# Petition for Writ of Certiorari — Cook Group, Inc. v. Wilson

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2000
- **Citation:** 529 U.S. 1082

## Text

Bupreme Court, U.S.

a. i oe
991248 Jan 25 2000
No. 99-
2 0 5 os ere oom wn omen ererene es eed =
IN THE
Supreme Court of the United States

COOK GROUP INCORPORATED, WILSON-COOK MEDICAL
INC., COOK INCORPORATED, VANCE PRODUCTS
INCORPORATED and SABIN CORPORATION,
Petitioners,
v.

JON S. WILSON and WILTEK MEDICAL, INC.,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

AARON J. KRAMER
Counsel of Record
RONALD WILDER
CATHERINE M. MASTERS
ROBERT UNIKEL
ScuiFF HARDIN & WAITE
Attorneys for Petitioners
6600 Sears Tower
Chicago, illinois 60606
(312) 258-5500

157455 @ Counsel! Press LLC
(800) 274-3321 + (800) 359-6859

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QUESTION PRESENTED

The “doctrine of equivalents” is an intellectual property
doctrine, holding that infringement of a protected idea occurs
when one modifies an element of the protected idea merely
by substituting an equivalent element inspired by the
protected original. The court below refused to apply the
doctrine of equivalents in analyzing whether the respondents,
who had previously been held to be willful and malicious
infringers of the petitioners’ trade secret rights and were
enjoined from further infringement, vioiated the injunction
when they substituted equivalent elements of the trade secrets
and continued to use them. In considering petitioners’ motion
for contempt of the injunction, did the court below err in
treating trade secrets differently from other intellectual
property and in refusing to apply the doctrine of equivalents?

il
STATEMENT PURSUANT TO RULE 29.6

Petitioner Cook Group, Incorporated is the parent

corporation of the other petitioners herein. Cook Group,
Incorporated has no parent corporation and there is no
publicly held company owning ten percent or more of any
of the petitioners’ stock.

ill

TABLE OF CONTENTS
Page
eee sli h ese waee secon 6s i
Statement Pursuant to Rule 29.6 ............... ll
ES Ee are Serre ill
pe | ere iV
PII, oa ecb auc cccecesbetcoetees Vill
RTE Sees eae a eae l
rere er are rer eee 3
Statutory Provision and Rule Involved .......... 3
EE as ase wine 6 dew 5.06 ob cnt anes 4
Reasons for Granting the Writ ................. 8
The Fourth Circuit’s Opinion Conflicts With
Decisions Of The Third, Seventh, Tenth,
Eleventh And Federal Circuits, Which
Recognize The Importance Of Applying The
Doctrine Of Equivalents To Remedy
Contempt Of Federal Court Injunctions
Protecting Valuable Intellectual Property
Rights, Including Trade Secrets And Patents.
ee ee ees ag Wk eee es KEE oe 6 8
ea ed os ps bain Vaks een a RASS 20

iv

TABLE OF CITED AUTHORITIES

Page
Cases: 6
Becher v. Contoure Laboratories, Inc., 279 U.S. 388
fo '. PMNE aprile Bir oem ace Ee eS erie pple iN pains 17
Board of Trade of Chicago v. Christi Grain & Stock
Ca, Se ee STEED otis ceee ee veeee bon 17
Dr. Miles Medical Co. v. John D. Park & Sons,
Be OTe EP EE K bc cee ca bewes casein 11,17
E.J. DuPont de Nemours Powder Co. v. Masland,
BD hs POP REOETE 44s 200K ESS 10, 17
Eskay Drugs v. Smith, Kline & French Laboratories,
LSS F649 CEC, URGE) occ execccsicsesss 16
Forest Laboratories, Inc., v. The Pillsbury Co.,
ee Loge, FS A. 2s > eee 12
Fowle v. Park, 131 U.S. 88 (1889) ............. 17
General Electric Co. v. Sung, 843 F. Supp. 776
tS PERRET UEP CTT CET Te Cee Tee 15
Graver Tank & Mfg. Co., Inc. v. Lini Air Products
Ce., 559 US: GOS CFE) oe ev ecsckss 8, 9, 11, 17, 19

Hoeltke v. C.M. Kemp Mfg. Co., 80 F.2d 912
Gat See 65s ih dhwacesaseaderpar ors 15

Cited Authorities

Page
In re Innovative Construction Systems, Inc., 793 F.2d
eB, Le ML | Rpg ron: beers Cope pr arene 13
In re Jon S. Wilson, 233 B.R. 915 (M.D.N.C. 1998)
Pe PE Py ee ee EN rc ey Oe EE 2
In re Jon S. Wilson, 165 F.3d 913, 1998 WL 671658
PS RAD 5 aa ees Sr ona ee 5
Interdynamics, Inc. v. Firma Wolf, 698 F.2d 157
ee Ala PE a oa 00. iGo wad da kd Maes Oe 17
International Industries, Inc. v. Warren Petroleum
Corp., 99 F. Supp. 907 (D.C. Del. 1951) ...... 16
Kewanee Oil Co. v. Bicron Corporation, 416 U.S.
he. | perewens Serer ey pena pe were as 18
KSM Fastening Systems, Inc. v. H.A. Jones Co.,
770 Fiat 1902 Gree. CA. FI) oi 6 once e ee 17
Mangren Research and Dev. Corp. v. National
Chem. Co., 87 F.3d 937 (7th Cir. 1996) ....... 12
McCullough Tool Co. v. Well Surveys, Inc., 395 F.2d
APO CT Gs ED a8. 5b eR ie Fi es 17
Motorola, Inc. v. Computer Displays Int'l, Inc.,
739 F.2d 1149 (7th Cir. 1984) ........ 13, 14, 16, 17

vi

Cited Authorities

Page
Pennwalt Corporation v. Durand-Wayland, Inc.,
$33 F.26 931 (P08. CW. ISBT) sce cdeavescens 9
Sure Plus Manufacturing Co. v. Kobrin, 719 F.2d
1136 CEA: Se 6a ee ee eins see 17
Thermodyne Food Service Products, Inc., and
AFTEC, Inc., v. McDonald's Corporation, et al.,
940 F. Supp. 1300 (N.D. Ill. 1996) ........... 13
Tower Mfg. Co. v. Monsanto Chemical Works,
20 F .26 S06 (GE PRET kee hh eh en ck 10
United States v. City of Miami, 664 F.2d 435
(FU CA. TIED 6 0 60h cextaerke score eee 14
United States v. Dubilier Condenser Corp., 289 U.S.
LTR CIs) 6s oben csanaciegeeeeeteen 18
Universal Motor Oils Co., Inc. v. Amoco Oil Co.,
743 F. Supp. 1484 (D. Kan. 1990) ............ 16
USM Corp. v. Marson Fastener Corp., 392 Mass.
534, 407 NEG TET) CE 6 kine ie Nae eee 15, 16
Vermont Microsystems, Inc. v. Autodesk, Inc.,
OS FSG FSS Cee ee BOR ce vec ccweneeeeness 12
Warner-Jenkinson Co. v. Hilton Davis Chemical Co.,
Fo gee Bees 6g Beep rem a en yn sa 9, 10

Winans v. Denmead, 15 How. 330 (1853) ........ 9

3
:
:
8

vil
Cited Authorities

Page
Statutes:
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ee Ss I Sede s 5 6.0 io eb Us 3
Rule:
Oa Sats Oy MO ogy 5's sw b'00 cokd wee cus 3
Other Authorities:
4 D. Chisum Patents § 18.04[1], at 18-32.3 ...... 9

Section 757 of the Restatement (First) of Torts,
snc nS Ee Pa PRD EO 11, 12,14

vill

TABLE OF APPENDICES

Page
Appendix A — Opinion Of The United States Court
Of Appeals For The Fourth Circuit Dated And
Breas CICONT ZI, 1S oc ce wewscviiacess la

Appendix B — Order Of The United States District
Court For The Middle District Of North Carolina
Dated And Filed December 2, 1998 .......... 8a

]

Petitioners, the Cook Companies, respectfully request
that a writ of certiorari be issued to review the judgment and
opinion of the United States Court of Appeals for the Fourth
Circuit in this case entered on October 27, 1999.

OPINIONS BELOW

This is an intellectual property case, involving trade
secrets and proprietary processes. Accordingly, certain of
the proceedings and opinions below were sealed and
unpublished. !

1. In order to protect the petitioners’ secret equipment and
processes from unintended public disclosure, this Petition describes
the trade secrets at issue (“Trade Secrets 3 and 14”) in general terms,
and the petitioners have filed separately, in a sealed appendix whose
pages are numbered by the designation “SA,” the following
confidential materials:

(1) Excerpts from the Bankruptcy Court’s May 22,
1995 sealed Injunction and Memorandum Opinion,
finding willful and malicious infringement of Trade
Secrets 3 and 14 (SA1 to SA45);

(2) The Bankruptcy Court’s December 8, 1997 sealed
Second Memorandum Opinion, refusing to find
violation of the Injunction as to Trade Secrets 3
and 14 after a surprise inspection of the
respondents’ plant in 1997 (SA46 to SA 84); and

(3) A nine-minute VHS videotape (the “Videotape”),
showing both the petitioners’ trade secret processes
in operation at their plant, and the respondents’
equivalent operations at their plant, shown side-
by-side on a split screen (petitioners’ on the right,
respondents’ on the left). The Videotape includes

(Cont’d)

2

The United States Bankruptcy Court for the Middle
District of North Carolina entered its Memorandum Opinion,
Findings of Fact and Conclusions of Law on May 22, 1995,
finding that the respondents willfully and maliciously
infringed certain of the petitioners’ trade secrets, and entered
a permanent Injunction and Judgment (the “Injunction’’) on
the same date. These documents were sealed by the court,
and pertinent excerpts have been tendered to this Court for
filing under seal.

The Bankruptcy Court entered a Second Memorandum
Opinion and judgment on December 8, 1997, refusing to hold
that the respondents violated the Injunction. These
documents, also sealed by the court, have also been tendered
to this Court for filing under seal.

The United States District Court for the Middle District
of North Carolina affirmed the Second Memorandum
Opinion and judgment by opinion dated December 2, 1998,
published as Jn re Jon S. Wilson, 233 B.R. 915 (M.D.N.C.
1998). A copy of that decision is annexed as Appendix B.

The United States Court of Appeals for the Fourth Circuit
affirmed, in an unpublished decision available at 1999 WL
976491 (4th Cir. Oct. 27, 1999), a copy of which is annexed
as Appendix A.

(Cont'd)

footage both from before the 1994 trial and at the
1997 surprise inspection, as well as the catalog
pages of both companies offering identical products
for sale. The Videotape, based entirely on evidence
of record, was accepted by each of the reviewing
courts below.

3

STATEMENT OF JURISDICTION

The judgment of the United States Court of Appeals for
the Fourth Circuit was entered on October 27, 1999. This
petition was filed within 90 days of that date.

The jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).

STATUTORY PROVISION AND RULE INVOLVED
Rule 65(d) Fed. R. Civ. P., which provides:

(d) Form and Scope of Injunction or Restraining
Order. Every order granting an injunction and
every restraining order shall set forth the reasons
for its issuance; shall be specific in terms; [and]
shall describe in reasonable detail, and not by
reference to the complaint or other document, the
act or acts sought to be restrained. ...

18 U.S.C. § 401 which provides:

A court of the United States shall have power to
punish by fine or imprisonment, at its discretion,
such contempt of its authority, and none other,
as — m3

(3) Disobedience or resistance to its lawful writ,
process, order, rule, decree, or command.

4

STATEMENT OF THE CASE

This case involves the willful and malicious
misappropriation of intellectual property. The petitioners, Cook
Group, Inc., Wilson-Cook Medical, Inc. (“Wilson-Cook”’), Cook
Inc., Vance Products, Inc., and Sabin Corp. (collectively,
“Cook” or the “Cook Companies”), manufacture and sell
medical devices worldwide. They employ a variety of trade
secret processes, developed at great expense of time and money
during the companies’ 37-year history, and scrupulously
guarded by them from disclosure to outsiders. Their products
include catheters and catheter wireguides, made for use in the
human body, that must be made in compliance with exacting
FDA regulations. Among Cook’s trade secrets recognized in
this case are methods for rounding the tips of wireguides and
other wire products to make them safe for use in the human
body (Trade Secret 3) and for forming permanent curves in
polymer catheters (Trade Secret 14).

The respondents are Jon S. Wilson (“Wilson’’) and his
company, Wiltek Medical, Inc. (“Wiltek’’) (collectively, the
Defendants”). Wilson is a former Cook employee who received
all his training and experience in the medical device field from
Cook. He was hired as a salesman in 1978, when he was a high
school graduate with no medical device manufacturing
experience or qualification, by Cook Canada, a company owned
by Cook and run by Wilson’s father. In 1981, at his father’s
suggestion, he was named president of a new Cook company,
Wilson-Cook, which was formed to expand Cook’s existing
manufacture of specialty gastroenterological medical devices.
In assuming this position, Wilson expressly agreed to keep secret
Cook’s confidential processes and equipment. In 1989, Wilson
was asked to resign, following certain repeated financial abuses
and failures to comply with critical FDA regulations.

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3

Immediately after his resignation, Wilson formed a new
venture, Wiltek, to compete directly with Wilson-Cook.
Because Wilson copied Wilsoii-Cook’s key product line and
its confidential manufacturing processes, Cook sued for
misappropriation of trade secrets. There is no question that
Cook has genuine trade secrets, and that the Defendants
misappropriated them. After a two-month trial (held before
the Bankruptcy Court because Wilson filed a petition for
protection under Chapter 11 of the Bankruptcy Code) in May
of 1995, the Bankruptcy Court held that Wilson and Wiltek
had willfully and maliciously misappropriated a number of
Cook’s trade secrets, including Trade Secrets 3 and 14, and
issued the permanent Injunction, prohibiting further use,
licensing, marketing, or disclosure of the trade secrets.”

The Bankruptcy Court’s disposition allowed Cook to
make one surprise inspection of Wiltek’s facilities to monitor
the Defendants’ compliance with the Injunction. At the
inspection in October 1997, Cook found that the Defendants
continued to manufacture wire products with rounded tips
and catheters with formed curves, using Trade Secrets 3 and
14 with minor modifications: for forming the rounded tips
of the wires, they used the identical Cook Trade Secret 3
process, but shortened the duration of the application of the
process by a fraction of a second, so that the tip of the wire
was rounded but not ball-tipped;’ and for forming curves in

2. The Bankruptcy Court’s judgment of willful and malicious
misappropriation was affirmed on appeal. See Jn re Jon S. Wilson,
165 F.3d 913, 1998 WL 671658 (4th Cir. N.C.) (unpublished).

3. Catheter wireguides can have approximately the thickness
of a human hair and must pass through delicate body passageways
like blood vessels and organs. Symmetrically rounding the tip of
the wire, as Cook’s secret process accomplishes, to create the
smoothest possible interface with the body passageway, is of critical
importance. (See Videotape.) Cook uses this trade secret process
some 3,000,000 times each year.

6

catheters they substituted for the Trade Secret 14 secret
medium a medium with similar physical properties, expressly
chosen to mimic Cook’s secret medium in every critical
respect.* The Defendants were able to replicate these
manufacturing processes, identical to Cook’s processes
except for the insubstantial substitutions, only because of
their knowledge of Cook’s processes.

Cook filed a motion seeking to hold the Defendants in
contempt of the Injunction (the “Contempt Motion”).
The Bankruptcy Court denied the Contempt Motion as to
Trade Secrets 3 and 14, and the district court affirmed.
SA 46-58, 75-82; App. 8a-10a. The Fourth Circuit affirmed.
App. la-7a. The Fourth Circuit refused to apply the “doctrine
of equivalents” — an intellectual property doctrine holding
that a minor modification or substitution in one’s use of a
protected idea does not defeat a claim of infringement,
because in these circumstances the use is “equivalent,”
though not “identical.” The Fourth Circuit explained its
refusal to apply the doctrine as follows:

4. The Bankruptcy Court viewed the Defendants’ choice of a
substitute medium as an “independent development.” SA80. But,
as they admitted below, Defendants’ choice of a substitute medium
was “obvious” only to someone who already knew the unique and
publicly unknown characteristics and advantages of Cook’s secret
medium. The advantages of the Cook process and secret heating
medium over publicly known methods for forming curves in polymer
catheters include: (1) uniformity of the process applied to all angles
of the catheter; (2) consistency in the formation of the catheters,
achieved by formation at a uniform temperature; (3) the ability to
manufacture multiple curved catheters at one time; (4) lack of danger
to the workers; (5) excellent biocompatibility; and (6) quickness,
simplicity, and inexpensiveness. (See SA77-78; Videotape.)

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7

The doctrine of equivalents is primarily a patent
law doctrine and its application in the trade secret
context has been quite limited. Almost all of the
cases Cook relies on are appeals to determine
whether or not something was a trade secret [but
here] the bankruptcy court had already determined
the scope of the trade secrets. .. . Cook cites to
only one circuit court case where the doctrine of
equivalents was applied in a trade secret contempt
context. See Motorola, Inc. v. Computer Displays
Int'l, Inc., 739 F.2d 1149 (7th Cir. 1984). But even
Motorola can be distinguished because it involved
a consent decree and not an injunction. Nothing
in this circuit would suggest that the doctrine of
equivalents is invariably applied in the trade secret
contempt context, much less that it would

somehow trump the governing standards of
review.

(App. 4a-5a n.*)

8

REASONS FOR GRANTING THE WRIT

THE FOURTH CIRCUIT’S OPINION CONFLICTS
WITH DECISIONS OF THE THIRD, SEVENTH,
TENTH, ELEVENTH AND FEDERAL CIRCUITS,
WHICH RECOGNIZE THE IMPORTANCE OF
APPLYING THE DOCTRINE OF EQUIVALENTS TO
REMEDY CONTEMPT OF FEDERAL COURT
INJUNCTIONS PROTECTING VALUABLE
INTELLECTUAL PROPERTY RIGHTS, INCLUDING
TRADE SECRETS AND PATENTS.

This Court mapped out the vital importance of the
doctrine of equivalents in protecting intellectual property
rights in Graver Tank & Mfg. Co. v. Lini Air Products Co.,
339 U.S. 605 (1950). The Court recognized that to permit a
close but non-literal imitation of a patented invention would
be to convert the protection of the patent grant into a “hollow
and useless thing” and would encourage the unscrupulous
copyist to make “unimportant and insubstantial changes and
substitutions” which, while adding nothing of substance,
would be enough to take the copied matter outside both the
claim and the protection of the law. Jd. Justice Jackson wrote
for the Court that one who seeks to pirate an invention, a
book or a play may be expected to introduce minor variations
to conceal and shelter the piracy since outright duplication
is a “dull and very rare type of infringement.” Jd.

The key issue in Graver Tank was whether the
substitution of a nonalkaline earth metal (manganese) for
the alkaline earth metal (magnesium) claimed in the patent
was, under the circumstances of the case, a sufficiently
insubstantial change which justified application of the
doctrine of equivalents. Just as the substitution in Graver

Parnes

LSM

9

Tank was found sufficient to invoke the doctrine there, so
too it should have been applied to the insubstantial
substitutions or deviations in the present case, but the Fourth
Circuit refused erroneously even to apply the doctrine.

To prohibit form prevailing over substance, the doctrine
of equivalents has evolved and regularly been observed, by
this Court and other federal courts, for the last 150 years in
the area of intellectual property rights, to prevent an infringer
from stealing the benefits of someone else’s creation.
See Winans v. Denmead, 15 How. 330 (1853); Pennwalt
Corp. v. Durand-Wayland, Inc., 833 F.2d 931 , 946 (Fed. Cir.
1987), cert. denied, 485 U.S. 961 (Bennett dissenting)
(in 130 years of jurisprudence, in the interests of justice,
judicial interpretations of claims beyond their bounds have
been made under the doctrine of equivalents), citing 4 D.
Chisum Patents § 18.04[1], at 18-32.3 (“While contrary to
the general principle that claims measure the scope of the
patent monopoly, the doctrine [of equivalents] is retained in
order to prevent persons from practicing fraud on patents.”).
Thus, a patentee may proceed against the producer of a device
that “performs substantially the same function in
substantially the same way to obtain the same result,” under
the theory that “if two devices do the same work in
substantially the same way and accomplish substantially the
same result, they are the same, even though they differ in
name, form or shape.” Graver Tank, 339 U.S. at 608
(citations omitted). Most recently, in Warner-Jenkinson Co.
v. Hilton Davis Chem. Co., 520 U.S. 17, 40 (1997), Justice
Thomas reaffirmed this Court’s “adher[ence] to the doctrine
of equivalents” and its benefits in “the prevention of copying
and piracy.” /d.

10

Although the doctrine of equivalents was initially born
as a patent law doctrine, as early as 1927, Judge Augustus
N. Hand found the doctrine eminently suitable for application
in the field of trade secrets:

[T]he novel question [is] whether there can be
anything applicable to a secret process like the
doctrine of equivalents familiar to the patent law.
There seems to be no authority upon this subject,
but I cannot think that the fiduciary obligation of
one bound not to disclose a secret process, or not
to use such a process that has been improperly
disclosed, is not violated, where the process
employed is used to produce an identical result
in ways directly suggested by the disclosure,
though slightly differing from it in detail.

The question is one of the real scope of the secret
process and the closeness of approximation of the
variation. ...

Tower Mfg. Co. v. Monsanto Chem. Works, 20 F.2d 386,
387 (S.D.N.Y. 1927).

In contrast to infringement via the doctrine of equivalents
under the patent law, which does not necessarily require proof
of a wrongful intent, Warner-Jenkinson, 520 U.S. at 35, trade
secret misappropriations invariably involve a breach of a
trust.

As recognized by Justice Oliver Wendell Holmes in
E.I. DuPont de Nemours Powder Co. v. Masland, 244 U:S.
100, 102 (1917), trade secret laws are not those of property,
but of the equitable principles of good faith applicable to

PAN Pres A ee RL he EAS EL

1]

confidential relationships. The employer who has discovered
or developed trade secrets is protected against unauthorized
disclosure or use, not because he has a property interest in
the trade secrets, but because the trade secrets were made
known to the employee in a confidential relationship. Again
in Dr. Miles Medical Co. v. John D. Park & Sons, 220 U.S.
373, 402 (1911), this Court recognized that a trade secret
complainant “is entitled to be protected against invasion of

its rights in the [secret] process by fraud or by breach of
trust or contract.”

Because trade secret misappropriation is always the
product of wrongful conduct akin to the piracy concern
addressed in Graver Tank, the need for the doctrine of
equivalents is generally stronger in the case of trade secrets
than in the case of patents. Under the Restatement (First) of
Torts and the numerous cases applying the doctrine of
equivalents in the trade secrets context, a defendant enjoined
from trade secret misappropriation may be held in contempt
even if he does not use a protected trade secret in exactly the
form prohibited by the injunction. As stated in Section 757
of the Restatement (First) of Torts, comment c:

Modification or improvement of the secret by the
actor. To subject a person to liability, under the
rule stated in this Section, for the use of another’s
trade secret, there is no requirement that he use
it in exactly the form in which he received it. He
may be liable even if he uses it with modifications
or improvements upon it effected by his own
efforts. Differences in detail do not preclude
liability if, substantially, the process used by the
actor is derived from the other’s Secret in the
manner stated in this Section. The liability is

12

avoided only when the contribution by the
other’s secret is so slight that the actor’s process
can be said to be derived from other sources;
although even in such a case the actor is still
subject to liability for harm caused by his
disclosure or possession of the secret, under the
rules stated in Secs. 757-759.

(Emphasis added.)

This Restatement doctrine of equivalents for trade secrets
has been recognized and applied in numerous
misappropriation cases in federal courts of appeals. For
example, in Vermont Microsystems, Inc., v. Autodesk, Inc.,
88 F.3d 142, 147 (2nd Cir. 1996), where the plaintiff
established that the defendant’s display list driver was
substantially derived from the architecture of the plaintiff's
list driver, the court held that the plaintiff did not have to
prove that the display list drivers were identical. Substantial
derivation was all that was necessary to establish trade secret
misappropriation. See also Mangren Research & Devel.
Corp. v. National Chem. Co., 87 F.3d 937, 943 (7th Cir.
1996) (where defendants’ formula contained ingredients
different from the plaintiff's formula, but the essential
characteristics of both were identical, the court found
misappropriation because defendants used the plaintiff's
secret to develop their product); Forest Laboratories, Inc.
v. The Pillsbury Co., 452 F.2d 621, 624-25 (7th Cir. 1971)
(court dismissed difference between plaintiff’s and
defendant’s processes — one using open containers and the
other using closed — stating, “the user of another’s trade
secret is liable even if he uses it with modifications or
improvements upon it effected by his own efforts, as long as
the substance of the process used by the actor is derived from

Pere

13

the other’s secret”); Jn re Innovative Construction Systems,
Inc., 793 F.2d 875, 886 (7th Cir. 1986) (“Were the law of
trade secrets not flexible enough to reach the modifications
in the instant case, when it is evident that the formulas were
substantially derived from Innovative’s, [the law] would
indeed be hollow.”).

Thus, although a process or equipment is slightly
modified or different from a trade secret process or
equipment, a trade secret misappropriation occurs if the
modified or different process or equipment is “substantially
derived” from the trade secret. See 7) hermodyne Food Service
Products, Inc. v. McDonald’s Corp., 940 F. Supp. 1300,
1307-08 (N.D. Ill. 1996) (applying doctrine of equivalents
to find misappropriation, for slightly different or modified
component parts were “connected” or “interrelated” in a
manner derived improperly from the plaintiff's technology).

The same rule applies in the contempt context. Where
(as here) an injunction has forbidden a defendant from using
a trade secret, that defendant cannot escape contempt by
arguing that he “modified” or changed the trade secret, where
the modification is substantially equivalent to, and derived
from, the original. See Motorola, Inc. y. Computer Displays
Int'l, Inc., 739 F.2d 1149, 1156-57 (7th Cir. 1984) (trade
secret defendant held in contempt for utilizing the substantial
equivalent of the plaintiff's trade secret). As stated by the
Seventh Circuit:

To say that the consent decree prohibited only the
sale of a display monitor series identical to the
[plaintiff's] in all respects or with only minimal
changes would make the injunction meaningless.
Even [the defendant] recognized that more than a

14

trivial change would be required to comply with
the [trade secret consent] decree [prohibiting the
infringing competitor from performing certain
acts].... Moreover, this interpretation is in
accord with trade secret law, which protects the
holder of a trade secret from uses substantially
derived from that secret.

Id. at 1156. See Restatement (First) of Torts § 757,
comment c.°

The “substantially derived” element of the doctrine of
equivalents in trade secrets cases is both fundamental and
critical to the protection of trade secret rights, which depend
upon the continued observance of ethical obligations by a
person (such as an employee) toward those from whom he
learned the secrets in trust (such as an employer who has
developed the trade secrets for use in its business). Given
the impossibility of wiping a misappropriator’s mind clean
of stolen trade secret information, it is all too easy for the
misappropriator to devise a process only slightly different

5. The Fourth Circuit’s attempt to “distinguish” Motorola in the
opinion below on the ground that Motorola “involved a consent decree
and not an injunction,” as in the instant case (App. 5a n.*), is erroneous:

A consent decree, although founded on the agreement of
the parties, is a judgment. United States v. Kellum, 523
F.2d 1284, 1287 (Sth Cir. 1975). It has the force of res
judicata, protecting the parties from future litigation. It thus
has greater finality than a compact. As a judgment, it may
be enforced by judicial sanctions, including citation for
contempt if it is violated.

United States v. City of Miami, 664 F.2d 435, 439-40 (Sth Cir. 1981)
(emphasis added and footnotes citing supporting authorities omitted).

15

from, but having the same essential characteristics as, the
protected trade secret process, Without the information which
the misappropriator learned and received as a part of his trust
relationship with the real trade secret owner (here Cook), it
would be considerably more difficult, if not impossible, for
the misappropriator (here Defendants) to start from scratch
and truly “discover” the equivalent process.

It is for precisely this reason that a “compelling
inference” of substantial derivation is applied where
modifications and/or improvements are made by
misappropriators or their privies. As explained by the court

in General Electric Co. y. Sung, 843 F. Supp. 776 (D. Mass.
1994):

[Defendant] himself was intimately familiar with
the GE trade secret technology and supervised the
development of the [accused] design. Under
Massachusetts trade secret law, these facts give
rise to a compelling inference that the [accused
design] was substantially derived from GE trade
secrets. “Where modifications in the process are
made by persons cognizant of the trade secret . =
proof of the independent derivation of the
differing process is more difficult than would be
the case if an apparent ‘modification’ were made

by a person untainted with knowledge of the trade
secret.”

Id. at 778 (quoting USM Corp. v. Marson Fastener Corp.,
392 Mass. 334, 352, 467 N.E.2d 1271, 1284 (1984)); Hoeltke
v. C.M. Kemp Mfg. Co., 80 F.2d 912, 923-24 (4th Cir. 1936)
(similarity of a defendant’s device, after he has received a
confidential disclosure from an inventor, is Strong evidence

16

of copying); /nternational Industries, Inc. v. Warren
Petroleum Corp., 99 F. Supp. 907, 914 (D.C. Del. 1951)
(injunctive relief granted where defendants had designed and
built a cargo vessel after receiving confidential disclosure
of plaintiff's tanker plans).

In fact, as is true of trademark infringers who attempt to
alter their designs to avoid further infringement, it is, and
should be, incumbent upon an adjudged trade secret
misappropriator — particularly those like Defendants who
are found liable for willful and malicious misappropriation
— to “keep a safe distance away from the dividing line
between violation of and compliance with the injunction.
The infringer ‘must do more than see how close [it] can come
with safety to that which [it was] enjoined from doing.’ ”
Universal Motor Oils Co. v. Amoco Oil Co., 743 F. Supp.
1484, 1488 (D. Kan. 1990) (quoting Eskay Drugs v. Smith,
Kline & French Laboratories, 188 F.2d 430, 432 (Sth Cir.
1951)); see also USM Corp., 392 Mass. at 351, 467 N.E.2d
at 1284 (“Modifications in the process do not relieve a
defendant of responsibility if the defendant’s process is
substantially derived from the trade secret.’’).

Petitioners respectfully submit that the Fourth Circuit’s
complete refusal to consider the doctrine of equivalents or, much
less, to apply it to the particularly apt facts at bar should be
reviewed by this Court to resolve the split between the Fourth
Circuit on the one hand and the Third, Seventh, Tenth, Eleventh
and Federal Circuits on the other. All of the latter circuits hold
that the doctrine of equivalents must be considered to determine
whether contempt of a federal court injunction exists on the
part of a “copyist” whose modifications either: (a) are
“substantially derived from” trade secret rights protected by an
injunction, Motorola Inc. vy. Computer Displays Int’l, Inc.,

17

supra; or (b) are not “colorably different from” patent rights
protected under an injunction. /nterdynamics, Inc. v. Firma Wolf,
698 F.2d 157 (3rd Cir. 1983) (rear window defroster held merely
a colorable variation from earlier defroster found to infringe
patent and its manufacture resulted in contempt under the
doctrine of equivalents); Sure Plus Manufacturing Co. v.
Kobrin, 719 F.2d 1114, 1118 (11th Cir. 1983) (under doctrine
of equivalents if enjoined defendant’s modifications of its mirror
assembly were not more than colorably different from plaintiffs
mirror assembly covered by patent infringement injunction, then
defendant was in contempt); McCullough Tool Co. v. Well
Surveys, Inc., 395 F.2d 230, 234 (10th Cir. 1968) (infringer’s
modified device for making radioactivity measurements was
properly found, under doctrine of equivalents, to be merely a
colorable variation of the original enjoined structure, making it
proper for trial court to proceed with contempt citation);
KSM Fastening Systems, Inc. v. H.A. Jones Co., 776 F.2d 1522,
1526 (Fed. Cir. 1985) (an enjoined party’s attempt to design
around the claims of a patent “bears the risk that the enjoining
court may find changes too insubstantial to avoid contempt,”
noting applicability of the “universal rule” of doctrine of
equivalents under Graver Tank).

From the early decision of this Court in Fowle v. Park,
131 U.S. 88, 97 (1889), recognizing that the policy of trade
secret law “is to encourage useful discoveries by securing
their fruits to those who make them”; through Board of Trade
of Chicago v. Christi Grain & Stock Co., 198 U.S. 236, 250
(1905), recognizing the trade secret owner’s right to be
safeguarded against theft of his work; through the
admonitions in 1911 and 1917 in Dr. Miles, supra, and
Masland, supra, protecting the trade secret owner against
breach of trust and fraud; to the recognition in Becher v.
Contoure Laboratories, Inc., 279 U.S. 388, 391 (1929), ofa
cause of action against an employee for the “wrongful

18

disregard of confidential relations”; followed shortly by the
teaching in United States v. Dubilier Condenser Corp., 289
U.S. 178, 186 (1933), that an inventor “may keep his
invention secret and reap its fruits indefinitely”; down to
the more recent proclamation in Kewanee Oil Co. v. Bicron
Corp., 416 U.S. 470, 481-82 (1974), that

the maintenance of standards of commercial ethics
and encouragement of invention are the broadly
stated policies behind trade secret law
[necessitating] good faith and honest, fair dealing,
[which] is the very life and spirit of the
commercial world ... [and] not[ing] the
importance of trade secret protection to the
subsidization of research and development ...
[and] increased economic efficiency within large
companies through the dispersion of
responsibilities for creative developments,

this Court has cast a broad protective net safeguarding owners
and developers of trade secrets from those who would
dishonestly usurp intellectual property which is not theirs
for the taking.

This Court’s historically high level of protection
accorded to trade secret rights together with the federal
courts’ 150 years of adherence to the doctrine of equivalents
(including the express recognition by nearly half of the
federal Circuits, noted above, that the doctrine of equivalents
must be considered in cases asserting contempt of federal
court injunctions protecting intellectual property rights, be
they trade secrets or patents), counsels heavily toward
granting this Petition.

discerns ee Oe ee ee

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asic Dies aes

19

The Fourth Circuit’s statement that “[nJothing in this
circuit would suggest that the doctrine of equivalents is
invariably applied in a trade secret contempt context”
(App. 5a n.*) leaves the Fourth Circuit severely out of step
with the rest of the courts in the federal system. Moreover,
the Fourth Circuit’s refusal to “invariably apply” the doctrine
of equivalents in the trade secret contempt context unfairly
and improperly leaves trade secrets far more exposed in the
Fourth Circuit to the machinations of the unscrupulous
copyist who (as in the case of the Defendants at bar) has
already once been enjoined and who, to paraphrase Justice
Jackson in Graver Tank, is very rarely a dull fellow but rather
one who may always be expected to adopt clever variations
in attempting to conceal and shelter his piracy. As the
Videotape submitted to this Court graphically establishes,
had the Fourth Circuit properly invoked the doctrine of
equivalents it surely would have held that the Defendants’
current processes to round off the end of wire and to form
curves in polymer catheters were substantially derived from
Cook’s Trade Secrets 3 and 14 in violation of the Injunction.

In this technologically driven age, patents and trade
secrets, and equitable decrees safeguarding them, are
increasingly focused im the federal courts. Indeed, patent
infringement is a realm exclusively policed by the federal
judiciary. As the growing global economy steadily transcends
state and national boundaries, such fundamental rights should
not be rendered uncertain or illusory by being subject to the
new form of elective doctrine of equivalents erroneously
adopted by the Fourth Circuit. Such a change would unjustly
transform trade secret injunctions entered in the Fourth
Circuit into “hollow and useless” remedies, i.e., as here,
courts erroneously could “elect” not to apply the time-tested
and critical docirine of equivalents to protect invaluable
intellectual property interests.

20

CONCLUSION

For the foregoing reasons, this Petition for a Writ of
Certiorari should be granted to review the decision of the
Court of Appeals for the Fourth Circuit.

Respectfully submitted,

AARON J. KRAMER
Counsel of Record
RONALD WILDER
CATHERINE M. MASTERS
ROBERT UNIKEL

SCHIFF HARDIN & WAITE

Attorneys for Petitioners
6600 Sears Tower
Chicago, Illinois 60606
(312) 258-5500

APPENDIX

la

APPENDIX A — OPINION OF THE UNITED STATES
COURT OF APPEALS FOR THE FOURTH CIRCUIT
DATED AND DECIDED OCTOBER 27, 1999

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 98-2831
In Re: JON S. WILSON,
Debtor.
COOK GROUP INCORPORATED; WILSON-COOK
MEDICAL, INCORPORATED; COOK INCORPORATED;

VANCE PRODUCTS INCORPORATED;
SABIN CORPORATION,

Plaintiffs-Appellants,
v.
JON S. WILSON; WILTEK MEDICAL, INCORPORATED,
Defendants-Appellees.
Appeal from the United States District Court
for the Middle District of North Carolina, at Greensboro.
N. Carlton Tilley, Jr., Chief District Judge.
(CA-96-657-2, BK-93-50034C-11W, AP-94-6010W)
Argued: September 24, 1999

Decided: October 27, 1999

2a

Appendix A

Before WILKINSON, Chief Judge, and HAMILTON and
WILLIAMS, Circuit Judges.

a * *

OPINION
PER CURIAM:

Appellants Cook Companies argue that appellees Jon
Wilson and Wiltek Medical should be held in contempt for
violating an injunction that prohibited the continued use of
Cook’s Trade Secrets 3 and 14. The bankruptcy court denied
the motion to hold appellees in contempt for violating these
secrets and the district court affirmed. Because the
bankruptcy court did not abuse its discretion in declining to
hold Wilson and Wiltek in contempt, we now affirm the
judgment.

Z

This case arises from a longstanding dispute concerning
the alleged misappropriation of various trade secrets
developed by appellant Cook for the manufacture of medical
devices. Jon Wilson is a former president of Wilson-Cook,
one of the Cook Companies. Upon resigning from Wilson-
Cook, Wilson founded Wiltek Medical. In May 1995, the
United States Bankruptcy Court for the Middle District of
North Carolina found that appellees Wilson and Wiltek
(collectively Wiltek) wilfully and maliciously appropriated
trade secrets of Cook. The bankruptcy court entered a
permanent injunction prohibiting Wiltek from using,

3a

Appendix A

licensing, marketing, or otherwise displaying or disclosing
the Cook trade secrets. Several months later, the bankruptcy
court granted Cook the right to conduct one surprise
inspection of Wiltek’s plant.

The surprise inspection occurred on October 1, 1997.
As a result of information uncovered during the inspection,
Cook claimed that Wiltek was continuing to use five Cook
trade secrets, including Trade Secrets 3 and 14. Cook filed a
contempt motion with the bankruptcy court asserting that
Wiltek was violating the injunction. Cook alleged that Wiltek
either violated the trade secrets directly or used processes
and techniques that were substantially derived from the trade
secrets. In December 1997, the bankruptcy court denied
Cook’s contempt motion as to Trade Secrets 3 and 14. The
district court summarily affirmed. Cook appeals.

II.
A.

The district court sits as an appellate court in bankruptcy.
See First Nat'l Bank of Md. v. Stanley (In re Stanley),
66 F.3d 664, 667 (4th Cir. 1995). Therefore, we apply the
same standard of review as the district court in reviewing
the bankruptcy court’s judgment. The denial of a contempt
motion can be overturned only for an abuse of discretion.
See, e.g., Langton v. Johnston, 928 F.2d 1206, 1220 (\st
Cir. 1991); Davis v. Bowen, 894 F.2d 271, 272 (8th Cir.
1989). To obtain a contempt citation, the complaining party
must prove a violation of a court order by clear and
convincing evidence. See In re General Motors Corp.,

4a
Appendix A

61 F.3d 256, 258 (4th Cir. 1995). The bankruptcy judge
denied the contempt motion because he found that Cook did
not meet this high burden with regard to Trade Secrets 3 and
14. The bankruptcy court’s denial of the contempt motion
likewise turned on findings of fact. We apply a clearly
erroneous standard to these findings. See /n re Stanley, 66
F.3d at 667. Here, the same bankruptcy judge defined the
scope of the trade secrets and denied Cook’s subsequent
contempt motion. His interpretation of his own order and
injunction must thus be given substantial deference. See
Colonial Auto Center v. Tomlin (In re Tomlin), 105 F.3d
933, 941 (4th Cir. 1997) (bankruptcy court involved with
earlier proceeding has a “better vantage point” from which
to assess the order’s meaning (internal quotation marks
omitted)). These standards of review coupled with Cook’s
burden of proof underscore the daunting nature of Cook’s
appeal.*

* Cook concedes that the deferential standard of review applies
to findings of fact, but argues that it does not apply to a lower court’s
failure to apply the doctrine of equivalents, which should be reviewed
de novo. See In re Stanley, 66 F.3d at 667 (application of law is
reviewed de novo). Cook contends that application of the doctrine
of equivalents might have led to the conclusion that Wiltek’s
procedures and equipment were substantially derived from or were
substantially equivalent to those protected by Cook’s trade secrets.
Such a finding would prove a violation of the injunction and provide
a basis for the contempt motion.

We are unpersuaded. The doctrine of equivalents is primarily a
patent law doctrine and its application in the trade secret context
has been quite limited. Almost all of the cases that Cook relies on
are appeals to determine whether or not something was a trade secret.

(Cont'd)

Sa

Appendix A
B.

We thus proceed to review the rulings of the bankruptcy
court. Trade Secret 3 involves a process for making a
traumatic wire guides used for a variety of medical purposes.
Cook argues that in its 1997 ruling the bankruptcy court
mistakenly found that Trade Secret 3 was limited to forming
balls on the tips of wires and did not include rounding-off
wires. Cook maintains that identical equipment, processes,
and techniques are used either to form a ball on the end of
wire or to round-off the end of a wire. Yet it was Cook who
emphasized in its 1994 proposed findings of fact that Trade
Secret 3 involves forming a jointless ball on the end of wire.
Wiltek stopped this process after the injunction, but it
continued the rounding-off process. Despite Cook’s
arguments to the contrary, we hold that the bankruptcy court
did not err in finding that Trade Secret 3 was limited to
forming balls on the tips of wires.

(Cont'd)

See, e.g., Vermont Microsystems, Inc. v. Autodesk, Inc., 88 F.3d
142 (2d Cir. 1996); Mangren Research and Dev. Corp. v. National
Chem. Co., 87 F.3d 937 (7th Cir. 1996). In this case, however, the
bankruptcy court had already determined the scope of the trade
secrets. We must decide only whether it abused its discretion in
denying Cook’s contempt motion. Cook cites to only one circuit
court case where the doctrine of equivalents was applied in a trade
secret contempt context. See Motorola, Inc. v. Computer Displays
Int'l, Inc., 739 F.2d 1149 (7th Cir. 1984). But even Motorola can be
distinguished because it involved a consent decree and not an
injunction. Nothing in this circuit would suggest that the doctrine
of equivalents is invariably applied in a trade secret contempt
context, much less that it would somehow trump the governing
standards of review.

6a
Appendix A

Cook also claims that Wiltek continued to violate Trade
Secret 14 by using the same process to form catheters with
only one minor modification — substituting the heating
liquid Cook used with a similar substance. Again, it was
Cook who in its proposed findings claimed that Trade Secret
14 depended on the particular qualities of a specific liquid.
The heated liquid Wiltek uses has similar properties, but an
entirely different chemical composition from Cook’s liquid.
The bankruptcy court found that Wiltek’s process was
independently developed and was not substantially derived
from Trade Secret 14. The bankruptcy court’s finding that
Trade Secret 14 was limited to a particular type of heating
liquid was not clearly erroneous. Under Cook’s
interpretation, Trade Secret 14 could prevent Wiltek from
using any substance that is more effective than water for
forming catheters. This position has no logical stopping
point. The protection of trade secrets serves important goals,
but the extension of a trade secret to cover any conceivable
modification would stifle innovation and competition.

Contempt is a weighty penalty and should not be casually
imposed. In this case, Wiltek officers testified that they did
not think rounding-off was a violation of Trade Secret 3
because of the injunction’s emphasis on forming balls on
the ends of wires. Fairness dictates giving a party clear notice
of what it is violating before holding that party in contempt.
See In re General Motors, 61 F.3d at 258 (civil contempt is
an appropriate sanction only where a party has violated an
order that sets forth “in specific detail an unequivocal
command” (internal quotation marks omitted)); Project
B.A.S.I.C. v. Kemp, 947 F.2d 11, 16 (1st Cir. 1991) (“[C]ivil

7a
Appendix A

contempt will lie only if the putative contemnor has violated
an order that is clear and unambiguous.”).

Ii.

In this case the trade secrets at issue were defined and
later interpreted by the same bankruptcy judge. Because his
interpretation of the scope of his earlier injunction warrants
deference and because his findings reveal no clear error, there
was no abuse of discretion in denying Cook’s contempt
motion. For the foregoing reasons, the judgment of the
district court is

AFFIRMED.

8a

APPENDIX B — ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE MIDDLE DISTRICT OF
NORTH CAROLINA DATED AND
FILED DECEMBER 2, 1998

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
No. 1:98CV01019
No. B-93-50034 C-11W
In re:

. JON S. WILSON,

Debtor.

No. A-94-6010W
COOK GROUP INCORPORATED, WILSON-COOK
MEDICAL INC., COOK INCORPORATED,
VANCE PRODUCTS INCORPORATED,
and SABIN CORPORATION,

Plaintiffs,
VS.

JON S. WILSON,

Defendant.

9a

Appendix B
No. 6:90CV00206

WILSON-COOK MEDICAL INC.,

Plaintiff,
VS.
WILTEK MEDICAL INC.,
Defendant.
ORDER

TILLEY, District Judge

It is hereby ORDERED that the Bankruptcy Court’s
Second Memorandum Opinion of December 8, 1997 be
AFFIRMED, to the extent that it finds Defendants Jon S.
Wilson and his company, Wiltek Medical, Inc. (collectively,
“Wiltek” (not in contempt for alleged misappropriations of
trade secrets 3 and 14. The holding of the Bankruptcy Court
in its Second Memorandum Opinion regarding trade secrets
5, 6, and 8, and the Bankruptcy Court’s Reconsideration of
those holdings in its May 7, 1998 Order and Amendment to
the Second Memorandum Opinion, are not affected by this
Order. The Plaintiffs’ appeal of the Bankruptcy Court’s
decisions regarding trade secrets 5, 6, and 8 should continue
as scheduled by the Court.

Because of Wiltek’s Motion to Dissolve Partial Stay in
Case No. 2:96CV00657, the Court requested expedited

10a
Appendix B

briefing and oral argument regarding trade secrets 3 and 14.
After hearing oral argument and examining the record and
the parties’ briefs, it is clear upon a de novo review that the
Bankruptcy Court correctly interpreted the scope of trade
secrets 3 and 14, and that it was not clearly erroneous in its
factual findings regarding the processes that Wiltek was
using at the time of the inspection. The Bankruptcy Court
was correct in concluding that the processes Wiltek was using
at the time of the inspection were not the same as — or
substantially similar to — trade secrets 3 and 14. Therefore,
for the reasons stated in the Bankruptcy Court’s December
8, 1997 Second Memorandum Opinion, the Bankruptcy
Court’s holding that Wiltek was not in contempt for allegedly
misappropriating trade secrets 3 and 14 is AFFIRMED.

This the 2nd day of December, 1998.

s/ [illegible]
United States District Judge

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_0929%3A1. Public record. Not legal advice.