, Brandenburg’s knowl- edge of the process, however complete, did not negate the substantial element of secrecy necessary to the existence | of a trade secret. Saco-Lowell Shops v. Reynolds, 141. F. 2d 587 (4th Cir. :1944); International Industries v. Warren Petroleum Corp., 99 F. Supp. 907 (D.C. Del. 1951). See Chun King Salesw. Oriental Foods, 136 F. Supp. 659, 662 (D.C. S.D. Cal. 1955).. Cf. Mycalex Corporation of ‘America v. Pemco Corporation, 159 F. 2d 907 (4th Cir. -1947) ; and Messler v. siitiatad Bros., 52°F. Supp. 812 alia Mass. 1942)..° - There was much testimony as to tours aia the plant and particularly as to a public demonstration of hose- building for the Greater Washington Industrial Council, v . et bhai aie dceliaaiaa sibs nhsidin BARNS McA inion dinabitheaho WCNC Keiaenieeable bean > : ft aS ‘6 : | 4, oa Bf 2. fa . 24a. during which small groups of guests were given , detnonistra- : tions of hose-building and other techniques. The appeHants — : . point, inter alia, to the testimony that two overhead garage - ' doors to the street were left open and that workers were ns free to have visitors. while they were assembling the hose. Darling’s yan was located not in one of the country’s © ‘great industrial centers, but in a rélatively small, if grow- . ing community, -The testimony, taken as a whole, convinces ". us that Darling took precautions, to guard the secrecy of. _ its process. which, under the circumstances, were reason- - ably sufficient. In its particular community and environ- ment, it may well ‘be ‘that’ Darling. considered ‘that ‘too | elaborate efforts: at concéalment would call attention ‘to | what was being concealed, as in Poe’s ‘‘Purloined Letter.’’ In any event, as the lower court emphasized in its opinion, ‘ : no one else succeeded. in making hoses according to the Darling process. Until the formation of Space Aero by Darling’s former employees, Darling’s efforts at secrecy, - . like the process itself, met the basic. criterion of success. Upon consideration of all the testimony i in the light of the applicable legal principles, we are convinced that Darling’s “processes and methods in~ manufacturing its: oxygen ~ breathing hoses (apart from the male disconnect atine). constituted. a trade secret. ‘The Inability of the Former Employees The development of the law of trade secrets ‘is a result of’ balancing two conflicting elements essential to our society. There is a strong policy favoring frée competi- tion; an employee is entitled to use the skill and knowledge - __ of his trade or profession which he has learned in the course of his employment, for the benefit of himself and the public, if he does not violate a contractual or fiduciary obligation . in doing so. C-E-I-R, Inc. v. Computer-Corporation, 229 Md; 357, 366, 183 A. 2d 374 (1962); Ritterpusch v. Litho- - graphic Plate Service, Inc., 208 Md. 592, 595, 119 A. 2d 392 e A TT ., 2a (1956) ; Sistatenend, Torts, $8708 and 757, gonimnent a; Herbert Morris Ltd. v. Saxelby, 1 A.C. 688 (1916) ; Sir ~ 'W. C. Leng & Co. v. Andrews, 1 Ch. 763-77% (1909). On the other hand, in order to promote the progress of science and the. useful arts, the law provides certain protections to-an originator. Among these protections are the patent - and copyright statutes and the law. of, torts prohibiting unfair competition. The law ao trade: secrets is another protection. . *® The basis of the law-as to trade . sant apast from breach of contract, is abuse ‘of confidence ‘or impropyiety .in the means of procurement. ‘Justice Holmes stated the ‘ legal principle in Du Pont Powder Co. v. Masland, Sages U. 8. 100 (1917), as follows: | : ‘The word paeiiiely as applied to tradeuiarks ‘al . trade secrets is an unanalyzed expression of certain _ secondary consequences ‘of the primary fact that the ‘law makes some rudimentary requirements of good © faith. Whether the plaintiffs have any valuable secret or not the defendant.knows the’facts, whatever ,°;,%" they are, through a special.confidence that he accepted. \.. The property may be denied but the confidence cannot .*’* be. ‘Therefore the. starting point for the present - matter is not property or due process of law, b@t that - the defendant stood in confidential relations with the plaintiffs, or one of them. These have-given place to | hostility, and the first-thing to be made sure of is ' ——~that the defendant shall _not-fraudulently—abuse the ——_—__- trust reposed in him. It is the usual incident of con- ~ fidential relations. If there is any disadvantage in the * fact that he knew the plaintiffs’ secrets he’must take the burden with the good. wate 244 Uz S. at.102, - The Restatement summarizes the doctfine enunciated in _the case law as follows: ‘‘One who discloses or. uses *another’s trade secret, without a privilege te do so, is liable to the other if * * * * (b) his disclosure or use con- _ stitutes a breach of confidence reposed in him by the other in disclosing the secret to him.’’: Restatement, Torts, § 757. 26a See also Carter Products, Inc. v. ra eld - 130 F. Supp. 557, 571-75 (D.C. Md. 1955). Judge Pugh points out in his opinion that the jun- contradicted | evidence shows that. each ‘of the former . ’ employees was an employee of Darling from,November 1, @ = 1956 to ‘the month. of December; 1960, and that each of _.* them had an important position with the plant in the building of oxygen breathing hoses. After setting forth the nature of their assignments, Judge Pugh states that © ‘‘in their respective positions these defendants knew the » hose business, each having learned an there. was to know from the plaintiff.”’. He then ‘stated : Des ‘‘While in the employ of the plaintiff, the, defendants at the instigation of Jackson, discussed going into the ‘ hose business fr Ori September, 1960; to early in December, 1960, and such discussions led to the making. of plans, financial and otherwise, to go in the business . ' of manufacturing the same, kind of oxygen breathing ~ hoses manufactured by the plaintiff.. The incentive to: — go in business was to submit bids to the United States’ _ Navy.under its Military: Specification H22489, which was open to the public in the month of April,. 1960. All individual Gtaents knew .of the existence of this. _.. Military Specification which came to.the knowledge of the individual defendants who were employees of the plaintiff by virtue of their employment with the plain- © _ the charter. was granted to the defendant corporation when it submitted a hose to the Nayy on February 20, - 1961. The rapidity with which this was done is only _ attributable to the fact that the individual defendants, except William Brandenburg and Norris Mannfactur- ing Company, had gained the knowledge to set up a business and manufacture the hose under the military specifications, which came to their knowledge while they. were employed b; by | the _— ee cate , > The ] processes used by. Space Aero were the same as those used by Darling. - While Darling did not qualify under the military specification until several months after Space A EE tiff. * * * * It was only twenty-nine-{29) days ‘gier ee . 27a | Aero had submitted its hose to the Navy, Datling contends that information which would have accelerated Darling’ Ss qualification had been obtained by J ackson, one of. the | appellants, while still in Darling’ s employ, and: was inten- ~ tionally withheld and secreted by him. This claim is dis- puted’ by the appellants, but, in any event, the dispute on _this issue goes to whether. or not Darling is entitled to _damages for loss on the Navy contracts by reason of the appellants’ breach of their duty of “fidelity, and not to -whether that duty had-been violated. The testimony amply es supports the findings of fact of the court below. - 7 While nore of the former employees ‘had. signed a con- tract. with Darling in which” they formally agreed not to use the information acquired by them, and while they were free to leave their employment at will, Judge Pugh found 7 that they owed the duty of, fidelity to their employer while - they were employed. We re C-E-I-R, Inc. v. Computer Corporation, supra, 229° Me Much. of ‘the siti eiisineil the ‘ses of various drawings and other material from Darling’s ‘plant by some © of the former employees before they left the company’s employ and the subsequent ' stops taken by Darling to endeavor to gain repossession of the drawings. The court —below found as a fact that some of the former employees had in their possession, after leaving Darling’s employ- ment, certain sketches of oxygen breathing hoses’ which . they had taken while they were employed by Darling, with- ‘out Darling’s knowledge. One of the former. ‘employees, J om, instructed his wife over the —" when he at. 366; Ritterpusch v. Ittho- . graphic. Plate Service, Inc., supra, 208 Md. at 602. That C-E-I-R and Ritterpusch involved the improper solicitation | by’ employees of their employer’s custémers, rather than’ the improper use of the employer’s trade secret, does not .- ~ make. the principle | for which those" -eases stand less. ' ; appliéable. It is the breach of the confidential relationship _ rather than the form whieh that breach takes which is deter- + minative. wy a ere was in California after severing his; “connection with Darling, to burn the drawings in his possession in. his home. Wilkinson; another former employee, ‘burned some of the drawings which J ackson hail given him. The court below also found that there were some of Darling’s drawings on. the drawing-board in. the. home: of- another of the former employees which were copies of Darling’s ne drawings. Judge Pugh found that it was doubtful as to ‘whether or not the drawings were in fact the drawings of , Darling; but that the evidence. clearly showed they were . . in fact Darling’s property. During’ the argument of this appeal, counsel for the appellants admitted that the taking of these drawings was wrongful.’ Judge Pugh also found ; ae that other records of Darling’s, such as. copies of its Security. and Quality Control | Manuals, were in possession of some of the former employees after they had severed _their_employment.. The testimony ‘strongly indicates that _ all the drawings to which reference has been made were | -in -effeet public property or were drawings or copies -thereof sent to Darling by the Douglas Aircraft Company. The appellee does not contend it had trade secrets in’ these > drawings. The testimony does not show, in.our opinion, © t these drawings were necessary for. the prodtction of - the oxygen breathing hosé by Space Aero and the individual appellants, or the securing of the Navy contracts. As Judge Pugh infers in his opinion, however, the actions. of the former employees in respect of the drawings _ strengthens. the conclusion. that, in availing themselves of | _Darling’s trade secret concerning the manufacture of the — oxygen’. breathing: hose, the former employees knew that they, were. acting wrongfully in’ violation of their con- fidential relationship and their ‘duty of loyalty. na ‘We agree with the court below that the former employees: violated the. duty of fidelity and trust which they’ owed to 3 Tt was stated without eenteadiation that these acts by some’ of the former employees took — before they were represented by . counsel. | Darling in respect of the trade secret and that their UZ - eondiact was ‘such as to entitle sani ‘to the — a . Ofa court of equity. . ; a The Liability of Brandenburg and Norris . The evidence is undisputed that Norris, through: Deandea” burg, its president, had-¢onferred with the former em- ployees before they left Darling’s employment and that Brandenburg advanced $1000 towards the formation of _the new enterprise, a few days before the’ lease for the Space Aero plant in Hyattsville was entered into. Addi- tional advances or investments totaling $7000 were made in 1960, and still further advances were made in the first - months ef 1961 totaling in excess of $90,000. Norris now ~ owns 49% of Space’Aero’s stock. . ihe _ The judge below excepted. Bienieabere and Norris from. ‘his finding that the defendants could not have gone into a - competing business without the knowledge gained at Darling’ s plant. “ He -found, however, that Brandenburg and orris, through Brandeaburg as its president and nt, illegally entered into a conspiracy to cause the er employees to terminate -, employment with ‘Darling. . pee. The appellants contend that the former weed had decided to leave Darling whether or not Brandenburg and Norris gave them financial: backing. They contend further that Brandenburg had independent knowledge. in respect of the manufacture of the hose by the process used by Darling. It is undisputed that neither Brandenburg nor Norris was under any express contract with Darling i in - Fespect of the hose process. It is also undisputed that while Norris had been a large ‘supplier of material to re Darling, Norris and Brandenburg were apprehensive that . _ the subsidiary being formed by Darling might take away ‘ much of Norris’ sales to. the parent company. . There is no question of the right of a supplier to a —-9 to become interested i in the Sormeticn: of wenn, \ t de ; : c . 30a : 7 fe, Eugene company to. which he expects diss to sell his supplies. N either Norris nor, Brandenburg” was “under: an express contractual obligation to Darling in respect of the non-use of Darling’s trade secret..; We do not reach the question |» -of whether Brandenburg and Norris were liable to Darling . forthe. breach of an implied agreement.* We agree with the court below that by their actions in respect of the formeremployees and the formation of Space Aero as a competing company for the procurement of ‘Navy’ con- tracts under the Military Specification H-22489 through the a use of Darling’s trade secret, repre. and Norris ! became: liable'to Darling. In Conmar Products Corp. v., Universal Slide Petene. 172 F. 24150 (2d Cir. 1949), Chief Judge Learned Hand — enunciated the principle which we believe is here appliéable: : ‘Courts. have been accustomed to speak of trade secrets as ‘property,’ and at times to deal with them ' ‘as if they. were. That may be permissible and to some extent desirable, when the question is whether the wrongdoer has got access to them by some wrongful means, like breaking -into a factory, or copying formulae or blue prints. When, however, the dispute . turns, as it does here, upon whether the wrongdoer has ‘acquired .a secret from the employee : who has him- self acquired it lawfully, the wrong consists in inducing - him to break his contract, or to. be disloyal to a confidence reposed in him; and in either case it is a species of the tort—recognized now for over a century —of inducing an obligor to default upon an er " 172 F. 2d at 155. See also McKinzie v. Cline, 197 Or. 184, 252 P. 2d 564 (1953); Restatement, Torts, § 757, Comment on i (a) h. _ The evidence amply satan ‘the finding of the court below that Brandenburg and Norris encouraged the former . employees to do what they did do while they were ‘still i in ‘See cases cited at page 17 of this opinion [p. 28a of this Petition]. | Darling’s emplpy. Even though. Brandenburg and Norris , may have had the knowedge and the ability to form a competing company on the: basis of their own know-how © and ‘without.the use in any way of any knowledge they may .» have acquired from their dealings with Darling, what they did was, knowingly -arid for their own interests, to help _ the former employees in their illegal action. This was ° Sufficient to make them liable to* Darling: . See Knicker- * bocker Co. v. Gardiner Co., 107 Md. 556, 559-60, 69 Atl. 405 - (1908) ; and Restatement, Agency, § 312 comment d. _ _ The Contention of “Unclean Hands” ' The appellants contend that Darling acted improperly in procuring a search warrant and in having the’ police department of. Montgomery: County enter the home of Wilkinson, one of: the former employees, and take. from r \ his home certain drawjp#$, when no criminal charge;had — been filed against. Wilkinson. They-also contend that Darling improperly harassed Brandenburg by having a number of detective agencies calling his family atid __ business associates, and in other ways. They argue further _ that Darling acted improperly in sending over one. hundred letters to various concerns asking if they were doing , . _.- business with Space Aero.’ They object to meetings bn me ‘between officers of Darling and the defendant, Phillips, during the trial; and -claim that Darling lacked the _ required candor before the lower court. Because of these actions, the appellants claim that Darling’s suit should .- have been dismissed because it did- not come into court. witheleanhands. - pe Seahieees In the argument on this appeal, counsel for. the appel- lants admitted that some of Darling’s drawings were improperly taken by various of. the former: employees while they were still in Darling’s employ. The question of whether or not the search of Wilkinson’s house on the’ — _ warrant obtained by Darling was legal or illegal does not fe . * ": 82a. : . go" ‘to any of the issues which, in our opinion, are deter. minative of this case. The various telephone calls’ and — eortespondence to which the appellants object were not on their face unreasonable in the protection of what we have found to be Darling’ s legal. interest in its trade secret. During the trial, Phillips, one of the defendants. elon who. has not appealed, called Darling’s counsel for the purpose of arranging a meetifig with one of Darling’s principals. The meeting. took place without the presence -of counsel for either side and without the knowledge or. - eonsent of. Phillips’ counsel. According to Phillips, it was at this: meeting that‘ he turned over certain physical evidence to Darling and agreed to state the true facts when called as a witness... At the trial, Phillips gave testimony inconsistent, with his pre-trial deposition. and, with the court’s © consent, counsel struck their appearance for Phillips and proceeded to attempt to impeach his testimony. Irrespective of the impropriety of an attorney arranging a meeting between parties to pénding litigation, without notice to other counsel of record,’ it was for the trial court, sitting without a. jury, to determine for itself the credibility ‘of Phillips’ testimony on thes witness stand, and, in so doing, to consider what had taken place before the testimony was given. : The clean hands doctrine is one resting in the soynd discretion of the court; it is applied, not for the protection of the parties, but for the court’s own protection. Ner - ¥ Hanson, 217 Md. 298, 309, 142 A, 2d 798 (1958). , Thamas | ins Witiaenes do not belong to either side of the controversy ; they * ean be interviewed by counsel for any party, in civil as Well as in criminal cases..\See State v. Papa, 32 R.I. 453, 80 Atl. 12, 15 (1911) and Mathews v. State, 44 So. 2d 664 (Sup. Ct. Fla. 1950). When ,a witness is also one of the parties, however, and is represented by counsel, a lawyer for the other side should not in any way com- municate with him withdut the knowledge and’ gonsent of the « party’s own counsel. See Canon 9, Canons of Professional Ethics of the American Bar. Association and Drinker, Legal: Ethics, p. 201. ee @: : me he nah laa aR BUT tre te gt amet v. Klemm, 185 Md. 136, 142, 43 A, 24 193 (1945): The court | ‘below heard, voluminous testimony as to all of the matters raised in connection with this issue and refused to bar '- Darling from the’ relief. to which the court found it was entitled, . We do not find that the court’s refusal to. apply the doctrine was an abuse of its discretion. ) Objections to Rulings of the Court The appellants contend that three of Darling’s exhibits were improperly admitted in the trial below over timely "" . objection. These exhibits were drawings obtained by the ~, . » -~ he? Montgomery Cownty police as a result of the search and ' seizure to which reference ‘has beén made. The court ’ “below granted the appellants’ motion to exclude the draw- ings as to Wilkinson but denied the motion as to.the other _ appellants.’ We do not find it necessary to decide whether or not these exhibits’ were improperly admitted for, even if they were, any error in connection with their admission was ‘not prejudicial. We have found that the. drawings were nat part of Darling’s trade: secret but they were Darling’s property and several of: the former employees admitted on the stand that the drawings had been taken before the employeés had terminated their ‘employment. . .The impropriety of the taking of the drawings was _ admitted by the appellants’ counsel. Apart from the draw-’ ings themselves, the circumstances under which they were . taken was admissible evidence which tended to show that the former employees meant to breach their confidential relationship ‘and duty of loyalty in improperly using Darling’s trade secret to compete with it. The court below ~ found that.the drawings were of use to the defendants in setting up their competitive business, but there was ample testimony other than the actual drawings which supported this finding. The introduction of the drawings themselves was only cumulative and unessential. NA : The appellants also contend that the lower court com. _ mitted prejudicial error in refusing to have several of their ~ . > ”) 34a : expert -witnegses . ‘presnt during the taking of testimon ' im camera unless they took an oath of secrecy as to all ‘the matters testified to. Darling, at all times, claimed that its manufacturing process was a trade secret. The court stated that'‘‘by the very nature of the case secrecy is an essential factor.’’? Maryland Rule 546 provides that the court may -. on its own motion exclude witnesses other than parties from the courtroom until calied upon to testify, but excludes from the operation of the Rule an expert witness who is to render an opinion based on the testimony given . at the trial. This Rule, however, is not a contravention of the general principle that in taking testimony on matters in whith, by the nature of the case, such as the one here involved, secrecy is an essential factor, the trial court has discretion to permit expert witnesses to remain in the court- - room only under reasonable conditions imposed to maintain secrecy. Annot., supra, 62 A.L.R. 2d 509, at pages 513-525 and 527-529 and cases, therein cited. _ At the trial, the court suggested that the expert wit- : nesses take an oath of secrecy similar to the oath of secrecy the Grand Jury takes. One of the appellants’ witnesses, Shreeve, took the oath and remained during the in camera proceedings. Other expert witnesses of the appellants, because of their positions, refused to take the oath. As to those witnesses, the appellants proceeded by ' asking them what they had seen at the Space Aero plant and whether those methods were generally known. It is true that, from the appellants’ point of view, it would have been preferable if they could have had all-of their experts © ‘present during the m camera proceedings; their witness, — Shreeve, who took the oath of secrecy, was:so present. The other witnesses, however, testified from their examination of the processes and methods used at the Space Aero plant that these mthods and processes were virtually the same as those used by Darling. The fact that the appellants’ expert witnesses, other than Shreeve, because of their. Pad . nett tins Arte PMs 5d Ob Lent Sie | 35a | employment, felt they could not take the oath of secrecy, is understandable but of itself did not give the appellants the right to have those witnesses present during the m ‘Camera proceedings without taking the oath.. The trial court was of:the opinion that to permit these witnesses to: attend the in camera proceedings without taking the oath might seriously prejudice Darling’s rights. For the same reason, the court refused to permit the appellants’ counsel to review the in camera testimony with the: experts who had ‘been excluded. Under all the circumstances, we can not find that these. rulings constituted an abuse of discretion. ’ The esi of the Injunction | The order of the lower court, filed. June 10, 1964, permanently enjoins the former employees, Space Aero, Brandenburg and Norris from further manufacture or sale of high or low pressure hose assemblies utilized in oxygen, air and pressure suit systems ‘of like of, similar con- struction to hose assemblies manufactured to the require- ments of United States Military Specification H-22489, and __ from. advising any person, firm or corporation as to the means for or method of . manufacture of. such hose assemblies. : oe There ‘is no provision in the order for the termination of the injunction if and when Darling’s trade. secret becomes generally known to the public; nor is there any provision with reference to the interest claimed by the United States i in the scope of the injunction. Injunction is a proper equitable remedy to protect the interest of the proprietor of a trade secret against the wrongful use of that secret in breach of a fiduciary duty. . Franke v. Wiltschek, 209 F. 24 493 (2d Cir. 1953) ; Restate- _ ment, Torts, §757 (e); Callman, op. cit., § 59.1; note, Protection and. Used Trade Secrets, 64 Harv. L. Rev., 976, (36a 982 (1951). The authorities differ, however, as to whether an injunction issued to protect a trade secrét should ter- -minate after the secrecy ends. _» The sixth and seventh Federal Circuit Courts of Appeals hold that,‘once a person has obtained a disclosure through a breach of confidence while the disclosure: was still secret, contrary to the obligations of a confidential or contractual relationship, he cannot thereafter use the subject matter of the disclosure which he has wrongfully used, even though members of the public can do so. Shellmar Products v. Allen-Qualley Co., 87 F. 2d 104 (7th Cir. 1936), cert. denied 301 U.S. 695; A. O. Smith Corp. v. Petrolewm Iron Works Co., 73 F. 2d 531 (6th Cir..1934). These cases deal with information subsequently patented but the rationale has been applied to trade secret cases, even where no patent is involved. The‘ doctrine enunciated in this line of authorities is sometimes referred to as the Shellmar rule. The Second Circuit Court of Appeals and some other jurisdictions hold to the contrary. Conmar Products Corp. v. Universal Slide Fastener Co., supra; Carter Products, Inc. v. Colgate-Palmolive Co., supra, 130 F. Supp. at 575. The holding of these cases is sometimes referred to as the Conmar rule. The American cases which follow the Shellmar and Conmar ‘rules respectively, are analyzed it in Turner, op. cit., at 442-454. The reasoning of the Conmar rule is that the trade secret is protectible only because of the fiduciary relationship of the discloser to the disclosee. Once the secret is public, the confidence would end in any event. An injunction is issued only when damages are not adequate compensation and once a trade*secret becomes public, its original owner ‘ean no longer be irreparably harmed by the use of the former secret by persons who originally used it wrong- fully, because the rest of the world is also using it. Under this rule, a distinction is made between the use of an 37a 3 injunction to protect proper lawful interests and its use - :. as a penalty. > Department of : Navy; ete., , denied. * Se March 12, 1965: Order afiriined ‘i in. part, reversed in hart: and case remanded for the passage of an order and for further proceedings if necessary in. conformity “with this opinion; costs of this appeal to be ‘paid’ one- ° half by thé appellants in equal shares and one-half by thle —- Opinion by Oppenheimer, J. | - April 7, 1965: Motion for modification of opinion and for reargument filed. Motion for stay. of mandate filed. April 12, 1965: Appellee’ 8 reply t to above motion ae modi- fication of opinion filed. ‘ “April: 12, 1965: Motion for hatninined denied ; sail? >" affirmed in-part and reversed in part and: case re- manded for further proceedings as provided in opinion . filed herein on March: 12, 1965, and as supplemented _ by this opinion. “Per Curiam Opinion filed. - Srare or Maryuann, Sct: I do hereby certify that the foregoing is truly taken from the record and proceedings of the said Court of Appeals. In testimony ‘whereof, I have hereunto ‘set my hand as ° Clerk and affixed the seal of the Court of eri this , — si of April A. D. 1965. ° J. Lxovp Youre . Clerk of the Court of aenes ., Maryland . 45a | ; APPENDIX D 1 | ; Oytaton and Order of the Court of Appeals of Maryland marie Motion for Modification of Opinion and " * for ‘Reargument IN THE COURT OF APPEALS OF MARYLAND No. 191 September: Term, 1964 | SPAcE Azno Propucts en, ‘Inc yp BE AL. v. R. E.. Danuta Co, Inc. | Prescott, C. J. ' Hammond, a ' * ‘Horney, Marbury: ‘ a daca a ‘aa Per Curiam Opinion On Appellants’ Motion For - Modification of Opinion and for Reargument.. # - Filed: April 12, 1965 PER CURIAM OPINION ON APPELLANTS’ MOTION | FOR MODIFICATION OF OPINION AND FOR > REARGUMENT ‘In the opinion filed herein on March 12, 1965, we ¢on- “sidered the statement of the United States as amicus curtae and the supporting affidavit of Rear Admiral Hines requesting the court below to consider the interest of the government in the scope ofthe injunction to be entered. We.held that, in the interest of the national defensé, the United States must be given the ‘opportunity to show whether all the work required under the contracts referred to las been performed and, if not, that the scope of the injunction should ‘be limited to permit’ completion. We ordered the scope of the injunction modified in this respect, y 46a not only as to the-contracts specifically referred to in the statement of the United States, but also as to the sub- contracts referred to in the affidavit of Rear Admiral Hines as to which the United States did. not specifically request modification of the injunction. In their motion, the appellants ‘now state that other departments and agencies of the United States have entered into contracts with Space Aero other than those referred to in the state- ment of the United States and the affidavit of Rear Admiral Hines: This allegation is supported by an affidavit of Rear Admiral E. R. Eastwold, assigned as Deputy Chief, Bureau of Naval Weapons, Department of the Navy. Rear Admiral Eastwold’s affidavit states. that, in addition to the contracts and sub-contracts to which reference has heen. made, the Navy has other prime contracts let to Space Aero and that the Navy’s Aviation Supply Office has two uncompleted contracts with Airborne Research and De- velopment Corporation, Sun Valley, California, which in- volved the same basic military specification and that this company has sub-contracted to Space Aero a significant segment of the work required by the contracts. The: only other Navy-approved source for the oxygen air hoses, it is stated in the affidavit, is the Darling Company, the ap- . pellee. The affidavit states that in the event Space Aero is unable to complete the work on these additionalgeontracts - and sub-contracts, a substantial amount of additional time will be required to complete them, with a consequent:dis- Yuptive effect upon the delivery of urgently required breathing hoses essential for pilots’ safety in the opera- tion of the Navy’s first line fighter and attack aircraft. Rear Admiral Eastwold asks that, in the interest of the — national defense, the scope of exceptions to the order of injunction be further broadened pursuant to the attitude expressed in the opinion. The appellants’ motion . | 58a competing business immediately. As was also said in the ; Ceir case at page 367, ‘*Because of the secret plans of the appellees to be- come competitors for this same business, an unfair situation was created whereby they ‘were able to ab- sorb this unique experience and solidify their contacts - with: Bureau officials on C-E-I-R’s time and at that company’s expense, and to use these advantages later as planned for the benefit of a competing corporation. > The training that the appellees received enabled the Computer Dynamics Corporation to begin immediate operations and the detailed draft proposal drawn up by Pulscak for submission to the Bureau is evidence of the extent of knowledge which the appellees had gained at the expense of C-E-I-R. Under these circum- stances, the appellees owed a duty of disclosure of their plans for engaging in competition with C-E-I-R. Had appellant known of these plans it could have taken steps to preserve its own favorable bargaining or bid- ding position by utilizing employees remaining with the, corporation, and it also could have avoided ex- pending considerable sums of money to prepare its own competitors to launch into business. The appel- lees ‘chose secrecy and deception under circumstances which demanded * * * candor and ful! disclosure.’ ’” While the case at bar is not exactly comparable to the Ceir facts since there is no solicitation of custoniers, the principles involved are similar. The defendants, employees of the plaintiff learned of the Military Specification H 22489 . while in the plaintiff’s employ; they learned the know-how to set up a competing business which knowledge was gained by them while in the employ of the plaintiff and they ‘used the sketches and other material of the plaintiff. The plaintiff was entitled to know the plans of these em- ployees in order that it may have either discharged them _ or changed their positions so that it, the plaintiff’s plans in connection with the Military Specification, might not be thwarted. It was only twenty-nine (29) days after the charter was granted to the defendant corporation when it 59a submitted a hose ‘to the Navy on February 90; 1961. The rapidity with which this was done. is only attributable to the fact that the individual defendants, except William Brandenburg and Norris Manufacturing Company, had -gained the knowledge to set up a business and-manufacture the hose under the military specifications, which came to: their knowledge while they were employed by the plain- tiff. They owed the duty of fidelity and.trust to their em-. ployer while they were employed. The Court of Appeals in the Ceir case’ has stated on page 367, ‘‘There ‘would. appear to be no precise line between acts by an employee © which constitute mere preparation and those which amount to solicitation. However indefinite that line may be, we feel that the appellees crossed over the line into the area of. _,Solicitation forbidden to the loyal employee.’’ While there is no solicitation as such in this case, there .is the gaining of knowledge of how to make the hose bythe employees at >: the employer’ S expense and on the employer’s time, the gaining of knowledge of the Military Specification by the employees on the empicyer’s time and the secret planning to compete with the stupioyer during the period of the em- ployment. As further stated in the case of Head Ski Co. vs. Kam Ski:Company, 158 Fed. Supp. 919, at page 923, (A Maryland case in the U. S. District Court ‘of Maryland) ‘other ski manufacturers in this country and in Europe have endeavored te produce a metal ski which would compete successfully with Head’s but have failed to do so _ despite their- knowledge and experience. Defendants were ~ able to-do so immediately because of the knowledge they had gained during their employment at plaintiff’s plant:’’ This Court likewise finds from the evidence in this case that other hose manufacturers in this Country have en- deavored to produce an oxygen breathing hose which would compete successfully with the plaintiff’s but had failed to do so despite their knowledge and experience but the defendants were able to do so immediately and within ' twenty days after the charter was granted to its. corpora- n 60a tion, all because of the -knowledge they had guinea during their employment by the plaintiff. This Court is convinced beyond a doubt that the defendants, except William Brand- enburg and Norris Manufacturing Company could not have — gone into a competing business with the plaintiff without the knowledge to build the hose that they had gained dur- ing their employment at the plaintiff’s plant and the knowl- edge that there was a Military Specification awaiting their compliance and approval. Much has been said in this case. to the effect that there was no trade secret owned by-the ~ plaintiff. What the plaintiff knew about hose building was what the defendants knew about hose building and this was enough to enable them to get going ‘‘fast’’. Whatever knowledge the plaintiff had was just what the defendants needed to compete with it. The Court is well aware of the . - right of anyone to go into business, whether it is in com- petition with their former empl [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0792%3A1. Public record. Not legal advice.