Data General Corp. v. Digital Computer Controls, Inc.

Brief Fact Summary.

Data General Corp. (Plaintiff) sought an order preliminarily enjoining Digital Computer Controls, Inc. (Defendant) from making use of claimed trade secrets allegedly contained in design drawings.

Synopsis of Rule of Law.

To prove violation of a trade secret, a plaintiff must demonstrate the existence of a trade secret, that the defendant did not properly receive the information in question in such a manner that its confidential nature should have been known, and that defendant proposes to misuse such information.

Facts.

Data General Corp. (Plaintiff) sold Nova 1200 computers with design drawings included bearing a legend that they contained proprietary information that the purchaser was not allowed to use for manufacturing purposes.  The Nova 1200 is not patented and its design drawings have not been copyrighted.  The president of Digital Computer Controls, Inc. (Defendant) purchased a Nova 1200 computer and acquired a set of design drawings furnished to facilitate maintenance of the computer.  Defendant then proceeded to use the design drawings as a pattern to make a competing machine, which it then prepared to market.  Plaintiff sought to enjoin Defendant from making use of the alleged trade secrets contained in the design drawings.  Digital (Defendant) claimed that Data General (Plaintiff) had not maintained the degree of secrecy that would preserve its right to relief and moved for summary judgment.

Issue.

To prove violation of a trade secret, must a plaintiff demonstrate the existence of a trade secret, that the defendant improperly received the information in question in such a manner that its confidential nature should have been known, and that defendant proposes to misuse such information?

Held.

(Marvel, V. Chan.)  Yes.  To prove violation of a trade secret, a plaintiff must demonstrate the existence of a trade secret, that the defendant did not properly receive the information in question in such a manner that its confidential nature should have been known, and that defendant proposes to misuse such information.  It cannot be held as a matter of law in this case that Data General’s (Plaintiff) precautions to safeguard its secrets were not adequate.  The motions for summary judgment and for an injunction are denied.  An order will issue with a provision that all drawings issued by Digital Computer (Defendant) in connection with the sale of its Nova-like computer contain a restrictive legend of the type now set forth on Data General’s (Plaintiff) drawings at issue here.

Discussion.

This court provided a compromise solution since trade secrets must remain secret to be protected, but computer manufacturers want to sell their computers to the public.  In other similar cases, it has been held that unpatented articles sold to the public may be subject to examination and copying by anyone, but the way they are made may still remain secret.  Trade secret law does not protect against reverse engineering by purchasers.