# Petition for Writ of Certiorari — Signatrol, Inc. v. Schulenburg

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1966
- **Citation:** 383 U.S. 959

## Text

Lint ie aan Office Supreme Court, U.S.
tn tet, We FILED

| No. 101 6] Fee 14 1966
| JOHN F. DAMS, CLERK

IN THE

Supreme Court of the United States

Ocroser Term, 1965

SIGNATROL, INC., a corporation, JOHN W. SUTPHIN,
WILLARD E. BACHMAN, JOSEPH E. McNAMARA and
WENDELL R. WALKER,

Petitioners,
V8.

EDWARD J. SCHULENBURG, EDWARD J. SCHULENBURG,
JR., HELEN E. SCHULENBURG and MARIE E. POTTEBAUM,
Co-partners doing business as TIME-O-MATIC COMPANY,
TIME-O-MATIC, INC., 2 Corporation, and E-S INDUSTRIES,
INC, ae

Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE SUPREME COURT OF ILLINOIS

HORACE E. GUNN
WILLIAM R. KESLER
4 North Vermilion Street
Danville, Illinois 61833

OWEN RALL

PETER M. SFIKAS
135 South LaSalle Street
Chicago, Illinois 60603
Attorneys for Petitioners

SARS TE CORT BET ETL LT NL LEI TET TE

McCORMICK & HENDERSON, INC. CHICAGO

SE ree anne | See ee ee ee ees

INDEX

PAGE
Citations to Opinions Below 2
JUTISGICHON — «...W2.....neeeee scene 2
Questions Presented | 3
Provisions of the United States Constitution Involved 4
How the Federal Questions Were Raised Below ...... 5
Statement | 6/ .
Reasons for Granting the Writ ...... 13
Conclusion “22

CITATIONS
Cases

Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S.
254 (1964) | 3, 6, 7, 13, 15, 19, 20
‘Fiske v. Katsas, 274 U.S. 380 (1927) 13

“New York Times Co. v. Sullivan, 376 U.S. 254 (1964) 13

Schulenburg v. Signatrol, Inc., 50 Ill. App.2d 402, 200
N.E.2d 615 (July 23, 1964); 33 I11.2d 379, 212 N.E.

2d 865 (Nov. 18, 1965) 2
Sears Roebuck & Co. v. Stiffel Co., 376 U.S. 225
ED - einseccsnienrenniensesenenivetons 3, 6, 7, 18, 15, 19, 20

‘Servo Corp. of Ameria v. General Electric Co., 337 F.
2d 716 (C.A. 4, 1964), rehearing denied 342 F.2d
993 (C.A. 4, 1965) | 7,19

Smith v. Dravo, Inc., 203 F.2d 369 (C.A. 7, 1958) ...... 18

Van Products Co. v. General Welding & Fabricating
Co., 213 A.2d 769 (1965) PY 18, 20 .

\. Fg

Constitutional Provisions

PAGE

U.S. Const. Art. I, § 8 4)

U.S. Const. Art. VI, § 2. , i 5

U.S. Const. Amend. XIV, § 1 5-6, 21
Statute

Sherman Act, 69 Stat. 282, 15 U.S.C.A. § 2 (1963) ...... 21

Miscellaneous

“PRODUCT SIMULATION: A RIGHT OR A
WRONG?’’ by Daphne R. Leeds, Milton Handler,
Walter J. Derenberg, Ralph S. Brown, Jr. and Paul
Bender, 64 Columbia L. Rev., 1178, at 1189, 1203,
1208, (1964); ‘“‘THE SEARS AND COMPCO
CASES: A FEDERAL RIGHT TO COMPETE
BY COPYING’’, by Lionel Kestenbaum, 51 Amer.
Bar Journal 935, at 938 (Oct. 1965) 20fn.

lili

APPENDIX ,
a « ees. Arp, Pace

Opinion of the Illinois Appellate Court: 1
Petitioners’ Petition for Leave to Appeal in the Tili-

nois Supreme Court (Excerpts). 9
First Opinion of the Illinois Supreme Court ................ 20
Dissenting Opinion of Mr. Justice Underwood of the

Illinois Supreme Court 27

Order Denying- Respondents’ Petition for Rehearing .. 32

Order Vacating Denial of Petition for Rehearing and cy
Granting Same 39

Second Opinion of the Illinois Supreme Court ............. 33

Clarification of the Opinion of the home Supreme
Court 42fn.

Respondents’ Motion for Clarification of Opinion ...... 43

Petitioners’ Petition for Rehearing in Illinois Supreme
Court

44
Order on Clarification of Opinion ...... : . 54
Order Denying Petitioners’ Petition for Rehearing .... 54

z<

=

IN THE

Supreme Court of the United States

% OcToBER TERM, 1965
No.

SIGNATROL, INC., a corporation, J OHN W. SUTPHIN,
WILLARD E. BACHMAN, JOSEPH E. McNAMARA and
WENDELL R. WALKER,

Petitioners,
~ Vs. age, *

EDWARD J. SCHULENBURG, EDWARD J. SCHULENBURG,
JR., HELEN E. SCHULENBURG and MARIE E. POTTEBAUM,
Co-partners doing business as TIME-O-MATIC COMPANY,

. "TIME-O-MATIC, XINC., a — and E-S INDUSTRIES,
INC., .

° - Respondents.

a

PETITION FOR A WRIT OF CERTIORARI
TO THE SUPREME COURT OF ILLINOIS

PETITION FOR CERTIORARI

Petitioners pray that a writ.of certiorari issue tb review .
the judgment of the Supreme Court of Illinois entered in
this case on September 28, 1965, which hecame final by the
denial of the Petitioners’ petition for rehearing on No-
- vember 18, 1965.

i
CeraTions TO OPINIONS BELow a ie
The unreported opinion of the trial court, 40 pages in
length, is printed in the Abstract* commencing at page
ra a ee
The opinion of the Appellate Court of. Illinois) Fourth
* District (Schulenburg v. Signatrol, Inc., 50 Ill.. App. 2d

402, 200 N.E.2d 615 (July 23, 1964)), is hs piace in the
Appendix** at page 1.

The first opinion of the titinois Supreme Court, filed ,

March 18, 1965, is unreported and is. printed in the Ap-
pendix at page 20. The second opinion of the Illinois
Supreme Court filed September 28, 1965, as revised No-
vember 18, 1965, on the denial of our petition for rehearing,
Schulenburg v. Signatrol, Inc., 33 Tll.2d 379, 212 N.E.2d
865, is printed in the Appendix at page 33. is

The revision or ‘‘clarification?? of the September 28,
1965 opinion of the Illinois Supreme Court which was made
on November 18, 1965 is indicated in the footnote on
pages 42 and 43 of the Appendix.

J URISDICTION

The judgment of the Illinois Supreme Court was entered
on September 28, 1965 (See Appendix, p. 33; Unprinted
transcript of record, p. 47). Rehearing was denied on
November 18, 1965 (See Appendix, p. 54; Record, p. 61).
The jurisdiction of this Court to entertain this Petition
for Certiorari is invoked under 28 U.S.C., Section 1257 (3).

* Page references to the “Abst.” are to the printed Abstract of ©
Record in the Illinois Appellate Court, re-covered in this Court, on
which the case was heard in the Illinois Supreme Court. Nine copies
have been filed with this Court.

** Page references to the “ Appendix” are to the separately-paged
_ appendix bound with this Petition.

3

QuEsTIONS PRESENTED

1. On the theory that widely-circulated drawings and
blueprints describing the parts of a simple, unpatented
electrical device were trade secrets, contrary to the un-
disputed evidence, in the record, the Illinois Supreme Court
in this case has made a serious inroad into the Federally-
protected right of copying any unpatented ‘article an-
nounced in Sears Roebuck & Co. v. Stiffel Co., 376 U.S. 225,
and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S.
234, on March 9, 1964, while the case at bar was pending
in the Illinois Appellate Court, long before the date of
the. judgment of the Illinois Supreme Court.

2. The judgment below algo denies ‘to former employees
the freedom of copying an unpatented article which free-
dom this Court held in the above cases is a right protected
against State interference — the judgment below thus deny-
ing to the Petitioners equal protection of the Jaws and
depriving them of liberty and property without due process

9 0f law in violation of the first section of the Fourteenth
Amendment.

3. Lastly, the judgment below is monopolistic in viola-
tion of every concept of Federally-protected freedom of
commerce, inasmuch as the judgment protects an assembler

- of an unpatented article against the competition of those
most likely to compete with him — his fokmer employees.

The three questions thus presented may be formalized
as follows: | —

1. May a State, by denominating as trade secrets widely-
circulated drawings and blueprints (for the purchase and
assembly of an unpatented article which is concededly in
the publie domain) invade and restrict the Federally-pro-
tected right of all persons freely to manufacture unpatented
articles? : Ky

wee
«

4

2. May the Federally-protected right of duplicating and
selling a simple, unpatented electrical device be evaded
by a State’s declaring that widely-circulated drawings and
blueprints of the parts of the device are trade secrets
which former employees of the seller may not copy or
memorize, thereby depriving them of liberty and property
without due process of law?

3. Are Federal laws and national policy protecting the
freedom of commerce violated by a State court decree*
which enjoins, everywhere in the~world, the Respondents’
former employees from manufacturing or selling, directly
or indirectly, a simple, unpatented electrical device whose
component parts are described in widely-circulated draw-
ings and blueprints which the employees are charged with
having memorized or copied?

PROVISIONS OF THE Unrtrep States ConstTItuTIon
Here INVoLveD

Article I, Section 8:

The Congress shall have power * * * to promote the
Progress of Science and Useful Arts, by securing for
limited Times to Authors and Inventors the exclusive Right
to their respective Writings and Discoveries.’’

Article VI, Section 2: —

This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof * * * shall be

* The injunction finally approved by the Supreme Court of
Illinois enjoins the Petitioners from manufacturing or selling, directly
or indirectly, flashers imitative of or operating on the same principle
as Respondents’ flasher anywhere in the world until such time as the
trial court may make a determination of the period of time in
which the Petitioners may “lawfully” duplicate Respondents’ flasher:
The manufacture and sale of parts of such flashers are similarly
enjoined. oad

5

the supreme Law of the Land; and the Judges in every
State shall be bound thereby, any Thing in the Constitution
or Laws of any State to the Contrary notwithstanding.

Fourteenth Amendment, Section 1:

* * * 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.

How THE FEperRAL Questions WERE RaiseD BELOW

The Petitioners raised in their Petition for Leave to
- Appeal to the Illinois Supreme Court (Appendix, pp. 9-17)
the substantial federal question that the use of State
unfair-competition law to give relief against copying of
unpatented articles conflicts with federal patent laws and
thus violates the patent clause of the United States Con-
‘stitution, U. S. Const. Art. I, § 8 and the supremacy
clause, Art. VI, § 2. The Illinois Supreme Court expressly
‘ruled on this aspect of the case by denying the Petitioners’
contention (Appendix, pp. 33, 39-40).

In the Petitioners’ Petition for Leave to Appeal to the
Illinois Supreme Court and in all other briefs filed in the
Illinois Supreme Court the substantial federal question
was raised that any judicial relief, injunctive or otherwise,
denying the petitioners the right to manufacture and sell
an unpatented article solely because the petitioners were
former employees of the manufacturer of the unpatented
article is clearly a deprivation of liberty and property
without due process of law and a denial to the petitioners
of the equal protection of the laws. U.S. Const. amend.

6

XIV, § 1 (Appendix, pp. 17-20, 44, 51). This contention
of the Petitioners was denied by the Illinois Supreme Court
sub silentio.

The Petitioners in their Petition for Leave to Appeal
to the Illinois Supreme Court and in all other briefs filed
in the Illinois Supreme Court raised the substantial federal
question that an injunction which enjoined the Petitioners
from copying an unpatented article ol to permit the
Respondents to enjoy monopoly control over the unpatented
article was an express violation of explicit federal policy
prohibiting monopolies (Appendix, pp. 9, 20, 44, 51, 54).
This contention of the petitioners was also denied by the
Illinois Supreme Court sub silentio.

STATEMENT

This is a petition for certiorari to the Supreme Court
of Illinois seeking review of a judgment affirming a sweep-
ing injunction against the Petitioners prohibiting them
from, among other things, manufacturing or selling any
electric ‘‘flasher’’ or ‘‘timer’’ or any component parts
thereof similar to the Respondents’ unpatented device, or
manufacturing or selling any electric flasher employing
the same principle or principles.

On a petition to review the judgment of the intermediate
appellate court, reported in 50 Ill. App. 2d 402, 200 N.E.
2d 615 (1964), affirming the trial court decree, the Illinois
Supreme Court initially, on March 18, 1965, reversed th
decree of the trial court, held that no trade secret | a
shown, and that under Sears Roebuck & Co. v. Stiffel, 376
U.S. 225, and Compco Corp. v. Day-Brite Lighting, 376
U.S. 234, the manufacture by Petitioners of flashers simi-

ie

lar to Respondents’ unpatented flashers could not en-
joined or punished in damages (Appendix, p. 20, at p. 22).~

On rehearing, the Illinois Supreme Court struck from
its original opinion all references to the evidence dis-
proving the existence of a trade secret, and without dis-
cussing the evidence so ignored, held in general language
that the ‘‘determinations of the trial and appellate courts
on the trade secret question are affirmed’’ (Appendix, p.
42). The Court held that the Sears and Compco cases were
distinguishable because in those cases no problem of trade
secrets was present (Appendix, p. 40).

In distinguishing Sears and Compco the Illinois Supreme
_ Court relied (Appendix, p. 39) upon Smith v. Dravo Corp.,
203 F. 2d 369 (C.A. 7, 1953), based upon Pennsylvania law,
and (Appendix, p. 40) on Servo Corp. of America v. Gen-
eral Electric Co., 337 F. 2d 716 (C.A. 4, 1964), rehearing
denied with opinion, 342 F. 2d 993 (1965), which as this
Petition is written is pending in this Court on a petition
for certiorari filed on May 19, 1965 (Oct. T., 1965, No.
154). [The petition for certiorari is by Servo and relates
to patent aspects not involved in the case at*bar.]

The Respondent corporation, E-S Industries, is the suc-
cessor in interest to a corporation, Time-O-Matic Company
(TOM), which was in the business of assembling and |
selling electric flashers used primarily in the sign industry ~
to cause lights to flash on and off in such a manner as
to animate'the sign in various patterns or designs.

In 1932, Respondent Edward J. Schulenburg, Sr., went be
to work for Sangamo Electric Company at Springfield,
Illinois, as head of its flasher and timer division and held
that position until 1945 when he purchased all of the assets
of the flasher and timer division (Abst. 90) for. $2,718.61
(Appendix, p. 33). He moved the operation to Danville,

fr
ae |

8

Illinois, under the name of Time-O-Matic Company. Peti-
tioner.John W. Sutphin was also an employee of Sangamo.
When he returned from military service in World War II
he contacted Schulenburg and was employed by TOM.
He eventually, without formal title, held the post of general
manager (Abst. 53-54, 228-229).

During this period TOM manufactured a Model 3 flasher
consisting of two basic types, the first a frame type flasher
which contains either one or two electrical contacts and
the second a base plate-type flasher, used when more than
two contacts are required.

There is no contention by Respondents that the TOM
Model 3 flasher, basically the same flasher previously manu-
factured by Sangamo Electric Company, is patented or
that the flasher is a trade wecret or that the method of
assembling the flasher is a trade secret (Appendix, p. 34;
Abst. 169).

Sutphin continued in the employ of TOM until January,
1959, when he and Respondent Schulenburg had a disagree-
ment of policy concerning the operation of the company
and Sutphin resigned effective at the end of January,
1959 (Abst. 230). Sutphin thereupon made an investigation
to determine whether or not it was feasible to start a
company of his own and determined that there was an
opportunity for another company in the flasher industry
and he then, in March, 1959, organized Signatrol, Ine.

Petitioner Bachman had been employed by TOM since
» 1947 charged with the general responsibility of designing
special equipment. He also assisted in sales work. Bach-
man left TOM in the middle of March, 1959, after a dis-
agreement with Schulenburg and joined Signatrol (Abst.
308). The Petitioners McNamara and- Walker had also
been employees of TOM for several years, McNamara as

9

purchasing agent (Abst. 284) and Walker in the engineer-
ing department (Abst. 295). Both of them asked Sutphin

whether they could join Signatrol and in Apfil 1959 —

McNamara left TOM and joined Signatrol as its purchas-
ing agent (Abst. 284). In June, 1959 Walker left TOM and
joined Signatrol (Abst. 297).

Prior to that time TOM had virtually monopolized the
market for flashers. Approximately 85% of all flashers
in operation had been manufactured by TOM (Abst. 234).
Sutphin determined that it was necessary to manufacture
a flasher that was interchangeable with the flashers already
on the market, due to the fact that there was a large de-
mand for flashers to replace ‘those which had worn out.
There was also a large demand for replacement parts to
replace worn-out parts of flashers (Abst. 234).

The flasher itself is a simple mechanical device (Abst.
130) consisting of a metal frame approximately six inches
square having thereon a small electric motor which turns
electric switches on and off. These flashers are easily
assembled by unskilled workers who need no technical
knowledge whatsoever (Abst. 237). Neither Respondents
nor Petitioners are true manufacturers but actually buy

the motors, gears, sideplates, switches and other parts :

which they assemble, usually in the manner requested by a
customer (Appendix 33, 34).

Many of the flasher parts are regular catalog items
furnished by suppliers (Appendix 34-35). Some of the
parts are specifically manufactured for both the Respond-
ents and the Petitioners. When ordering these parts from
the manufacturer, it is the practice of both Respondents
and Petitioners and is frequently the practice of all con-
cerns dealing with suppliers, whether dealing in flashers
or not, to furnish the supplier with a blueprint of the item
desired. This shows the size, dimensions and other infor-
mation necessary to manufacture the part.

i)

bs)

Ney

10

There is no better statement supporting the Petitioners’
contention that the drawings and blueprints of the Re-
spondents (used by them to purchase some of the com-
ponent parts of the flashers and to assemble these un-
patented mechanical devices) are not trade secrets than
the following language of the original opinion of the
Illinois Supreme Court (Appendix, pp. 23-24) which was
deleted from the final opinion:

‘«< * * * Tn this connection, it must be pointed out
that the blueprints were customarily submitted to sev-
eral suppliers by the plaintiffs in order to secure the
most favorable birds.for the manufacture of parts; no
effort was made by the company to keep the informa-
tion on such plans and blueprints secret; the suppliers
were never advised that the plans contained any secret
information; they were never requested to keep the
information on the plans secret; and the plaintiffs
never requested a return of the blueprints and plans
from suppliers to whom they were sent. The electrical
principle involved is well known and plaintiffs’ un-
patentable product is for sale and anyone can buy it.
Anyone reasonably skilled in the art, could, without
difficulty, duplicate plaintiffs’ flasher from an exami-
nation of the flasher itself and lawfully engage in a
competing business.”’

The undisputed evidence in the sini fully sustains
the above initial holding by the Supreme Court of Illinois.
This evidence is summarized and heavily documented in
the attached Appendix at pages 48, 49 and 50.

This initial opinion also held that no trade secret was
proved and on March 18, 1965 the court unanimously re-
versed the.judgment of the intermediate appellate court
and remanded the cause to the trial court with directions
to dismiss the complaint.

11

On May 19, 1965, the Supreme Court of Illinois denied
the Respondents’ petition for rehearing, but two judges
who oviginally joinedyin the unanimous opinion filed a
dissenting opinion (Appendix, pp. 27-32) and twenty-four
hours later the court on its own motion vacated its-previous
order of denial and granted the Respondents’ petition for
a rehearing. On September 28, 1965, the court filed an

opinion deleting its reference to the undisputed evidence ,

proving that A, TM was involved and held that
the Respondents” drawings and blueprints were trade
secrets, but it modified ‘‘the injunction. so as to limit its
duration to the period of time reasonably required for de-
fendants to legally produce”’ copies of Respondents’ flasher
(Appendix, p. 42fn)..

The trial judge was directed that if on remandment ‘‘the
evidence establishes that the period of time required for
reproduction of the flashers by lawful means, computed
from the date defendants [Petitioners] first commenced
production, has now expired, the injunction order should
be vacated’’. (Appendix, p. 43 fn.)

Later, on November 18, 1965, in denying Petitioners’
petition for a rehearing which is set forth in the Appendix
hereto (pp. 44-54), the court altered its opinion by provid-
ing that upon remandment the trial court should order ‘‘the
enforcement of the original injunction pending a prompt
determination—of the time required for the reproduction
of the flashers by lawful means”’ and that the ‘‘injunction
should then be modified to terminate upon the expiration of
such time period’’ (Appendix, p. 43).

The net effect of these various changes was to affirm a
sweeping injunction against the Petitioners, former em-
ployees of the Respondents, preventing them from manu-
facturing or selling unpatented electric flashers, or parts

&

12

thereof, imitative of or operating on the same principles
as Respondents’ flashers anywhere in the world until such
time as the trial court may make a determination of the
period of time in which Petitioners.might “‘lawfully’’ have
copied the Respondents’. unpatented flashers. The injunc-
tion will be found in the Abstract, pp. 28-31, and is sum-
marized in the Appendix hereto, pp. 9-11.

The remanding order also ordered a hearing on the
question of damages which had been reserved by the trial
court, but since no rule of damages was laid down by the
Illinois Supreme Court and no damages have as yet been
assessed the question of damages is not ripe for. decision
here.

The trial court, now affirmed by the Illinois Appellate
and Supreme (ourts, held that Petitioners had copied some
of the drawings and blueprints of Respondents, but that
whether copied or memorized the Respondents” drawings
and blueprints) comprised trade secrets which the Peti-
tioners could fot lawfully copy or memorize.

»

&

13

REASONS FOR GRANTING THE WRIT

I.

It is Important to Determine the Extent, if at all, that the
Claim of a Trade Secret Avoids the Federally-Protected
Right to Duplicate and Sell UnpatentedDevices.

The Petitioners contend that upon the undisputed evi-
dence in this record the Respondents’ widely-circulated
drawings and blueprints were not trade secrets and that
under Sears Roebuck & Co. v. Stiffel, 376 U,S.-225_(1964), —
and Compco Corp. v. Day-Brite Lighting, 376 U.S. 234
(1964), the Petitioners cannot lawfully be enjoined from
manufacturing ahd selling unpatented devices described in
those drawings and blueprints or be punished in damages
for-doing so. We recognize that we are bound by the find-
ings of the courts below on conflictmg evidence to the ef-
fect that Petitioners either copied or memorized the Re-
spondents’ drawings,. but we are not bound by the finding
that the drawings are trade secrets when‘that unsupported
finding i is made the basis for denying a: iin i ance

- right:

New York Times Co. v. Sullivan, 376 USS. 254, 285
~ (1964);
Fiske v. Kansas, 274 U.S. 380, 385-86 (1927).

The undisputed evidence freely conceded by Respondents
(Abst. 330; Appendix, pp. 34-35) is that the assembled
‘‘flashers’’ are in the public domain, unpatented. and un-
patentable, and that they can be duplicated from an exami-—
nation of the flasher itself by anyone reasonably skilled in
the art (Respondent Schulenburg, Abst. 130-131, 167). To
evade the Sears and Compco cases, however, the Respond-
ents successfully contended that the drawings describing
the flashers were trade secrets, although the flashers were
not. se

Pa
Fa

oe
Pa

140

The undisputed evidence is that the drawings were not:
trade secrets. The drawings of various parts of the flash-
‘ers were not kept under lock and key and were available
to all employees in Respondents’ plant (Abst..93, 132, 168,
286). No inventory’ was kept of the drawings and any —
employee could go through the drawers without being
questioned. Some of the drawings were left out on benches
over night (Abst. 166-167, 286).

None of the Respondents’ employees was ever notified
orally or in writing that the drawings and blueprints were
secret (Abst. 168, 285), and Respondents did not exact
any written agreements from employees as to Secrecy
(Abst. 132, 168, 286).

Each prospective supplier of parts received a drawing
of the part that: he was to bid on (Abst. 56, 93, 286), and»
. nothing was said about any secrecy of the plans in the
letters.of transmittal (Abst. 286-287). These drawings of
parts were submitted without any request that they be re-
turned, so there may be drawings scattered around the —
companies which have not been returned or thrown away
(Abst, 132).

Although Respondent E. J. Schulenburg, Sr. first tes-
- tidied that no complete set of drawings was sent out of the
plant (Abst. 56, 93-94), it was later admitted by him that
a complete set of sepia drawings—a type of drawing se-
lected because of the ease of reproducing a large number
-of copies therefrom—had been sent to Martin-Marietta ~
Company in Colorado which was.neither an employee nor
a supplier (Abst. 280-281, 300-301).

The above undisputed evidence shatters the theory that
the Respondents’ drawings and blueprints were secret.
. Therefore, they were not trade secrets.

15 C

-In its original opinion in this case, the Illinois Supreme
Court, on the undisputed evidence which we have listed
above, properly held (Appendix, pp. 26-27, omitted from
the final opinion:,

‘«The only permissible restriction affording injunc-
tive relief in this case is the unlawful violation of ‘a
definite trade secret. The plaintiff’s [Respondents’]
blueprinted ‘know-how’ does not qualify under the
circumstances as a trade secret. Therefore, the de-

_ fendants could not have been guilty of unfair competi-
tion for the plaintiff’s claim of trade secret does not
meet the qualifications of the law.’’

In its original opinion the Illinois Supreme Court also
said (Appendix, p. 22, omitted from the final opinion) :

‘‘The Supreme Court of the United States has held
that no State may, by laws dealing with unfair com-

‘ petition, impose damages or enjoin the copying, manu-
facturing and sale of an article which is protected by
neither a Federal patent nor a copyright. Sears, Roe-
buck & Co. v. Stiffel, 376 U.S. 225, 11 L.ed 2d 661; -
Compco Corp. v. Day-Brite Lighting, 376 U. 8. 234, 11
L. ed 2d 669.”’

At the risk of dignifying too much an opinion which the
court below itself rejected, we believe that the original
opinion correctly stated the applicable Illinois law on the
question of trade secrets as follows (Appendix, pp. 24-26,
omitted from the final opinion) :

‘‘In order to constitute a trade secret which will be pro-
tected by injunction there must be a plan, process, tool,
machine or compound known only to the owner and those
employees to whom it is necessary to confide in secret.
Therefore, a process commonly known in the trade is not
a trade secret entitled to injunctive protection, and mat-
ters which are generally known in the trade or readily

16

&

discernible by those in the trade cannot be made secret by
being so labeled. (Victor Chemical Works v. Iliff, 299 Ill.
532; Sarkes Tarzain, Inc. v. Audio Devices, Inc., 166 F.
Supp. 250, 265 (D. Cal. 1958), aff’d 283 F.2d 695 (9th Cir.
1960), cert. denied 365 U.S. 869, 5 L. ed: 2d 859.) Here
there is ample evidence in the record to show that the in-
formation conveyed to defendants was of such a nature
that it was generally known in the trade. In addition, none
of the employees were ever told that the plans weressecret
or confidential, no secrecy agreement was ever required of
any employee and no employee was required to enter into
any restrictive covenant not to engage in any competitive
business with plaintiff.

‘<The Restatement of Torts contains a comprehensive
treatment of the principles concerning liability for dis-
closure or use of others’ trade secrets. In section 757 of
the Restatement of Torts under comment b it is stated as
follows:

‘< ¢ Definition of a trade secret. A trade secret may con-
sist of any formula, pattern, device or compilation of in-
formation which is used in one’s business, and which gives
him an opportunity to obtain an advantage over competi-
tors who do not’know or use it.

: oo cd e

‘¢ ¢Secrecy. The subject matter of a trade secret must
be secret. Matters of public knowledge or of general
knowlede in an industry cannot be appropriated by one
as his secret. Matters which are completely disclosed by
the goods which one markets cannot be his secret.’

‘‘Defendants are accused of copying or memorizing nec-
essary information and using it in their manufacturing
process in competition with their former employers. The
Appellate Court quoted, with approval, the memorandum

=

17

opinion of the trial court which states: ‘By defendants’
own statement they carried away from plaintiffs mental
pictures of the plaintiffs’ drawings, and specifications, and
from that mental picture they reproduced it upon paper—
an accurate copy of the original. It was no more or less
than a copy made from the original. * * * The human eye
is but a photographic lens, and the mind is the film.
Through the lens the object is exposed to the sensitive film,
the mind. * * * These mental pictures were obtained while
in plaintiffs’ employment, and to carry them away in this
manner was a-violation of a confidence reposed in them
by their employer, as if they had made copies or photo-
graphs and carried them away.’

“The law is well settled that an employee, upon termi-
nating his employment, may carry away and use the gen-
eral skill or knowledge acquired during the course of the
employment. ‘[E]quity has no power to compel a man
who changes employers to wipe clean the slate of his mem-
ory.’ (American Cleaners and Dyers v. Foreman, 252 Tl.

. App. 122; Peerless Pattern Co. v. Pictorial Review Co.,

*147 App. Div. 715, 132 N.Y.S. 37, 39.) In American Cleam-
ers and Dyers v. Foreman, 252 Ill. App. 122, the court re-
versed an injunction against defendants who were former
route drivers for a laundry and dry cleaning firm who

“ went to work for a competing laundry and solicited their

old customers whose names and addresses they had re-
membered.

‘©A 1958 federal case, Sarkes Tarzainm, Inc. v. Audio
Devices, 166 F.Supp. 250, contains an excellent statement
of the information which an employee has the right to
carry away and use in competition with his former em-
ployer: ;

18

‘* ‘Of necessity, whenever a change of employment of
this type occurs and former employees enter into the em-
ploy of another with whom they engage in a competitive
business, it is inevitable that some of the knowledge ac-
° quired while in the employ of the other should be made
available to the new employer. But, as already appears,
the courts will not deprive the employee of the right to
use the skill he developed through the years.

* * &

‘¢ ‘So there is agreement among the courts that, except,
where real trade secrets are involved, an employee may
compete with his former employer and with such knowl-
edge and skill as he has developed in the former’s em-
ploy.’ 29

‘The above material was entirely deleted from the final
opinion and only one case is cited therein to\justify the
complete turnabout on the question here involved, Smith
v. Dravo, Inc., 203 F.2d 369 (C.A. 7, 1953), which ‘the court
below found ‘‘most persuasive’’ (Appendix, p. 39). In
Dravo the Court of Appeals found (p. 374) that the plain-
tiff’s plans were secret and had never been disclosed to
the trade, which completely differentiates that case from
the case at bar. Furthermore, Dravo was based on a
Federal court’s determination of Pennsylvania law. The
Supreme Court of Pennsylvania has very recently spoken
on the subject of alleged trade secrets in a suit between a
manufacturer and former employees and refused to fol-
low the Dravo case, stating, Van Products Co. v. General
Welding & Fabricating Co., 213 A.2d 769 (Oct. 13, 1965)
at page 780:

‘‘We feel that the authorities holding that public dis-
closures destroy plaintiff’s right to maintain a cause

of action to preserve his trade ‘secret’ against a com-
peting former-employee who has violated a duty of

FY)

(

confidence are more sound in theory and practice than
those continuing to look ,to the relationship of the
| parties as a basis for the’action. * * * The starting
_ point in every case of this sort is not whether there
was a confidential relationship, but whether, in fact,
there was a trade secret to be misappropriated: Na-
tional Starch Products, Inc. v. Polymer Industries,
Inc., 273 App. Div. 732, 79 N.Y.S.2d°357 (1948).’’

Mr. Justice Cohen concurred specially on the ground
that Sears Roebuck & Co. v. Stiffel, 376 U.S. 225, and
Compco Corp. v. Day-Brite Lighting, 376 U.S. 234,- clearly
indicate that the field has been pre-empted by the Federal
patent law and that ‘‘state law of unfair competition is in
conflict with the patent law and in the interest of uni-
formity and unburdened competition relief by way of dam-
ages or injunction based on the state law of unfair com-
petition may not be allowed’’ (213 A.2d 769 at 781).

The Illinois Supreme Court cited Servo Corp. v. General
Electric Co., 337 F.2d 716 (C.A. 4, 1964) rehearing denied
with opinion 342 F.2d 993 (C.A. 4, 1965), Term No. 154,
October Term, 1965, for the proposition that Sears and
Compco do not apply to trade secret cases. A trade secret
was found to exist in that case. Whether the existence of
a true trade secret avoids the rule of Sears and Compco
should be decided by this Court. If-possession of a trade
secret insulates its owner from the exércise of a Fed-
erally-protected right ef others to compete with him, it is
highly desirable (as. shown by the present record) that
this Court establish criteria with which evidence of such
a trade secret must comply.

The Supreme Court of Illinois in the instant case re-
fused to follow Sears and Compco on the ground that
those cases did not deal with trade secrets. Our short
answer to this is that no trade secret is involved in this

y

20

case either, and that Sears and Compco should have been
given effect. We submit that to preserve the integrity of
the rule announced in Sears and Compco. and to avoid
evasion on the pretext that a trade secret is involved
certiorari should be granted in the instant case.

The obvious difficulty; which the Illinois Supreme Court
had with the instant case, the contrary opinion of the
Pennsylvania Supreme Court in Van Products Co., just
discussed, and the legal literature* bearing on the proper
relationship of this Court’s opinions in Sears and Compco
to trade secret cases, all indicate the desirability of a
' grant of certiorari here to delineate the extent, if any, to
which a state court may go in restricting the Federally-
protected right to duplicate unpatented devices.

If.

Certiorari Should be Granted Because this Injunction Pro-
hibiting the Duplicating and Selling of an Unpatented
Article is a Deprivation of Liberty and Property With-
out Due Process of Law and a Violation of the Equal
Protection of the Laws. :

)

In the case at bar there is no doubt that anyone (other
than the Petitioners) who wishes to duplicate the Re-
spondents’ electric flashers and sell them on the market
may do so with impunity. The lower court held that the
Petitioners’ conduct was actionable because it found that
the Petitioners gained their information (which is open
to the trade, generally) of the Respondents’ flashers while |

*“Propuct SrmuLaTion: A RIGHT or A WRonG?” by Daphne R.
Leeds, Milton Handler, Walter J. Derenberg, Ralph S. Brown, Jr.
and Paul Bender, 64 Columbia L. Rev.,.1178, at 1189, 1203, 1208,
(1964) ; “THe Sears anp Compco cases: A FEDERAL RIGHT TO
Compete sy Copyinc”, by Lionel Kestenbaum, 51 Amer. Bar Jour-
nal 935, at 938, (Oct. 1965). |

21

in the employ of the Respondents. The broad injunction
granted by the trial court effectually precludes the Pe-
titioners from engaging in any business activity connected
with the flasher or timer for a period of time not yet deter-
mined but which may prove to be long enough to put the
Petitioners out of business.

The mere fact that Petitioners obtained their informa-
tion regarding the Respondents’ concededly simple flasher
while employed by the Respondents is not enough to
justify the palpable discrimination against the Petitioners
which is a violation of the first section of the Fourteenth
Amendment. }

Moreover, the injunction and the decision of the IIli-
nois Supreme Court reduce the Petitioners to virtual servi-
tude in denying them their right to work in their chosen
field—in the case of Petitioner Sutphin, for example, in
the only business in which he has ever been engaged.

Il.

The State Court Judgment Violates the Concept of Fed-
erally-Protected Freedom of Commerce and Tends
Toward Monopoly.

Prior to the time the Petitioners began competing with
the Respondents in the flasher business the Respondents
‘enjoyed a virtual monopoly over this market inasmuch as
| they had manufactured 85% of all flashers in operation
_. (Abst. 234). It is clear beyond any question that this
| monopoly control flies directly in the face cf the Federal
government’s explicit policy against all forms of restraint
of trade and commerce, cf. Sherman Act, 69 Stat. 282, 15
U.S.C.A. §2 (1963).

The lower court in the instant case enjoins the Peti--
™ tioners from manufacturing or selling flashers, imitative
of or operating on the same principles as Respondents’

22

flashers anywhere in the world until such time as the trial
court may make a determination of the period of time in
which Petitioners might ‘‘lawfully’’ have duplicated Re-
spondents’ unpatented flasher. Although the injunction
- MImay ultimately be limited as to time, the injunction is
not limited as to geographic area: During the period of
time—indefinite in its termination but certain in its com-
mencement—that this injunction remains in effect the in-
junction again gives the Respondents monopoly control
in the flasher market, contrary to the clear Federal policy
embracing freedom of competition. If the interruption in
the Petitioners’ business which the Illinois Supreme Court —
has affirmed results in the Petitioners’ being put out of
business permanently the Respondents will have succeeded
in restoring to themselves a virtual monopoly of this in-
dustry.
CONCLUSION.

Because the judgment below imposes severe and unwar-
ranted restrictions on Federally-protected constitutional
rights and—on the pretext that a trade secret exists—has
restricted a Federal right sustained by this Court in Sears
and Compco, the writ of certiorari ought to be granted.

Respectfully submitted,

Horace E. Gunn

Wim R. Kester
4 North Vermilion Street
Danville, Illinois 61833

\. Owen Rati
Perer M. Srikas
135 South LaSalle Street
Chicago, Illinois 60603
~ Attorneys for Petitioners
- February 11, 1966

APPENDIX

On July 23, 1964, the Illinois Appellate Court, Fourth
District, filed the following opigion (Schulenburg v. Sig-
natrol, Inc., 50 Til. App. 2d 402, 200 N.E. 2d 615), which
is appended to defendants-petitioners Petition for Leave
to Appeal to the Illinois cat Court, marginal record
page 2, below:

SMITH, J.

Plaintiffs manufacture and sell devices for automatically
making and breaking electrical circuits. Such devices known
in the trade as flashers are used in display signs where
changing light patterns or a flashing effect is thought desir-
able. Plaintiffs were first in the field, at least {# were
there before defendants, all of whom are former employees
who left to form their own competing company, Signatrol,
also a defendant. For our purposes we can group defend- —
ants as one as we can the various plaintiffs. The lower
court issued an injunction re#gining defendants from the
further manufacture and sale of competing flashers, in
effect, putting them out of business and. they appeal. -
Damages, if any, are postponed pending the outcome here.

Plaintiffs say that their manufacturing ‘‘know-how”’ is __”

a trade secret which was imparted in confidence to defend-
ants while employees and that such secret has been used
by them in manufacturing a competing product. Defend-
ants deny utilization by them of any such secret, in fagt,
they deny its very existence. -All they used, they answer,
were acquired skills and such general knowledge of the
operation as the law permits them to take away.

2 7 Appendia

Plaintiffs’ trade secret, if it is, is to be distinguished
from the product itself“in which they have no property
ight, being devoid of patent protection. The electrical
principle involved is well known and plaintiffs’ product is
for sale and anybody can buy it... For that matter anybody
can duplicate it if they want to and can go into business.
Competition i is considered a very good thing (in the flasher

- business), but those who choose to go, must use fair means,
not foul. If fair means are used the field is wide open to
all comers for-the owner of a trade secret as distinguished
phen owner of a patent has no right as such to exclude
others from using it. Relief is only granted when someone
attempts to use.the secret in violation of some general duty
of faith such as an abuse of confidence. Such an abuse’
results in = competition and equity will then intervene

‘if called

ing possession of a trade secret by plaintiffs,
assuming its disclosure in confidence to defendants while
employees, assuming its profitable use thereafter by them
to plaintiffs’ financial detriment, is this unfair competition?
- Posited thusly, the answer is immediately apparent. Mis-
use of confidential information by erstwhile employees
as a weapon of attack upon their former employer is
indeed unfair competition for-it shocks one’s sense of fair
play. Even in times gone by, when the law took a less
jaundiced view, such conduct was not defended~upon the
ground that it was fair. Lord Kenyon in Nichols v. Martyn
(2 Esp 732) characterized such conduct as ‘‘not hand-
some’’, but yet for his time not. contrary to law. It is for
ours without meaning to cast aspersions on a more free- |
wheeling age. Other courts and writers‘are of this con-
census. In Franke v. Wiltschek, 209 F.2d si was stated:

‘But the tendency of the law, bo gislative and
common, has been in the direction of enforcing increas-
ingly higher standards of fairness or commercial

ae ‘

morality in trade. The tendency still persists. The
present case surely is not one where we are disposed
to attempt to reverse the trend.’’
Misuse of confidential information, because it can result
in unfair competition, is said to be violative of an implied
condition that ‘‘he will not after the service is determined
use information which he has gained while the service has
been subsisting to the detriment of his former employer’’.

_ Essex Trust Co. v. Enright, 214 Mass. 507.. To sum up—

misuse of confidential information or breach of an implied

condition are but text in the larger context of unfair com-
petition and sich competition can run afoul of the equitable
doctrines which condemn fraud and over-reaching. For
our context the rule is, that an employee lawfully entering
upon a competing business may be enjoined from using
trade secrets of his employer’s business obtained during
the course of his employment.

Obviously all, knowledge acquired by an employee does
not partake of a trade secret. His relationship to his
employer may be confidential, but not the knowledge. That
which by experience has become a part of a man’s general
knowledge cannot and ought not to be enjoined from fur-
ther and different uses. Again, in Junker v. P
67 N.E. 2d 667 (Mass. 1946) the rule is stated thusly :

‘‘The law is well settled that an employee upon
terminating his employment may carry away and mse
the general skill or knowledge acquired during the

- course of the employment. (Citing cases) But it is
equally well estabished that out of the ‘relationship of.
employer and employee certain obligations arise, in-
cluding that which precludes an employee from using,
for his own advantage or that of a rival and to the
harm of his employer, confidential information that he
has gained in the course of his employment.” ’’

‘4 | Appendia

All would agree that equity should not restrict the subse-
quent use of general skills and knowledge and this for the
reason that such use simply does not shock one’s sense of
fair play. But this line between the useable and the non-
useable is hard to draw. Overstrict, we create a monopoly
of first users—a very bad thing in our society, if we
acknowledge the desirability of encouraging individual
- business enterprise and initiative which we do. Plaintiffs

agree:

“We do wis question or dispute this right (to enter
into a competing business) in the defendants. However;
there was a legal and an illegal method open for adop-
tion by defendants in preparing to enter into such com-
peting business and producing products in competition

- with their former employer and defendants deliberately
chose the illegal method.”’
This method, they say, took the form of either copying or
memorizing their ‘‘know-how’’\on blueprints during the
time they were employed and putting it to use in manu-
facturing a competitive product.

We thus come to grips with the central question pre-
sented by this appeal. Was there a ‘‘trade secret’’? In
defining these two words we need not be concerned, as we
are elsewhere, with searching for some esoteric meaning
for none exists, though for a play on words, the informa-
tion to be ‘‘secret’’ must be ‘‘esoteric’’ in the sense of
being restricted to an inner circle. As there are two words
there are two aspects. It must be secret and the secret
must relate to business (trade). Formulae, lists, patterns /
and blueprints are examples. To be secret means that a
blueprint, for example, is not in the public domain through
_divulgence and that it is not too easily discoverable; that
is, apparent to all without too much hard work.

Appendix b.

Was plaintiffs’ blueprinted ‘‘know-how”’ a secret? Well,
they considered it a secret and attempted reasonably to
keep it so (without much success), and their intent and
attempt, we suppose, are of importance in answering the
question. It was imparted privately to a select few—
defendants among them. That the secret was spyed (sic)
out does not make,it any less a secret nor does the fact
that their finished product was on the market amount to
either a divulgence or an abandonment of such secret. In
Smith v. Dravo, 203 F. 2d 362, it was said:

‘‘But this (publicity material) was not equivalent to
a disclosure of the structural design, the engineering
‘details, of either the container as a whole or its various
working parts. This could only be obtained by careful
inspection of the article and the drawings.’’

Certainly this secret was one connected with business.
In manufacturing their flashers, plaintiffs used an assem- -
bling process. The component parts were secured from
suppliers and then put together. For each part there are
very precise drawings or blueprints showing the dimensions
and metallurgical specifications. These are furnished the
suppliers. We agree with the court below that the infor-
mation, measurements, designs, and material specifications
contained on these blueprints or drawings and used in the
manufacturing process qualify as a trade secret in view of
the fact they were kept confidential. We have thus an-
swered our first question—plaintiffs .were possessed of a
trade secret.

We arrive at the final question of use by defendants,
which like our first query, has two points. Were the blue-
prints copied or memorized, and if so, did defendants
utilize such knowledge in producing a competitive product.
First off, let it be said that the question of means, whether
copied or memorized, is immaterial to a proper conclusion

9

OG Appendia A

as distinguished from irrelevant. Ejther is a taking. In
logic why should plaintiffs be enti to less protection if
their gecret was memorized rathef than copied? The ques-
tion answers itself. Copying has obvious advantages since
memory does play tricks, but if enough is remembered it
will certainly do. In this voluminous record there is ample
evidence of copying, very good evidence indeed, and there
is even better evidence, almost aul agreement, that defend-
ants did memorize the salient details. There is likewise sub-
stantial evidence that they drew on both in making up
their blueprints and that such were used by them in the
same manner as plaintiffs used them. This is enough for
injunctive relief. The court below, in: an excellent memo-
randum opinion, said this:

7g “By defendants’ own statement they carried away

. ftom plaintiffs’ mental pictures of the plaintiffs’ draw-
/ ings, and specifications, and from that mental picture
they reproduced it upon paper—an accurate copy of
the original. It was no more or less than a copy made
from the original. . . The human eye is but a photo-
graphic-lens, and the mind is the film. Through the
lens the object is exposed to the sensitive film, the
mind. .. . These mental pictures were obtained while
in plaintiffs’ employment, and to carry them away in

. this manner was a violation of a confidence reposed
in them by their employer, as if they had made copies

4 or photographs and carried them away.’’

, Nor does it make any difference that defendants need
not have taken the course they did in getting their business
going. The fact of the matter is, they did use plaintiffs’
secret and thus gained a distinct advantage. For defend-
ants to have manufactured an identical flasher minus plain-
tiffs’ secret would have been a laborious and expensive
process, There would have been need for a metallurgical
analysis, precise measuring, and doubtless after that, a \ a

Appendix : Be

period of trial and error. We quote from an analogous
situation in Tabor v. Hoffman, 118 NY 30, 23 NE -12,
involving molding patterns:

‘‘The pump consists of manly different pieces, the.
most of which are made by running melted brass or
iron in a mold. The mold is formed by the use of
patterns, which exceed in number the separate parts
of the pump, as some of them are divided into several
sections. ... The size of the patterns cannot be dis-
covered by merely using the different sections of the

‘ pump, but various changes must be made and those
changes can only be ascertained by a series of experi-
ments, involving the expenditure of both time and
money. Are not the size and shapes of the patterns,
therefore, a secret which the plaintiff has not published

« and in which he still has exclusive property? Can it
be truthfully said that this secret can be learned from
the pump when experiments must be added to what can
be learned from the pump before a pattern of the
proper size can be made? As more could be learned
by measuring the patterns, than could be learned by
measuring the component parts of the pump, was there
not a secret that belonged to the discoverer until he
abandoned it by publication, or it was fairly discovered
by ancther?’’

The lugubrious chore of duplicating ii part from a an
was sys by defendants with copies of plaintiffs’
blueprints in hand. That defendants could have traveled
a legal route, is beside the point. They chose a short cut
and in doing so are accountable in equity. Franke v.
Wiltschek, 209 F. 2d 493, 495, noted above, is apropos:

‘‘Defendants argue ‘that the heart of plaintiffs’
process was revealed by an expired patent, and that
the improvements thereon were unpatentable applica-
tions of mechanical skill. This totally misconceives the |
nature of plaintiffs’ right. Plaintiffs do not assert, in-
deed canhot assert, » property right in their develop-

Dao

a

8 | Appendin

ment such as would entitle them to exclusive enjoyment
against the world._ Theirs is not a patent,but a trade
secret. The essence of their action is not infringement,
but breach of faith. It matters not that defendants
could have gained their knowledge from a study of the
lred patent and plaintiffs’ publicly marketed prod-
ct. The fact is that they did not. Instead they gained
it from plaintiffs’ via their confidential relationship,
and in so doing incurred a duty not to use it to plain-
tiffs’ detriment. This duty they have breached.

| And again in Vitrp Corporation of Americe-v. Hall Chemi-

cal Co., 254 F. 2d 787, at page 793:

‘‘The fact that Hall’s trade secrets could have been

' discovered just as he discovered them, by extensive and

painstaking experimentation, which led from known
factors to an ascertainable result, does not destroy the
value of the discovery“nor eliminate the liability of
Vitro.’’

The short cut used by’defendants enabled them to com-
pete with plaintiffs on equal terms by sparing them the
necessity of spending time and money in acquiring the
‘‘know-how’’. Competition is a desideratum in our eco-
nomic system, but it ceases to serve an economic good when
it becomes unfair. The concept of fair play should not be.
shunted aside on the theory that competition i in any form
serves the general good. Only fair competition does that.
Unfair competition is not competition at all in the truest
sense of the word. We see no good purpose in condoning
defendants’ conduct by lifting the injunction. If defendants
are now out of business they can only blame themselves.
They were not born that way but got that way on their
own, It may be that in getting there, they did not know
of the consequences, of the duty equity would impose on
them, but this is a mistake of law. Defendants’ action,
therefore, cannot be excused, nor can it be condoned, as we
have said. We therefore hold that the use by defendants

Appendia — ug
of plaintiffs’ trade secret, whether copied or memorized,
made known only to them as employees in the furtherance
of plaintiffs’ business may not now be used by them in a
competing business of their own.

The injunction is indeed drastic, but they always are.
We do not see how we can make it any less sweeping
and yet give to plaintiffs their just due. The order
appealed from is accordingly affirmed. |

AFFIRMED. i
Crow, P. J. and Spivey, J. concur.

1 On September 15, 1964, the Petition for Lenie to
: Appeal was filed in the Illinois Supreme Court on be-
half of Signatrol, Inc., a corporation, John W. Sutphin,
Willard KE. Bachman, Joseph E. McNamara and Wen-

- del R. Walker, defendants-petitioners.
2 Following are excerpts from defendants-petitioners’
Petition for Leave to Appeal referring to the substan-

tial federal questions in this lawsuit: :

2.*4 The Trial Court’s Decree and its Affirmance by the

Appellate Court Violate the Constitution and Pat-

ent Laws of the. United States.

The decree in this case is not limited to depriving
the defendants of the right to use plans allegedly
@opied (which is denied) but enjoins them forever,
without limit in time or geographical area, from doing

- the following:

(a) The sale, manufacture or ‘production of any flash-

er or timer or any of the component parts of any
_ flasher or timer, machine or-device canara Seny sim-

*The decimal refers to the internal ‘shied of. the
Petition -_ Leave to Appeal.

—

¢

‘10

2.5

Appendia

ilar to the Signatrol Model No. 30 (Abst. 28). As
the Signatrol. Model No. 30 is substantially similar
to both TOM [plaintiff Time-O-Matic] Model No. 3
and the competitive McMahon flasher, and is neces-
sarily similar to any flasher. that can be sold to fit
standardized sign brackets, it is obvious that if this
decree stands the defendant Sutphin, for example, can
never again engage in the only business in which he is
trained and qualified.

(b) Paragraph B-2 of the Decree (Abst. 28) goes

one step further and enjoins the defendants from ever
selling, manufacturing or producing a flasher or timer
using the same principle or principles employed or
used in the Signatrol Model No. 30 or TOM Model No.
3. It is undisputed that the only principle involved in
these flashers is the mere opening and closing of an
electric switch actuated by an electric motor which is‘a
basic principle which has been used for many decades
in the electrical industry, almost since the use of elec-

tricity became common. Yet these defendants are en-—

joined by-the decree forever and perpetually from even
selling a device operating on this principle, namely,
that of the opening and closing of an electric switch

by an electric motor.

(c) Paragraph B-3 of the decree (Abst. 28-30) en-
joins the defendants from the sale, manufacture or
production of flashers which possess and use any parts
which are substantially the same as parts represented
by a series of 36 drawings and blueprints listed in the
decree. This portion of the injunction enjoins not the
use of the plans and blueprints but the manufacture,

sale and production of any parts similar to those »

shown in the drawings and blueprints offered in evi-

a

a

Appendix ct

dence by the plaintiffs. This bars the defendants from
even acting as salesmen or dealing in of flashers
for other companies. |
(d) Provision B-4 of the decree (Abst. 30) enjoins
the defendants from use of plaintiffs’ plans, drawings
and sketches and of any information contained thereon
or therein. However, this paragraph also goes further
and deprives the defendants of use of ‘‘like drawings,

_. plans or sketches for any purpose’’ and any informa-

2.6

tion contained thereon or therein. This proyision is
not limited to plaintiff’s plans and sketches “but. it is
so broad as to prohibit the defendants from submit-
ting plaintiff’s unpatented devices to a‘completely ii- |
dependent engineering firm who had no previous con-
nection or knowledge or association of any kind with
the plaintiffs and thereby independently securing.
plans, sketches and drawings. Such drawings inde-
pendently prepared fall within the bar of the decree
because they would in describing plaintiff’s unpatented

~ devices of necessity be “‘like’’ the drawings, plans and

sketches from which the plaintiff assembles the un-
patented..devices. ; ‘

(e) Paragraph B-5 of the decree (Abst. 30-31) bars
the defendants from using any information the defend-
ants’ obtained in confidence while employees of the

-plaintiff. The decree does not specify what information

_is confidential, what information is not confidential and

what information tlie defendants had prior to their
employment by the plaintiff. It is so vague and in-

_ definite as te be clearly erroneous.

This decree clearly violates Section 8 of Article I of
the Constitution of the United States, the patent clause,
which states that ‘‘The Congress shall have power

Appendia

** * To promote thé Progress of Science and Useful
Arts, by securing for limited Times to Authors and

- Inventors the exclusive Right to their respective Writ-

ings and Discoveries’’.

‘The decree therefore, also violates the supremacy
clause providing in part:

‘‘This Constitution, and the Laws of the United

States which shall be made in Pursuance thereof

* * * shall be the supreme law of the Land; and the

Judges in every State shall be bound thereby, any

Thing in the Constitution or Laws of any State to
the Contrary notwithstanding.’’

The Supreme Court of the United States has held
that no State may by laws dealing with unfair com-
petition: (which is precisely the ground asserted by the
plaintiffs here) enjoin, or impose damages, for the

‘manufacture and sale of unpatented articles. We sub-

mit that this holding puts an end to the present case.

On March 9, 1964, the United States Supreme Court
decided two companion cases involving the Illinois
law of unfair competition as it relates-to the copying
of another’s products. Sears, Roebuck & Co. v. Stiffel,
376 U.S. 225, is the first of these cases. Stiffel had
perfected a pole lamp which stretched between the
floor and the ceiling of the room to which pole three
lamps with swivel brackets were connected. Stiffel
was very successful in selling this lamp on the market ~
and. thereafter Sears manufactured a substantially
identical lamp which was sold in competition with
Stiffel.. Stiffel had obtained a patent on its pole

- lamp prior to putting the same on the market. Stiffel

then brought suit against Sears on the basis both

~ of patent infringement and unfair competition. Sears

4

° as

ev TN ee Ae eate Ae cee we net ne -

28

Apyendia na “18

answered that the-patents in the suit were invalid and

that Sears was not guilty of unfair competition. The °

district court decided that the patent was invalid but —
found that there was unfair competition by Sears in

selling an identical lamp in competition with Stiffel.

The Court of Appeals for the Seventh Circuit af-—

firmed the trial court’s judgment on the basis of unfair
competition. Stiffel Co. v. Sears, Roebuck & Co., 313
F.2d 115.

Upon certiorari to the gusiutis Court of the United
States the judgment of the Court of Appeals was re-
versed. Mr. Justice Black, speaking for a unanimous
court, summarized the basic issue of the case as follows
376 U.S. at p. 225): 3

‘‘The question in this case is whether a State’s

unfair competition law can, consistently with the .

federal patent laws, impose liability for or pro-

hibit the copying of an article which is protected ©

by neither a federal patent nor a copyright.’’

The opinion then reviewed in detail the history of
the federal patent laws and the constitutional provi-
sions concerning patents and then said (pp. 230-232) :

‘‘Thus the patent system is one in which uni-
form federal standards are carefully used to pro-
mote invention [231] while at the same time pre-
serving free competition.” Obviously a State could

not, consistently with the Supremacy Clause of |

the Constitution,® extend the life of a patent be-

purpose of Congress to have national uniformity
d copyright laws can be inferred from such
which vests exclusive jurisdiction to hear

yright cases in federal courts, 28 U.S.C.
ind that section of the Copyright Act which

§ 1338(a),

expressly saves state protection of unpublished writings but —

does.not include published writings, 17 U.S.C. § 2.
“U.S. Const., Art. vi.” :

‘14

2.9

Appendia a

yond its expiration date or give a patent on an
article which lacked the level of invention required
for federal patents. To do either would run coun-
ter to the policy of Congress of granting patents
only to true inventions, and then only for a lim-
ited time. Just as a State cannot encroach upon
the federal patent laws directly, it cannot, under
some other law, such as that forbidding unfair
competition, give protection of a kind that clashes

with the objectives of the federal patent laws.

‘*In the present case the ‘pole lamp’ sold by
Stiffel has been held not to be entitled to the pro-
tection of either a mechanical or a design patent.
An unpatentable article, like an article on which
the patent has expired, is in the public domain
and may be made and sold by whoever chooses
to do so. What Sears did was to copy Stiffel’s
design and to sell lamps almost identical to those
sold by Stiffel. This it had every right to do un-
der the federal patent laws. That Stiffel orig-.
inated the pole lamp and made it popular is im-
material. ‘Sharing in the goodwill of an article
unprotected by patent or trade-mark is the exer-
cise of aright possessed by all—and in the free
exercise of which the consuming public is deeply
interested.’ Kellogg Co. v. .National Biscuit Co.,

<~""supra, 305 US. at 122.. To allow a State by use

of its law of unfair competition to prevent the
copying of an article which represents too slight
an advance to be patented would be [232] to per-
mit the State to block off from the public some-
thing wHich federal law has said belongs to the
public. The result would ‘be that while federal
law grants only 14 or\17'years’ protection to gen-
uine inventions, see 35\U.S.C. §§ 154, 173, States
could allow perpetual protection to articles too
lacking in novelty to merit any patent at all under
federal constitutional standards. This would. be
too great an encroachment on the federal patent
system to be tolerated.’

pao (15

In concluding to reverse the judgment of the Court
of Appeals the Supreme Court stated (p. 232) that
doubtless a State may yequirg labelling to prevent
customers being misled as to the Source but added
(pp. 232-233) :

“But because of the federal patent laws a State
may not, when the article is unpatented and un-
copyrighted, prohibit the [233] copying of the ar-
ticle itself or award damages for such copying.
Cf. G. Ricordi & Co. v. Haendler, 194 F.2d 914,
916 (C.A. 2d Cir. 1952). The judgment below did
both and in so doing gave Stiffel the equivalent of
a patent monopoly on its unpatented lamp. That

’ was error, and Sears is entitled to a judgment“in
its favor.’

2.10 The other case dealing with the Illinois law of un-
fair competition decided by the Supreme Court on the
same day, March 9, 1964, was Compco. Corp. v. Day-
Brite Lighting, 376 U.S.°234. Compeo had copied a
fluorescent light fixture made and sold by Day-Brite.
This fixture contained a reflector having cross-ribs
which Day-Brite claimed gave both strength ‘and at-
tractiveness to the fixture. As in the Sears case, Day-
Brite sought relief on the grounds: ‘both of patent in-
fringement and ‘unfair competition. “ “ Day-Brite had
procured ‘a designed patent on the fixture which the
trial court held to be invalid. ®

The federal district court adjudged Compco guilty
of unfair competition under Illinois law in the sale of
its fixtures which the Supreme Court found to be, ‘‘the

_ same, to the eye of the ordinary observer, as the over-

all appearance of Day-Brite’s reflector, which em-
bodied the design of the invalidated patents.’? The
trial court ordered an accounting for dened s and ~
entered a permanent injunction. ;

Appendia

The Court of Appeals for the Seventh Circuit af-

firmed the district court’s finding of unfair competition
on the ground that there was substantial evidence in
the record to support the finding of likelihood of con-
fusion and that this finding was sufficient under IIli-
nois law to support the finding of unfair competition.

Reversing both courts below, the Supreme Court of

the United States unanimously held, per Mr. Justice
Black (376 U.S. at p. 235):

‘‘As in Sears, Roebuck & Co. v. stifel Co., 376
U.S. 225, the question here is whether the use of
sae unfair competition law to give relief against

copying of an unpatented industrial design con-
flicts with the federal patent laws.”

211 After discussing the evidence, the opinion of the
court stated” (PP: 237-238) :

°

‘‘Notwithstanding the thinness of the evidence to
support findings of likely and actual confusion
among purchasers, we do not find it necessary in
this case to determine whether there is ‘clear |
error’ in these findings. They, like those in Sears,
Roebuck & Co. v. Stiffel Co., supra; were based
wholly on the fact that selling’ ‘an article which is
an exact copy of another unpatented article is
likely to produce and did in this case produce con-

_ fusion as to the source of the article. Even ac-

cepting the findings, we hold that the order for an
accounting for damages and the injunction are in
conflict with. the federal patent laws. Today we
have held in Sears, Roebuck & Co. v. Stiffel Co., .
supra, that when an article is unprotected by a
patent or a copyright, state law may not forbid
others to copy that article. To forbid copying

would interfere with the federal policy, found in

Art. I, §8, cl. 8, of the Constitution and in the

aN implementing federal statutes, of .allowing free

: access to copy whatever the federal patent.and

Appendix a

copyright laws leave in the public domain. Here
Day-Brite’s fixture had been held not to be en-
titled to a design or mechanical patent. Under
the federal pat-[238]ent laws it i is, therefore, in the
public domain and can be copied in every detail by
whoever pleases.”’

The decree in the present case enjoins the copying
of plaintiff’s unpatented electric flashers which con-
cededly are in the public domain (Abst. 131, 345-346;
Appellate Court opinion, Appendix, p. 2). The decree
reserves the-right to assess damages against the de-
fendants (Abst. 31). The. decree is affirmed by the

» Appellate Court on the basis of the Illinois law of un-
fair competition (Appendix, pp. 3, 9). - The Supreme
Court of the United States has decided that no State
may rely upon such law to punish in damages or pro-
hibit the copying of an unpatented article. This Court
should therefore grant leave to appeal and 1 reverse the
decree of the trial court in toto. |

2.12 The Appellate Court Ruling Violates the Basic Right ° ,

Guaranteed to. Free Men to Pursue the Occupation
of Their Own Choosing. :

The Appellate Court erred in. affirming a dseree of
the trial court which enjoins the -individual defend-
ants from pursuing their chosen occupation by per-
petually enjoining these defendants from lawfglly
producing and selling an unpatented product which is
widely used and. distributed throughout the county.
The effect of this decision is that. it destroys the de-
fendants’ freedom to work and tends to reduce them
to,a-condition of industrial servitude and it deprives
these defendants of. the right to engage in a business -
' that is open to all other citizens of: this country.

Pl
vd

18 | Appendia -

2.13 Here the injunction is so broad that its effect is to.
bar defendants engaging in the flasher business open
to all persons, no matter how innocent and blameless
their future action may be.

The injunction entered by the Trial Court is not lim-
ited to prevent the improper use of plaintiff’s blue-
_ prints or alleged confidential information but is so
broad.and all-inclusive that it permanently (for the
lifetime of the deferidants) bars them from selling or
manufacturing a flasher or timer similar to the plain-
2.14 tiff’s unpatented’ fasher. The defendants are even
7 permanently enjoined from selling or making any of
the unpatented component parts of an unpatented .
flasher similar to the plaintiff’s even though many
of such parts are standard catalog items sold by sup-
pliers. Moreover, the defendants. are enjoined from
selling or manufacturing flashers or timers using the
same principle of operation as plaintiff’s flashers.

Bearing in mind that there are several flasher manu-
facturers selling flashers in the United States market,
all of which flashers operate on the same basic prin-
ciple, fit the same. sign brackets and, in fact, must
necessarily be similar to-even be saleable, it becomes
obvious that the injunction, in effect, excludes the de-
fendants from the flasher business for life. They not
only can never build and sell their own flasher but
can never again even act as salesmen for other flasher.
companies already established in the flasher business.
They cannot become salesmen or manufacturers of
parts for others in the flasher business if any of the
parts are similar to’ parts used in plaintiff’s ’s flasher
(as they must be to be saleable); |

; ‘ Appendia 9
Uuider the provisions of the décree the defendants
cannot even have a new flasher designed and/ built
for them by independent engineers who have never
known or had any contact with plaintiff’s business.
As flashers similar to plaintiff’s flasher are an ex-
-tremely simple, unpatented mechanical device, the ef-
. fect of the injunction is to prohibit forever the de-
fendants from engaging in lawful activities freely
available to all of the other one hundred ninety mil-
lion people in the United States. In other words*’the
injunction is so broad that no matter how legal, ethical
and blameless their future conduct might be, they
would be in violation of the broad provisions of this
2.15 injunction and subject to harassment and penalties at
the instance of the plaintiffs, their competitors.

2.21 The Appellate Court erred here in affirming the de-
cree which enjoins the individual defendants from pur-

- suing their chosen occupation inasmuch as the decree
has the effect of perpetually enjoining these defend-
ants from lawfully producing and selling a product
which is widely used throughout the country. The
effect of this decision is to destroy the defendants’
freedom to follow a lawful occupation and affécts not
‘only the individual defendants here involved but, if
this decision is applied in the future to other em-
2.22 ployees, it would have a profound effect upon the
entire economy of our State. If it is not reversed, all
persons hereafter will be fearful of leaving their
present employment because of the possibility that they
would be forever enjoined from ‘thereafter engaging

in the same business. If this decision. stands no
lawyer will be safe in advising an employee that he
may safely compete with his employer if he wishes to
produce a similar product, for no one can erase com-

$20

Appendia

pletely from his mind the sort of information which
the courts below have held to be trade secrets. A
more serious threat of monopoly can hardly be ima-

gined.

If employees of all well-run, profitable companies |

are prohibited from going into a competing business
unless they can erase from their memories all plans
and blueprints used therein there can be no element of
free enterprise in our economy. The judgment of
the Appellate Court is a serious threat to individual

‘freedom to compete and should be reversed.

2.43 The decree below is wrong because it grants a mon-

opoly on an unpatented article in violation of the fed-
eral constitution and patent laws enacted pursuant
thereto, because it reduces the defendants-to virtual
industrial servitude, and because it is based on a com-

2.44 pletely erroneous finding that the plaintiff’s plans

12

13

14

and blueprints alleged to have been remembered or
copied by defendants were trade secrets.

.On January 15, 1965, Oral Argument for. the de-
fendants-petitioners and plaintiffs - a cama was
made. : !

On March 18, 1965, the following opinion of. the
Supreme Court.of Illinois was filed. a

Docket No. 38849—Agenda 19—January, 1965
Edward J. Schulenburg; et al., Appellees, v. Signatrol,
Inc., et al., Appellants. |

Mr. Justice Sotrissure delivered the opinion of the
court: ;

9

j

(

j.

he

LE

(\ — Appendia 1
This case involves the questions of trade secrets,
unfair competition and injunctive relief. Plaintiff E-S .
Industries, Inc., successor to Time-O-Matic,-manufac-
tured and sold certain devices commonly called flashers
-and used primarily in the sign industry to cause lights .
to flash in suchya manner as to animate the sign in
various patterns or designs. The individual defend-
ants were all former employees of said plajntiff who
eft to form their own competing company to manufac-
_ture and sell flashers. Plaintiffs filed suit against the
defendants charging unfair oman by violation of
a trade secret and requesting injunctive relief and
\ damages. The trial court found the jésues fdr the
laintiffs and issued an injunction resfraining the de-
endants from the further manufacture and sale of
competing flashers. © * The question of damages was
postponed pending appeal. The Appellate Court af-
firmed (50 Ill. App. 2d 402), and we granted leave
to appeal.

In 1932 the plaintiff Edward J. Schulenburg, Sr.,
went to.work for Sangamo Elegtric Company at
Springfield, Illinois, as head of its flasher and timer
division and held that position until 1945 when he
purchased all of the-assets of the flasher and timer
division for the sum of $2,718. 61. He moved the oper-
ation to Danville, Ilinois; under the name of Time-
O-Matic Company. Defendant J. W. Sutphin had been

an employee of Sangamo-.and when he returned from
military service in- 1945 he was employed by Time-O-
Matic. Sutphin continued in the employ of Time-O- »

Matic to January, 1959 when he and the plaintiff Schu-
lenburg had a disagreement of policy concerning the
operation of the company and he resigned. Signatrol,
Inc. was organized by defendant Sutphin in March,
1959, to manufacture and sell flashers.

15

- , Appendia

The defendant Bachman had been employed by Time- -
O-Matic since 1947, designing special equipment and
assisting in sales work. Bachman left ‘Time-O-Matic
in the middle of March, 1959, after a disagreement with
Schulenburg and joined ‘the new corporation with
Sutphin. The defendants McNamara and Walker had
also been employees of Time-O-Matic for several years,
McNamara as purchasing agent and Walker in the
engineering department. Both of them asked Sutphin
whether they could join his organization and in April,
1959, McNamara left Time-O-Matic and joined Signa-
trol as its purchasing agent and the following June,
Walker also joined Signatrol.

The flashers produced by the plaintiffs are not pat-
ented nor is there any contention that the flasher itself
or the method of assembling the flasher is a trade

* secret. Indeed, neither the plaintiffs nor defendants

are true manufacturers but actually buy the motors,

- gears, side plates, switches and other parts which they

assemble. Many of these parts are regular catalogue
items furnished by suppliers and can be ordered by
anyone. For that matter, anyone may legally duplicate
the plaintiffs’ product and go into business in com-
petition with the plaintiffs in the manufacture and sale
of, electric flashers. The Supreme Court of the, United
States has held‘ that no State may, by laws dealing
with unfair competition, impose damages or enjoin
the copying, manufacturing and sale of an article which
is protected by neither a Federal patent nor a copy-
right. Sears, Roebuck & Co..v. Stiffel, 376 U.S. 225,
11 L. ed. 2d 661; Compco Corp. v. Day-Brite —*
376 U.S. 234, 11 L. ed. 2d 669.
spa

16

-- Appendia : 123

Plaintiffs allege, however, that their manufacturing
‘‘know-how’’ is a trade secret which was imparted in
confidence to defendants while employees and that such
secret has been used by them in manufacturing a com-

, peting product. Defendants deny utilization by them of

any such secret, in fact they deny its very existence.
The trial and Appellate courts held that the informa-
tion, measurements, designs and material specifications

. contained on plaintiffs’ blueprints or drawings and

used in the manufacturing process qualified as a trade
secret. They further found that defendants copied or
memorized the information contained on these blue-

' prints and drew on such knowledge in making up their

own blueprints to be used in the manufacture of their
product.

The three issues anata by this appeal are (1)

: Was there a trade secret? (2) Did the defendants

violate a trade secret? and (3) Was the injunctive re-
lief appropriate? |
_ The trial and ‘Appellate courts concluded that the

manufacturing ‘‘know-how’’ contained on the plain-
tiffs’ blueprints: or drawings were trade secrets in

view of the fact that they were kept confidential and oe

that plaintiffs considered such as a secret and at-
tempted reasonably to keep it so. In this connection,
it must be pointed out that the blueprints were cus-
tomarily submitted to several suppliers by the plain-
tiffs in order to secure the most favorable bids for the
manufacture of parts; no effort was made by the com-
pany to keep the information on such plans and blue-
prints secret; the suppliers were néver advised that
the plans contained any secret information; they were

never requested to keep the information on the plans '

secret; and the plaintiffs never requested a return of

2

24

Appendia

, the blueprints and plans from suppliers to whom they

were sent. The electrical principle involved is well
known and plaintiffs’ unpatentable product is for sale
and anyone can buy it. Anyone reasonably skilled
in the art, could, without difficulty, duplicate plaintiffs’
flasher from an examination of the flasher itself and
lawfully engage in a competing business.

_ In order to constitute a trade secret which will be
protected ‘by injunction there must be a plan, process,
tool, machine or compound known only to the owner
and those employees to whom it is necessary to confide
in secret. Therefore, a, process commonly known in
the trade is not a trade secret entitled to injunctive
protection, and matters which are generally known. in
the trade or readily discernible by those in the trade
cannot be made secret by being sd labeled. (Victor
Chemical Works v. Iliff, 299 Til. 532; Sarkes Tarzain,
Inc. v. Audio Devices, Inc., 166 F.Supp. 250, 265 (D.
Cal. 1958), aff’d 283 F.2d 695 (9th Cir. 1960), cert.
denied 365 U.S. 869, 5 L. ed. 2d 859.) Here there is
ample evidence in the record to show that the informa-
tion conveyed to defendants was of such a nature that

it was generally known imthe trade. In addition, none -

of the employees were ever told that the plans were
secret or confidential, no secrecy agreement was ever
required of any employee and no employee was re-
quired to enter into 4ny restrictive covenant not to
engage in any competitive business with plaintiff.

The Restatement of Torts contains a comprehensive
treatment of the principles concerning liability for dis- —
closure or use of others’ trade secrets. In section 757
of the Restatement ‘of Torts under comment b it is
stated as follows:

17

Appendia | (25

5 “‘ Definition of a trade secret. 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.

‘* * bi
“Secrecy. The subject matter of a trade secret must
be secret. Matters of public. knowledge or of: general
knowledge in an industry cannot be appropriated by
one as his secret. Matters which are completely dis-
closed: by the goods which one ares cannot be his

secret. ”

Defendants are accused of copying or memorizing ,

| necessary information and using it ‘in their mana
. facturing process in competition with their former em-
' ployers. The Appellate Court quoted, with approval,

‘the memorandum opinion of ‘the trial court which

states: ‘‘By defendants’ own statement they carried
away from plaintiffs mental pictures of the plaintiffs’

drawings, and specifications, and from that mental pic-
ture they reproduced it upon paper—an accurate copy

of the original. -It was no more or less than a copy

made from the original. * * * The human eye is but a

7 photographic ‘lens, and the mind is the film. Through

the lens the object is exposed to the sensitive film, the
mind. * * * These mental pictures were obtained while
in plaintiffs’ employment, and to carry them away in
this manner was a violation of a confidence reposed
in them by their employer, as if they had made copies
or photographs and carried them away.’’

The law is well settled that an employee, upon termi-

_ nating his employment, may carry away and use the

general skill or knowledge acquired during the course
of the employment. ‘‘[E]quity has no power to compel ~~

| Appendia

a@ man who. changes employers to wipe clean the slate
of his memory.’” (American Cleaners and Dyers v.
Foreman, 252 Ill. App. 122; Peerless Pattern Co. v.

‘Pictorial Review Co., 147 App. Div. 715, 132 N.Y.S.

-37, 39. ) In American Cleaners and Dyers v. Foreman,

'.- 252 Ill. App. 122, the court reversed an injunction

18

against defendants who were former route drivers for
a laundry and dry cleaning firm who went to work
for a competing laundry and solicited their old custo-
mers’ whose names and addresses they had remem-
bered. :

‘A 1958 federal case, Sarkes Tarzain, Inc. v. Audio
Devices, 166 F. Supp. 250, contains an excellent state-
‘ment of the information which an employee has the
right to carry away and use in competition with his
former employer: .

“‘Of necessity, whenever ‘a change of employment of
this type occurs and former employees entér into. the
employ of another with whom they engage in a com-
petitive business, it is inevitable that some of the
knowledge acquired while ia the employ of the other
should be made available to the new employer. But,
as already appears, the courts.will not deprive the
employee of the right to use the skill he developed
through the years.

a * _ *

‘‘So there is aireement among the courts that, ex-
cept, where real trade secrets are involved, an em-
ployee may compete with his former employer and
with such knowledge and skill as he has developed in
the former’s employ.”’

The only permissible restriction affording injunctive
relief in this case is the unlawful violation of a definite

-——=

18

_ Appendia Vy. “OT

trade secret. The plaintiff’s blueprinted ‘‘know-how’’
does not qualify under the circumstances as a trade
secret. Therefore the defendants could not have been
guilty of unfair competition, for the plaintiff’s claim

_of trade secret does not meet the qualifications of the

law.

Since we have held that defendants are not guilty of
wrongfully using a trade secret, we need not pass upon
the scope of the injunction. However, we feel it fitting
to note that the injunction.granted is unlimited either
as to time or geographic area. It amounts to a per-
petual injunction from engaging in the electric flasher
business and affords more relief than even a patent or
restrictive covenant could have afforded under the law.
Such an injunction even in an appropriate case would

_ be far too broad.

For the reasons stated, the judgment of the Appel-
late Court is reversed, and the cause is remanded to
the trial court, with directions to dismiss the complaint.

Reversed and Remanded, with directions.

Dissenting Opinion of Justice Underwood filed upon
denial of Petition for Rehearing May 19, 1965 (Justice
Schaefer joins in the dissent).

-Mr. J USTICE UnvErwoop, dissenting:

tionships, metallurgical qualities and other specifica- |
tions of plaintiffs’ products contained in various blue-
prints, plans and drawings do not constitute trade
secrets and are not-entitled to protection as such is a
holding with which I cannot agree.

That the tli tolerances, positions and rela-

ya

ae

23 ee . .., Appendia

The controlling definition of a trade secret in Illinois

is supplied’ by Victor ‘Chemical Works v. Iliff, 299 Tl.
. 932, 540, where this court said that it is ‘‘[A] secret
plan or process, tool, mechanism or compound known
only to its owner ‘and those of his employees to whom
=x, it is necessary to confide it.’? (Emphasis added.) The
initial requirement that the plan, too, etc., be regarded
as a secret has been found to exist by both the trial
and appellate courts herein. There is ample evidence
‘in the record to support these findings, and they should
not be disturbed here. Hence, the only question pre-
_ sented to this court is whether, notwithstanding the
19 Tact that the parties treated the information contained
in the blueprints as containing confidential material,

it nevertheless does not amount to a trade secret.

In Smith v. Dravo Corp., 203 F. 2d 369, 7th Cir. 1953,
decided under the law of Pennsylvania and relied upon
by both the trial and appellate courts herein, it was
held that information contained in blueprints and pat-
terns did qualify as a trade secret, even though the
finished product was on the market (and could, as
plaintiffs concede here, be copied by legal means), and
literature had been distributed to the industry par-
tially disclosing the product’s design. The reasoning
of that opinion is, in my judgment, most persuasive
here. .

The majority cite Sears, Roebuck & Co. v. Stiffel, 376
U.S. 225, 11 L. ed. 2d 661, 84 S. Ct. 784, and Compco
Corp. v. Day-Brite Lighting, 376 U.S. 234; 11 L. ed. 2d

669, 84 S. Ct. 779, for the proposition ‘‘that no state
may, by laws dealing with unfair competition, impose
damages or enjoin the copying, manufacturing and sale
of an article which is protected by neither a Federal
patent nor a copyright.’’ In a proper case, I would

%
\

S

20

Appendix : 29

have no trouble with this statement. However, reading
of Sears and Compco clearly indicates that they are
inapposite here. There, the defendants had copied the
plaintiffs’ unpatentable products by legal means. No
problem concerning trade secrets was present. Plain-
tiffs here readily concede that their finished products
may be copied by legal means, (such as acquiring one
of the finished products and measuring and analyzing
it, until a copy can be produced), but maintain that
employees in positions of confidence may not sur-
reptitiously copy plaintiffs’-blueprints while in their
employ and subsequently use them to establish a com-
peting business. Sears has in fact been distinguished
on this very basis, .in Servo Corporation of America
v. General Electric Co. (4th Cir., 1964), 337 F.2d 716.
It was there held that one could not take. advantage
of a confidential relationship and pirate another’s trade
secrets without responding in damages—even though
the finished product was unpatentable and could be
copied by legal means.

A holding that the confidential information contained
in these blueprints does not constitute a trade secret
is, I believe, incompatible with the practical problems
inherent in attempting to copy a product from exami-
nation of the product itself. The measurements, toler-
ances, quality of material, efc., cannot ordinarily be
discovered by these means without expensive and time-
consuming analyses. Plaintiffs have gone through this
process by trial and error and have preserved the in-
formation thus acquired in ‘working drawings and
blueprints. Defendants, however, have chosen to cap-
italize upon their positions of trust—to clandestinely
acquire the blueprints and reproduce them exactly.

e

Appendiza

(There is evidence in the record indicating that when
some of defendant’s drawings are superimposed over
plaintiffs’ corresponding one, they match exactly—
even to the positioning of_the lettering thereon. Bet-
ter evidence of copying would be hard to obtain. In
fact, defendants have even copied some of plaintiffs’
mistakes. )

It is clear that an employee may take with him, at
the termination of his employment, general skills and
knowledge acquired during his tenure with the former
employer. It is equally clear that the same employee
may not take with him confidential particularized plans
or processes developed by his employer and disclosed
to him while the employer-employee relationship ex-
ists, which are unknown to others-in the indust
which give the employer advantage over his com-
petitors. The facts and circumstances in a particular
case sometimes necessitate the drawing of a fine line of
distinction in determining which rule should properly
apply. Suffice it to say here that, in my judgment,
the facts and circumstances indicated herein fall well
within the contemplation of the latter rule.

It should, moreover, make no difference whether the
information contained in the blueprints, if it qualifies »
as a trade secret (which in my judgment it does), has —
been pilfered by tracing the blueprints themselves (as
some testimony herein indicates or has been memo-
rized by someone with a photographic memory, or has
been committed to memory by constant exposure to
the prints while in the employ of plaintiffs. This
record is replete with evidence leading to but one con-
_ clusion, #.¢., that these defendants have surreptitiously
taken the particularized information contained in

21

re)

Appendix ae

plaintiff’s blueprints and have employed it to establish .
a competing business. Even today’s ‘‘morals of the
market place’? are more demanding than this, and
should not be relaxed by this court, I would affirm the
judgments of the trial and appellate courts on the
trade secret question. .

The bothersome aspect of the trial and appellate
court decisions is the scope of the injunction that has
been issued. It does not restrict its application as
to time or geographical area. Defendants have, in
effect, been put out of business for all time, everywhere.
This is ¢learly not necessary to make plaintiffs whole
as it is conceded by them that their products may
legally be copied by competitors. Since defendants
might have reproduced plaintiffs’ flasher in this fash-
ion, \it is difficult to justify prohibition of such repro-
duction for a period of time longer than that required
to duplicate the product by lawful means. The rec-
ord contains no indication of the time so required, but
such fact should be readily ascertainable since a Min-
nesota firm did legally copy plaintiffs’ product. I
would accordingly deem it appropriate to modify the
injunction so as to limit its duration to the period
of time reasonably required for plaintiffs to legally
produce such copies, and remand the cause for a deter-
mination thereof, as well as the question of damages
reserved by the trial court for future consideration.
If the evidence established that the period of time re-
quired for reproduction of the flasher by lawful means,
computed from the date defendants first commenced
production, has now expired, the injunction order
should be vacated. |

32

or

S Appendia

_ I would, therefore, affirm the trial and appellate
courts’ determinations on the trade secret issue and
remand for a consideration of the questions as to dam-
ages and modification of the injunction.

22-28 On April 1, 1965, there was filed in the Illinois

Supreme Court’ a motion of Lllinois Manufacturer’s
Association for leave to file a brief as amicus curiae
with regard to the plaintiffs-respondents’ petition for

rehearing and an order entered by Mr. Justice Waltey«

V. Schaefer granting Illinois Manufacturers’ Associa-
tion leave to file its brief as amicus curiae.

29-30 On April 1, 1965 the brief of the Illinois Manufac-

turers’ Association as amicus curiae was filed in the
Illinois Supreme Court.

31-32 On April 2, 1965 the petition for rehearing of the

33

plaintiffs-respondents was filed in the Illinois Supreme
Court. oo

On May 19, 1965 the Illinois Supreme Court denied
the plaintiffs-resporidents’ petition for rehearing in
this cause.

On May 20, 1965 the Illinois Supreme Court on its -
own motion vacated the order denying the plaintiffs-
respondents’ petition for rehearing and allowed the
petition for rehearing.

35-36 On June 4, 1965 defendants-petitioners filed with

the Illinois Supreme Court an answer to plaintiffs-
respondents’ petition for rehearing.

37-38 On June 9, 1965 plaintiffs-respondents filed in the

Illinois Supreme Court a reply to the defendants-peti-
tioners’ answer.

39

Appendia ‘33

On sleptinaes 28, 1965’ the Illinois Supreme Court

_ filed the following opinion:

Docket No. 38849—Agenda 28—May, 1965. /

Kdward J. Schulenburg et al., Appellees, v. Signatrol,
Inc., et al., Appellants.

Mr. Justice Soirispure delivered the opinion of the
court:

This case involves the questions of trade secrets,

unfair competition and injunctive relief. Plaintiff ES .

Industries, Inc., successor td Time-O-Matic, manufac-
tured and sold certain devices commonly called flash-
ers and used primarily in the sign industry to cause
lights to flash in such a manner as to animate the
sign in various patterns or designs. The individual
defendants were all former employees of said plain-
tiff who left to form their own competing company
to manufacture and sell flashers. Plaintiffs filed suit
against the defendants charging unfair competition

by violation of a trade secret and requesting injunc-

tive relief and damages. The trial court found the
issues for the plaintiffs and issued an injunction re-
straining the defendants from the further manufacture
and sale of competing flashers. The question of dam-
ages was postponed pending appeal. Thé appellate
court affirmed (50 Ill. App. 2d 402), and we granted
leave to appeal.

In 1932.the plaintiff Hdward J. Schulenburg, Sr.,
went to wom for Sangamo Electric Company at
Springfield, Illinois, as head of its flasher and timer
division and held that position until 1945 when he pur-

chased all of the assets of the flasher and timer divi-

sion for ‘the sum of $2,718.61. However, this amount

=

41

Appendia:
is unimportant for since that time many blueprints,
plans, specifications and drawings have been revised
or added over the years by the plaintiff to perfect the
flasher. In fact, ‘there now are approximately 15,000
drawings of various types. He moved the opefation
to Danville, Illinois, under the name of Time-O/Matic
Company. Defendant J. W. Sutphin had been an em-

ployee of Sangamo and when he returned from mili-

tary service in 1945 he was employed by’ Time-O-Matic
until January, 1959, when he and the plaintiff Schu-
lenburg had a disagreement of policy concerning the
operation of the company and he resigned. Signatrol,
Inc. was organized by defendant Sutphin in March,
1959, to manufacture and sell flashers.

The defendant Bachman had been employed by Time-
O-Matic since 1947, designing special equipment and
assisting in sales work. Bachman left Time-O-Matic in

_ the middle of March, 1959, after a. disagreement with

Schulenburg and joined the new corporation with Sut-

phin. The defendants McNamara and Walker had.

also been employees of Time-O-Matic for several years,
McNamara as purchasing agent and Walker in the en-
gineering department. Both of them asked Sutphin
whether they could join his organization and in April,
1959, McNamara left Time-O-Matic and joined Signa-

‘trol as its purchasing agent and the following June,

Walker also joined Signatrol.

The flashers produced by the plaintiffs are not pat-
ented nor is there any contention that the flasher itself

or the method of assembling the flasher is a trade |

secret. Indeed, neither Phe plaintiffs nor defendants
are true manufacturers, but actually buy the motors,
gears, side plates, switches and other parts which they
assemble. Many of these parts are regular catalogue

om - | $35

items iene by suppliers and can be ordered by
anyone. For that matter, anyone may legally dupli-
cate the plaintiffs’ product and go into business in
competition with the plaintiffs in 1 the meneneNyer and
sale of electric flashers.

Plaintiffs allege, however, that their manufacturing
“know-how”? is.a trade secret which was imparted in ©
confidence to defendants while employees ‘and that
such secret has been used by them in manufacturing
a competing product. Defendants deny utilization by
them of any such secret, in fact they deny its very ex-
istence. The trial and appellate courts held that the
information, measurements, designs and material spe-
cifications contained on plaintiffs’ blueprints or draw-
ings and used in the manufacturing process qualified
as a trade secret. They further found that defend-
ants copied or memorized the information contained
on these blueprints and drew on such knowledge
in making up their own blueprints to be used in the
manufacture of their product.

The trial judge in his memorandum opinion stated
the issues involved in the following language:

‘‘Signatrol, Inc. was organized by the foregoing -de-
fendants in March 1959, and by the latter part of June,
1959, were (sic) engaged in the production of electric
flashers. Their product was to serve the same pur-
pose as plaintiff’s (sic) product, and was very similar
to the product of the plaintiffs. However, similarity of

‘products is not the controlling test which is deter-

minative of the issues in this case, but is a factor to
be considered. The question of infringement of pat-
ents.is not involved. The real question is whether
or not the individual defendants, or some of’ them,

42

ae

“Appendia

either . om copied or ‘reproduced Time-O-Matic
plans, drawings, prints, wee or carried away in

_ their minds information as to the same’ so that they~’

f

could reproduce them from their memory, provided .. .

further that such: information was:such as would be
classed as a ‘tradé ‘secret’.”? The determinative ques-
tion here is, how did the defendants go about repro-

ducing the plaintiffs’ flasher? Did they violate the

confidence reposed by their employer by appropriating,
in an unlawful manner, the trade secrets of the plain~
tiffs?

th,

The. trial ‘indies has woxvedily stated the ‘ein th. i

volved, and, of course, there is another issue in this ap-:: ~

peal, and that i is whether, the injunctive relief granted yi,

was appropriate.

The trial and the appellate courts concluded that the
manufaéturing ‘‘know-how”’ contained in the plain-
tiffs’ blueprints and drawings were trade secrets in
view of the fact that they were kept confidential and

-that plaintiffs considered such as secret and attempted

reasonably to keep it so. The memorandum opinion
of the trial judge is forty pages in length, contains
a detailed analysis of the evidence, makes certain find-
ings hereinafter mentioned, and contaitis a very com-
petent analysis of ‘most of. the cases in the United
States concerning trade secrets and the method where-

* by the use of such. trade secrets is acquired either

legally or illegally. The abstract of evidence is 240

pages in length, and it would unduly extend this “Opin-
ion to review in detail all the evidenge. Several of

-the more salient findings ,of the trial court are:

‘“‘The Defendants insist that they made their draw-
ings directly from the parts themselves. by measuring,

43

App 2ndia - - 37

é xcept ile they drew them from their memory of

Time-O-Matic’s drawings. However, their expert wit-
ness, Dale Beck, a skilled engineer, looked with con-
siderable askance (sic) upon the ability of any engin-

eer to make accurate drawings of many of the delicate

parts merely by measurements of the parts. This was

Z particularly true as to those parts where the measure-

ments were to a 10/1000 of an inch. And to come

up with the identical measurement, tolerances, ete.,.

as appear upon Time-O-Matic drawings were (sic)
almost. impossible.’’

“tian a marked similarity between the drawings
and sketches of Signatrol and those of ‘Time-O-Matic,
in other’ respects. The data is too often too alike to
be jus accidental. The placement of the data on the

. drawing is almost universally the same. ‘s

stthhe likenesses and similarities ocenr so often, with
such exactness, that it seems most unlikely that they
should so occur, if, as claimed by defendants all their
drawings were made from the torn down flasher parts,
and without reference to any drawings or sketches or
specifications of Time-O-Matic.’’

‘*Tt is to be i i that at no time did the Defend-
ants seek to produce a new and improved flasher.
They advanced no‘‘new novel’ improvements. a

‘ only sought to reproduce the identical basic flasher

of the Plaintiffs.’’

“From the diabtater of the Defendants’ own evi-

dence, their admissions, the very nature of their pro-

‘eedure in entering into this competing business, their

evasive attitude, one cannot but conclude that here
was a carefully’ designed scheme and plan to repro-

duce from their employer’s trade secrets, the product |

-—

41

38 Appendia

of their employer. This conclusion is emphasized by
Sutphin’s testimony that he anticipated he would be
sued. He had sought the advice of an attorney, then
anticipating a suit he preserved a large number of his
sketches. Why would he anticipate being sued, if he
only intended to copy the product from the product
itself, and did not intend to resort to the use of his
employer’s trade secrets?’’

‘* After hearing all the evidence, and having observed
the Defendants as witnesses, and their manner of tes-
tifying, this Court is convinced that this was a well
planned scheme upon the part of the Defendants. This
Court believes that the very nature of all the occur-
rences confirms the testimony of Mrs. Bachman rela-
tive to copying Plaintiffs’ plans, drawings and spe-
cifications in Bachman’s home. This Court also be-
lieves that, just as the defendants admit, they had
over the years actually memorized Plaintiffs’ plans
and drawings, and the information upon them; that
they actually, had a mental picture of these trade
secrets, was no\different than having a copy or picture
on paper. These mental pictures were obtained while
in Plaintiffs’ employment, and to carry them away in
this manner was a violation of a confidence reposed
in them by their employer, as if they had made copies
or photographs and carried them away. This was
not using the skill they had obtained, it was a question
of copying and carrying away the actual trade secrets
of Plaintiffs.’’

The trial judge also stated ‘‘it is of the very essence
of things to see to it that the stringent and clamorous
voice of self interest does not drown out the still,

44 small voice of duty and conscience.’’

Appendix “39

After having considered the entire record in the
trial court, including the transcript of the evidence,
and the trial judge’s opinion, we have determined,
as did the appellate court, that the evidence supported
the findings of the trial court.

. The controlling definition of a trade secret in Illinois
is supplied by Victor Chemical Works v. Iliff, 299 Tl.
532,540, where this court said that it is a secret plan
or process, tool, mechanism or compound known only
to its owner and those of his employees to whom it
is necessary to confide it. The initial requirement that
the plan, tool, etc., be regarded as a secret has been
found to exist by both the trial and appellate courts
herein. There is ample evidence in the record to sup-
port these findings, and they should not be disturbed
here. The more difficult question presented to this
court is whether notwithstanding the fact that the
parties treated the information contained in the blue-
prints as containing confidential material, it neverthe-
less does not amount to a trade secret.

In Smith v. Dravo Corp. 203 F.2d 369, 7th cir. 1953,
decided under the law of Pennsylvania and relied upon
by both the trial and appellate courts herein, it was
held that information contained in blueprints and
’ patterns did qualify as a trade secret, even though
the finished product was on the market (and could, as
plaintiffs: concede here, be copied by legal means), and
literature had been distributed to the industry par-
tially disclosing the product’sdesign. The reasoning
of that opinion is most persuasive here.

The defendants cite Sears, Roebuck & Co. v. Stiffel,

376 U.S. 225, 11 L. ed. 2d 661, 84 S. Ct. 784, and Comp-
co Corp. v. Day-Brite Lighting, 376 U.S. 234, 11 L. ed.

Appendia

2d 669, 84 S. Ct. 779, for the proposition ‘‘that no state
may, by laws dealing with unfair competition, impose
damages or enjoin the copying, manufacturing and
sale of an article which is protected by neither a Fed-
eral patent nor a copyright.’’ In a proper case, we
would concur with this statement. However, a read-
ing of Sears and Compco clearly indicates that they
are inapposite here. There, the defendants had copied
the plaintiffs’ unpatentable products by legal means.
No problem concerning trade secrets was men
Plaintiffs here readily concede that their finished prod-
ucts may be copied by legal means (such as acquiring
one of the finished products and measuring and analyz-
ing it, until a copy can be produced), but maintain that
employees in positions of confidence may not surrep-
titiously copy plaintiffs’ blueprints while in their em-
ploy and subsequently use them to establish a com- ’
peting business. Sears has in fact been distinguished
on this very basis, in Servo Corporation of America
v. General Electric Co. (4th cir., 1964,) 337 F. 2d 716.
It was there held that one could not take advantage
of a confidential relationship and pirate another’s
trade secrets without responding in damages—even
though the finished product was unpatentable and
could be copied by legal means. It is readily apparent
that the Sears and Compco cases do not cover a situa-
tion of industrial espionage by employees who plan to
organize a competing company and thereafter do that
very thing.

A holding that the confidential information contained
in the blueprints does not constitute a trade secret
would be incompatible with the practical problems
inherent in attempting to copy a product from exami-
nation of the product itself. The measurements, tol-

46

Appentix 41

erances, quality of material, efc., cannot ordinarily
be discovered by these means without expensive and
time-consuming analyses. Plaintiffs have gone through
this process by trial and error and have preserved the
information thus acquired in working drawings -and
blueprints. Defendants, however, have chosen to cap-
italize upon their positions of trust—to clandestinely
acquire the blueprints and reproduce them exactly.
There is evidence in the record indicating that when
some of defendant’s drawings are superimposed over
plaintiffs’ corresponding ones, they match exactly—
even to the lettering thereon. Better evidence of
copying would be hard to obtain. In fact, defendants
have even copied some of plaintiffs’ mistakes.

It is clear that an employee may take with him, at
the termination of his employment, general skills and
knowledge acquired during his tenure with the former
employer. It is equally clear that the same employee
may not take with him confidential particularized plans
or processes developed by his employer and disclosed
to him while the employer-employee relationship ex-
ists, which are unknown to others in the industry and
which give the employer advantage over his competi-
tors. The facts and circumstances in a particular case
sometimes necessitate the drawing of a fine line of
distinction in determining which rule should properly
apply. Suffice it to say that the facts and circum-
stances indicated herein fall well within the contem-
plation of the latter rule.

It should, moreover, make no difference whether the
information contained in the blueprints, if it qualified
as a trade secret (which in our judgment it does), has
been pilfered by tracing the blueprints themselves, as
some testimony herein indicates, or has been memo-

=~

42 Appendia

rized by someone with a photographic memory, or has
been committed to memory by ger wen exposure to
the prints while in the employ of] plaintiffs. This
record is replete with evidence leading to but one con-

- clusion: that these defendants ‘have surreptitiously
taken the particularized information contained in plain-
tiffs’ blueprints and have employed it to establish
a competing business. Even today’s ‘‘morals of the
market place’’ are more demanding than this, and
should not be relaxed by this court. The determinations
of the trial and appellate courts on the trade secret
question are affirmed.

The bothersome aspect of the trial and appellate
court decisions is the scope of the injunction that has
. been issued. It does not restrict ue application as
to time or geographical area. Defendants have, in
effect, been put out of business for all time, every-
where. This clearly is not necessary to make plaintiffs
whole as it is conceded by them that their products
may legally be copied by competitors. Since defend-
ants might have reproduced plaintiffs’ flasher in this
fashion, it is difficult to justify prohibition of such
reproduction for a period of time longer than that re-
quired to duplicate the product by lawful means. The
record contains no indication of the time so required,
but such fact should be readily ascertainable since a
Minnesota firm apparently did legally copy plaintiffs’
product. *[ Accordingly, we believe that the injunc-

* The language contained in the brackets was on November 18,
1965. substituted for the following language contained in the opinion
filed September 28, 1965: “Accordingly, we deem it appropriate
to modify the injunction so as to limit its duration to the period
of time reasonably required for defendants to legally produce

Appendia 43

tion should have been limited in duration to the period
of time reasonably required for defendants to legally
produce such copies. Since the original injunction
has been stayed pending the determination of this
appeal, we believe that justice will be served upon
remand by an order of the trial court ordering the
enforcement of the original injunction pending a
prompt determination of the period of time required
for the reproduction of the flashers by lawful means.
The injunction should then be modified to terminate
upon the expiration of such time period.]

The trial and appellate court determinations on the
trade secret issue are affirmed and the cause is re-
manded to the trial court with instructions to consider
the question of damages and modification of the in-
junction in accordance with the views expressed herein.

Affirmed in part and reversed in part and
remanded, with directions.

49-51 On October 2, 1965 a motion by the plaintiffs-re-
spondents was filed in the Illinois Supreme Court for
clarification of the opinion of the Supreme Court of
linois.

such copies, and remand the cause for a determination thereof,
as well as to consider the question of damages reserved by the
trial court for future consideration. If the evidence establishes that
the period of time required for reproduction of the flasher by lawful *
means, computed from the date defendants first commenced pro-
duction, has now expired, the injunction order should be vacated.”

The changed language contained in the brackets was incorporated
in the opinion after the plaintiffs filed on October 2, 1965 a motion
for clarification of opinion and the défendants filed an
the motion for clarification of opinion. This change wag made on
the .date the defendants’ petition for rehearing was deni
j

44 | Appendia

52-57 On October 13, 1965 an answer to the motion for
clarification of the opinion was filed in the Illinois
Supreme Court by the defendants-petitioners.

58-59 On October 13, 1965 the defendants-petitioners filed
in the Illinois Supreme Court a petition for rehearing
as follows:

~ 59.*1 The defendants in the above entitled cause, who are
appellants in this Court, respectfully petition the ©
Court to grant a rehearing ofthis case for the follow-
ing reasons:

59.2 1. The judgment of this Court violates the Con-
stitution and statutes of the United States. concerning
patent monopolies.

References:

Appellants’ Petition for Leave to Appeal, pp. 4-11;

Additional Brief of Appellants, pp. 8-14;

Appellants’ Answer to Appellees’ Petition for
Rehearing, pp. 10-12. 2

The latest opinion of this Court, the one filed Sep-
tember 28, 1965, recognizes that under the Constitu-
tion and patent statutes of the United States ‘‘no state
may, by laws dealing with unfair competition, impose
damages or enjoin the copying, manufacturing and
sale of an article which is protected by neither a Fed-
eral patent nor a copyright’? (Sears, Roebuck & Co.
v. Stiffel, 376 U.S. 225; Compco Corp. v. Day-Brite
Lighting, 376 U. S. 234) but the Court finds those
cases to be inapposite here because they do not in- .
volve a question of trade secrets. It is true that in
the cited cases the ground on which.unfair competition —

* The decimal refers to the internal pagination of the
- defendants-petitioners’ petition for rehearing.

Appendia £45

was based was a slavish imitation of unpatented ar-
ticles resulting in confusion. ~¥ source. Here the al-
leged ground of unfair compeftftion is that the defend-
ants violated trade secrets of the plaintiffs. The sweep-
ing language of the Supreme Court of the United
States makes no differentiation between the kind or
gradation of ‘‘unfair competition’’. which a state is
prohibited from using as a ground of disregard of the
Constitution and statutes the” United States relating -
to patent monopolies. Both the trial court and the
Appellate Court entered sweeping injunctions against
the defendants on the ground that the defendants
had been guilty of unfair competition. It is a little
late to reclassify the alleged wrongs committed by the |

59.3 defendants just in order to avoid the rights given to
the defendants by the Constitution and patent laws of
the United States freely to assemble and sell unpat-
ented flashers and timers in competition with the plain-
tiffs.

This Court now relies upon Servo Corporation of
America v. General Electric Co. (C.A. 4, 1964), 337
F.2d 716, which was first injected into the present case
by the brief of the Illinois Manufacturers Association
as indicating in the language of this Court’s opinion
‘‘that the Sears and Compco cases do not cover a sit-
uation of industrial espionage by employees who plan
to organize a competing company and thereafter do
that very thing.”’

_ Servo Corp. did not involve in any respect a con-
troversy between an employer and former employees,
and the present case does not involve, notwithstand-
ing the use of the loaded term in the brief of the
Illinois Manufacturers Association, any ‘*industrial

we oe:

46 Appendia

Plans which were freely shown to the defendants
while they were in-the employ of plaintiffs and which
were widely disseminated in the trade simply cannot
be the subject of. ‘‘industrial espionage’’ and it is a
play upon words—loaded words at that—to attempt
to differentiate the Sears and Compco cases on any
theory that industrial espionage is excluded from the
sweep of those cases and that the defendants are
guilty of industrial espionage here.

Since the only ground for refusing to Sait the
Sears and Compco cases to the present situation is
the claim that the defendants have stolen trade secrets
of the plaintiffs, we come back again to the proposi-
tion that drawings and specifications which were wide-

_ ly disseminated without any claim of secrecy cannot
© retroactively become trade secrets simply because an
employer who has a virtual monopoly of an industry
wishes to be freed of competition from former em-
ployees.

59.4 2. The drawings and specifications of the plaintiffs
in the instant case were freely circulated among em-
ployees, bidders and customers of the plaintiffs with- ’
out the imposition of any secrecy and this widespread
publication prevents the drawings and specifications
from being trade secrets. Y

References:

Appellants’ Petition for Leave to Appeal, pp. 22-
. 8;

Additional Brief of Appellants, pp. 20-31;

Appellants’ Answer to — — for Re-
hearing, pp. 3-8. |

~~

~~

&

59.5

( Appendix P47

In the then-unanimous opinion of this Court filed
March 18, 1965, which was prior to the receipt by this
Court of the inflammatory and uninhibited brief of the
Illixfois Manufacturers Association, this Court | _Cor-
rectly stated (pp. 2-3):

‘*The trial and Appellate courts concluded that
manufacturing ‘know-how’ contained on the.
plaintiffs’ blueprints or drawings were trade se-
crets in view of the fact that they were kept con-
fidential and that plaintiffs considered such as a
secret and attempted reasonably to keep it so. In
this connection, it must be pointed out that the -
blueprints were customarily submitted to several —
suppliers by the plaintiffs in order to secure the
most f

[Text truncated at 120,000 characters. The full text is on the page linked above.]

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_1241%3A1. Public record. Not legal advice.