the affidavits of six individual defendants, all of whom aver that they were unaware of SI's claims to trade secret protection for any aspect of its CARTRAC product and that, in any event, none of SI's trade secrets were used in their ROBOTRAC product. (Exhibit Q to "Defendants' Memorandum of Law in Support of the Motion for Summary Judgment, Doc. # 234)
Defendants do not support their argument that plaintiff's alleged failure, to date, to specify their claimed trade secrets to defendants' satisfaction entitles them to judgment as a matter of law. Such a requirement has not been imposed by Pennsylvania law, or by the Third Circuit. Rohm and Haas Co. v. Adco Chemical Co., 689 F.2d 424 (3d Cir. 1982). Thus, even if true, defendants are not entitled to summary judgment on that basis. Defendants' contention is also belied by the fact that this Court, as well as the Circuit Court, was able to identify, from the testimony presented at the preliminary injunction hearing, several discrete elements of CARTRAC which were entitled to trade secret protection. Further, we are puzzled as to the ability of some defendants to present sworn affidavit testimony that they never used the "trade secrets" which they also claim were not and cannot be identified. Moreover, as a practical matter, a jury may not have to be as precise as the Court needed to be in identifying the trade secrets. At trial, the inquiry may be less specific in that the jury will have to decide whether CARTRAC contains trade secrets without necessarily specifying in precise detail what they are. It will, of course, be the Court's task to be certain that the plaintiff has put into the trial record sufficient evidence from which the jury can properly find that CARTRAC contains trade secrets which the defendants misappropriated before allowing the case to go to the jury.
The affidavits which purportedly support defendants' contention that they were unaware of SI's claims to trade secret protection are unavailing for two reasons. First, some of the affidavits are, in part, based upon personal belief, not personal knowledge as to the existence of certain alleged trade secrets embodied in CARTRAC. As such, those affidavits are legally insufficient to support summary judgment. (See, e.g., Affidavits of Stanley Gutekunst, Russell Scheel and Barry Ziegenfus, referring to fit, dimensions and tolerances between the drive tube and tube plug, Exhibit Q to Defendants' Motion for Summary Judgment, Doc. # 234). Second, and more important, all of the affidavits have been sufficiently countered by other evidence of record so as to preclude the granting of summary judgment in favor of the defendants.
This case is in the unusual posture of having had the sufficiency of the evidence through which plaintiff proposes to establish the elements necessary to support its trade secrets claim analyzed for a different purpose, i.e., injunctive relief, at both the trial and appellate levels. None of the factual findings upon which this Court relied in granting the motion for a preliminary injunction were held to be clearly erroneous by the Court of Appeals.
That evidence is already on the record in this case and, presumably, may be offered at trial.
Thus, the inescapable conclusion is that there are material issues of fact in dispute with respect to plaintiff's trade secret claims, including those already identified by this Court and affirmed by the Court of Appeals.
Defendants' denials that they were aware of SI's claim of trade secrets, as well as their denials that they used those items which SI claimed as trade secrets, create additional issues of fact for the jury's consideration. By the same token, those portions of the deposition testimony of some of plaintiff's witnesses which contradicts or appears to contradict testimony given at the preliminary injunction hearing may make for effective arguments to the jury, but the purported contradictions do not entitle the defendants to summary judgment.
Finally, we see no need to enter judgment with respect to the "trade secrets" which this Court identified but which the Court of Appeals held not to be trade secrets as a matter of law. Obviously, plaintiff will not be permitted to prove or attempt to prove that those items are trade secrets.
B. Discovery/Ownership Requirement
Defendants argue that plaintiff lacks standing to assert trade secret protection for itself in that it neither discovered nor otherwise owns the trade secrets embodied in CARTRAC. As to defendants' first basis for this argument, that the individual defendants actually created CARTRAC and that SI would not possess it but for their efforts, there is no support for such a conclusion. In the first instance, assuming the argument has some validity as to those defendants who contributed to the development of CARTRAC, it is certainly not a basis for summary judgment for the corporate defendants or for those defendants who had no part in engineering CARTRAC. Even as to those defendants who were engineers, it is surely a novel concept to assume or conclude that an employer is not the owner of the fruits of its employees' labor. Not surprisingly, defendants have cited no controlling case law to support such a conclusion.
Finally, the defendants who developed CARTRAC at SI were subject to employment agreements in which they agreed to "give SI the full benefit, enjoyment, ownership and title to all improvements and inventions . . . of apparatus, appliances, devices and methods . . . developed during . . . employment". (Exhibit A to the Complaint, Doc. # 1). (Emphasis added).
Although the true effect of this provision in this context is merely to make explicit the usual obligations of an employee while on the job, it serves to emphasize the insubstantiality of this portion of defendants' ownership argument.
More serious is defendants' contention that the plaintiff concealed from the Court the indisputable fact that it never owned the technology upon which its CARTRAC product is based. The origin of this argument is the defendants' purportedly recent discovery that there is no agreement between SI and IHI, the Japanese source of the "Tokunaga Formula Book". Instead, there is an agreement between IHI and SII, a wholly-owned subsidiary of SI relating to technology transfer and the formation of a joint venture company, SIHI. Defendants conclude, in a footnote to their brief, (Doc. # 234 at 29, n.9), that such an agreement, "of course", is not effective in conferring ownership of the technology on SI.
Defendants, however, conveniently neglect to explore the relationship between SI and SII and have offered no support for their conclusion that the parent cannot and does not own that which has been acquired by its wholly-owned subsidiary. The only authority which this Court has been able to discover suggests otherwise. In Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771, 104 S. Ct. 2731, 81 L. Ed. 2d 628, 643 (1984), the Supreme Court described the relationship between a parent and its wholly-owned subsidiary as follows:
A parent and its wholly-owned subsidiary have a complete unity of interest. Their objectives are common, not disparate, their general corporate actions are guided or determined not by two separate corporate consciousnesses, but one. They are not unlike a multiple team of horses drawing a vehicle under the control of a single driver. With or without a formal "agreement", the subsidiary acts for the benefit of the parent, its sole shareholder. (Emphasis added).