Rockwell Graphic Systems, Inc. v. DEV Industries, Inc.

Brief Fact Summary.

Rockwell Graphic Systems, Inc. (Plaintiff) sued two former employees for misappropriation of trade secrets when they started working for a competitor, DEV Industries, Inc. (Defendant), and using secret drawings.

Synopsis of Rule of Law.

Holders of trade secrets are required to take reasonable precautions to keep the secrets confidential.

Facts.

Rockwell Graphic Systems, Inc. (Rockwell) (Plaintiff) manufactured printing presses and replacement parts based on secret piece part drawings.  Two prior employees of Plaintiff joined DEV Industries, Inc. (Defendant), a competitor, and Rockwell (Plaintiff) sued, claiming that they were using stolen secret piece part drawings.  Defendant convinced the district court that the piece part drawings were actually not trade secrets at all as Plaintiff made little to no effort to keep them secret.

Issue.

Are holders of trade secrets required to take reasonable precautions to keep the secrets confidential?

Held.

(Posner, J.)  Yes.  Holders of trade secrets are required to take reasonable precautions to keep the secrets confidential.  Only in an extreme case can what is a “reasonable†precaution be determined on a motion for summary judgment, because the answer depends on a balancing of costs and benefits that will vary from case to case and therefore each requires estimation and measurement by someone knowledgeable in the particular field involved.  What would Plaintiff’s cost have been to take more precautions? If trade secrets are only protected when their owners take extravagant, productivity-impairing measures to maintain their secrecy, the incentives to invest resources in finding more efficient ways of production will be reduced.  Reversed and remanded.

Discussion.

One cannot appropriate as a trade secret information that is in the public domain.  The Uniform Trade Secrets Act defines a trade secret as information that is both “not generally known†and the subject of reasonable efforts to maintain secrecy.  Most courts agree that reverse engineering of a product does not constitute misappropriation of a trade secret, although in most cases reverse engineering of a patented invention will not be permitted. &nbsp.