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Schulenburg v. Signatrol

OPINION FILED MAY 18, 1967.

EDWARD J. SCHULENBURG ET AL., APPELLEES,

v.

SIGNATROL, INC., ET AL., APPELLANTS.



APPEAL from the Circuit Court of Vermilion County; the Hon. HARRY I. HANNAH, Judge, presiding.

MR. JUSTICE WARD DELIVERED THE OPINION OF THE COURT:

This case arises from this court's decision in Schulenburg v. Signatrol, Inc., 33 Ill.2d 379. It will be helpful to review briefly that matter in order to facilitate understanding of the issues presented here.

Time-O-Matic Corporation, a plaintiff, is engaged in the production and sale of flashers. A flasher is a device which actuates and regulates the lights in electric signs in such a manner as to animate the sign according to a predetermined program. The individual defendants, while employed by the Time-O-Matic Corporation, traced or memorized confidential particularized information relating to Time-O-Matic's flashers which appeared in certain of Time-O-Matic's blue prints and drawings. Subsequently, Signatrol, Inc., a defendant, was formed by several of the individual defendants who, no longer employed by Time-O-Matic, then used the particularized plans and processes clandestinely obtained to reproduce, and enter competition with, the Time-O-Matic flasher. A suit was instituted by Time-O-Matic and the other plaintiffs for an injunction and other relief in the circuit court of Vermilion County, and after lengthy proceedings this court affirmed the trial and appellate courts' determinations that the defendants had wrongfully appropriated the plaintiffs' trade secrets by memorizing or copying the blue prints and drawings. Also, we upheld the injunction which inter alia restrained the defendants from producing a designated flasher manufactured by plaintiffs or any substantially similar flasher. However, the injunction that the trial court had issued on June 14, 1963, and which had been stayed pending appeal, was unlimited so far as duration was concerned. Since we determined, and it was conceded, that competitors could legally copy plaintiff's flasher from the product itself (as distinguished from confidential blue prints and drawings) we remanded the cause, for modification of the injunction, to the circuit court of Vermilion County, directing it to determine the period of time which would be reasonably required by the defendants to copy and produce the flasher by lawful means. The circuit court was also directed to consider the question of damages.

After conducting a hearing, the trial court on July 5, 1966, held that 18 months would be reasonably required for duplication of plaintiffs' flashers by lawful means. Accordingly, the injunction which became operative April 7, 1966, the date of the first hearing by the trial court under this court's mandate, is to expire October 7, 1967. Meanwhile, the plaintiffs on June 16, 1966, had filed in the trial court a petition for a rule on defendants to show cause. After a hearing was held on such petition the trial court ruled on July 21, 1966, that the manufacture and sale by the defendants of their flasher Model 32 (as distinguished from defendants' Model 30 which was the primary subject of the original suit and injunction) was in violation of the terms and spirit of the original injunction. Hence, the defendants were held in contempt of court and fines ranging from $25 to $500 were imposed upon the defendants. Defendants appealed both causes to the Appellate Court for the Fourth District. On September 15, 1966, upon motion by the defendants, we ordered that these appeals be taken directly to this court under our former Rule 28-1E. The appeals of the defendants from the order setting the injunction's duration at 18 months and from the order holding the defendants in contempt have been consolidated for opinion.

The defendants contend that the trial court's adjudging that 18 months would be required to reproduce lawfully the plaintiffs' flasher was manifestly against the weight of the evidence; that the trial judge failed to follow impartially the mandate of this court; and that the trial court's finding that the defendants' flasher Model 32 was substantially similar to the models specified in the injunction order was contrary to the manifest weight of the evidence and improperly deprives the defendants of the right to produce any type of motor driven, cam-operated, silver contact electric flashers.

In our original opinion we issued the following direction: "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 reproduction of the flashers by lawful means. The injunction should then be modified to terminate upon the expiration of such time period." (33 Ill.2d at 388.) As stated, the trial court determined that it would take 18 months to reproduce the flashers by lawful means.

Although a trial court's holding is always subject to review, this court will not disturb a trial court's finding and substitute its own opinion unless the holding of the trial court is manifestly against the weight of the evidence. (Brown v. Zimmerman, 18 Ill.2d 94, 102; Illinois Nat. Bank & Trust Co. of Rockford v. County of Winnebago, 19 Ill.2d 487, 495; Mortell v. Beckman, 16 Ill.2d 209.) Underlying this rule is the recognition that, especially where the testimony is contradictory, the trial judge as the trier of fact is in a position superior to a court of review to observe the conduct of the witnesses while testifying, to determine their credibility, and to weigh the evidence and determine the preponderance thereof. We may not overturn a judgment merely because we might disagree with it or might, had we been the trier of facts, have come to a different conclusion.

Here, after remand, the trial judge was confronted with the difficult task of ascertaining the time required to reproduce the flasher by lawful means. The flasher reproduction process includes many steps of a technical nature which had to be considered. These steps include dismantling the flasher; analyzing the parts as to dimension, metallurgical content, etc.; making sketches and drawings of each part; building, testing, adjusting and correcting the prototype; adjusting the drawings and sending them to vendors for procurement of parts for the flasher; making manufacturing test runs, etc. In addition, the flasher reproduction process consists of many intangible and unpredictable factors which render a precise time calculation most difficult. For example, the record discloses that once an operable flasher has been produced and the flasher is subjected to widespread consumer use, previously undiscovered flaws often emerge. This would necessitate further refinements through painstaking trial and error before the product could attain and duplicate the high quality and efficiency of plaintiffs' flasher.

Having such considerations before him, the trial judge conducted an extensive hearing in which the plaintiffs presented one witness and the defendants four witnesses. The trial judge actively participated in the examination of the witnesses. The evidence was undisputed that the defendants through the improper usage of plaintiffs' trade secrets were able to reproduce plaintiffs' flasher Model 3 in 4 months. Other evidence adduced at the hearing was conflicting. Edward Schulenburg, a plaintiff, who has been engaged in the engineering and development of flasher devices since 1927, testified as to the time required in his judgment for each step in the flasher reproduction process. His opinion as to the total time required for reproduction of plaintiffs' flasher was 30 months, after excluding, as the trial judge did in his memorandum opinion, Schulenburg's time estimates of extraneous factors such as investigating market conditions.

Lester Piper, a flasher distributor and defendant's first witness, testified that he had hired an industrial testing laboratory to disassemble and make drawings of one of defendants' flashers. But he didn't offer any opinion as to the time necessary to duplicate plaintiffs' flasher. Allen Sigel, a chemical engineer and director of the industrial testing laboratory, testified that at Piper's request he and his firm had dismantled one of plaintiffs' flashers and analyzed and made drawings of several of the parts. He stated that it took about 2 weeks working time to do this. However, the drawings were somewhat incomplete and Sigel didn't attempt other phases of the flasher reproduction process so as to determine whether the drawings could form the basis of an operable flasher. John Sutphin, a defendant and president of Signatrol corporation, stated his opinion to be that 4 months would be needed to reproduce plaintiffs' flasher.

The defendants' most important witness was probably Bruce McNeil who was formerly associated with the Minnesota firm referred to in our earlier opinion and who had participated in the development of a flasher competing with that of the plaintiffs. The defendants argue that a period of 6 months or less should have been determined to have been the time for reproduction by lawful means and that the trial judge should have rejected Schulenburg's testimony in its entirety because of his interest and should have accepted in toto the testimony of disinterested witnesses such as McNeil. However, McNeil's testimony was not entirely certain and without qualification. He testified on direct examination that the duplication of the plaintiffs' flashers would take 6 months for a first draft in the normal course of business. However, McNeil admitted on cross-examination that after the flashers had been in service for the first year or two there had been difficulties and some complaints from users and "more than you would expect." Also, McNeil stated on direct examination that his firm had actually produced two flasher models consecutively in a period of 15 months but said on cross-examination that a period from March 1955 (the time of their first industry survey) until June 1957, or about 27 months, was required before these flasher models were able to be made commercially competitive with the plaintiffs' flasher.

The trial judge may have given considerable weight to Schulenburg's testimony in making his determination but he did recognize and consider, as stated in his memorandum opinion, the interest and possible bias of Schulenburg and the court declared his time estimate was somewhat excessive.

In light of the conflicting evidence here relating to a complex factual question we cannot say the trial court acted unreasonably in not adopting entirely the evidence of one side or the other. The finding and judgment of the trial court that 18 months would reasonably be required to reproduce lawfully the plaintiffs' flasher cannot be said to have been against the manifest weight of the evidence.

This court in its prior opinion remanded, as has been stated, with directions that the trial court consider the question of damages and determine the period of time reasonably required for the defendants to reproduce lawfully the plaintiffs' flasher and we stated that the duration of the injunction should be limited to such period of time. The trial court found and ordered that such a reasonable period of time would be 18 months. Although the trial court in its opinion stated firmly and unmistakably its determination that paragraphs 4 and 5 of the original injunction were to remain in effect perpetually, it would appear the order itself makes no reference to this determination to extend the restraint of paragraphs 4 and 5 beyond 18 months. Paragraphs 4 and 5, in substance, had restrained the defendants from using any information improperly obtained from the plaintiffs. Under these circumstances we deem it appropriate to restate our expression in Thomas v. Durchslag, 410 Ill. 363: "Where a judgment is reversed by an ...


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