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James C. Wilborn & Sons, Inc. v. Heniff

APRIL 25, 1968.

JAMES C. WILBORN & SONS, INC., A CORPORATION, PLAINTIFF-APPELLANT,

v.

WILLIAM VINCENT HENIFF, ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. WALKER BUTLER, Judge, presiding. Affirmed in part and reversed in part. Remanded with directions.

MR. PRESIDING JUSTICE DEMPSEY DELIVERED THE OPINION OF THE COURT.

Rehearing denied May 28, 1968.

James C. Wilborn & Sons, Inc., the plaintiff, is a manufacturer of window sash and frames. Among its products is a wooden window with sash that tilts to the inside and is removable from the inside of a house — it is known as the "tilt-sash" window. The defendants, William Heniff, Joseph Vilcek and Joseph Skopec are former employees of Wilborn. Brandex Tilt-Sash, the corporate defendant, was organized by Heniff and by another employee of Wilborn, Peter Miller. As its name indicates, Brandex also makes a tilt-sash window.

In its complaint Wilborn charged the defendants with conspiracy and with pirating its trade secrets, customers' list, price schedules and business methods; inducing key employees to leave its employment; appropriating its samples; and manufacturing and selling windows which were identical with its own and palming them off as those of Wilborn. It prayed for an accounting and for a permanent injunction restraining the defendants from continuing their competition.

The charges were denied by the defendants and the case was referred to a master in chancery. The master's conclusions were in favor of the defendants. The chancellor also found that the equities were with the defendants, adopted the master's findings and recommendations and entered judgment accordingly. The costs and the master's fee were assessed against the plaintiff. (In a prior appeal in this case, James C. Wilborn & Sons, Inc. v. Heniff, 56 Ill. App.2d 217, 205 N.E.2d 771 (1965), a temporary injunction was denied Wilborn; while in another suit, James C. Wilborn & Sons, Inc. v. Brandex Tilt Sash, Inc., 380 F.2d 44 (1967), it was held that Wilborn's complaint for patent infringement stated a cause of action which gave the Federal Court jurisdiction of the subject matter, notwithstanding the factual determination by the chancellor in the present case that the equities were with the defendants.)

On appeal Wilborn contends that the court erred in not finding that it had an exclusive license to make and sell the tilt-sash window in Cook and surrounding counties: that the defendants were guilty of unfair competition, that they conspired to destroy its business, and that they appropriated its trade secret and trademark. Other contentions are that the master ruled improperly on matters of evidence and that the court erred in setting the fee to be paid to the master.

Wilborn started making tilt-sash windows in 1959. It makes this product pursuant to a license granted that year by the Tilt Sash Corporation. In making these windows it uses an alleged trade secret called a "variable blind stop." A blind stop is a strip of wood attached to a window frame to keep the sash in position. The "variable blind stop" is a vertical piece of wood of varying dimensions; it enables the sash to compensate for different wall thicknesses.

Heniff became a salesman for Wilborn about the time Wilborn received its license from Tilt Sash. Prior to this he had been employed as a salesman by the Five Star Window Company of Peru, Illinois. Peter Miller joined Wilborn as a salesman in 1961. In the summer of 1963 Heniff and Miller formed the Brandex company. Miller withdrew from Wilborn in September but Heniff did not leave until January, 1964. While employed by Wilborn he purchased machinery for Brandex and otherwise participated in setting up its organization. Vilcek, foreman of the frame department at Wilborn, and Skopec, foreman of its sash department, (and three other employees) joined Brandex around the first of April 1964. Vilcek and Skopec testified that they were unhappy at Wilborn and, without being solicited, approached Heniff about working for Brandex. Heniff testified that he decided to leave Wilborn when he was informed that his sales commission would be cut in half.

Brandex started production in March 1964. Its window, which was made and distributed in the same territory as Wilborn's, was similar to Wilborn's. The mechanism and construction were the same, including the thickness of the blind stops. Two witnesses, who were in the sash and millwork business, testified that prospective customers would tend to be confused by the two units and could buy one thinking they were getting the other. Three witnesses, also in the same trade, testified that buyers would not be confused. They pointed out differences between the windows such as the trim and color and the material used in the hardware and pins. The emblems used on the two windows were distinctive in title, shape, color and typography, but both featured the words "tilt-sash" and bore the same trademark. However, there was testimony that the words "tilt-sash" were used by other window manufacturers including one (a maker of aluminum windows) in the Chicago area. The tilt-sash window was a patented product and the display of the trademark was required of all those who made or sold the window.

Soon after Brandex started its operation, Miller left a sample of the Brandex window with a customer to whom he had sold Wilborn windows. The customer turned the window over to Wilborn. The evidence showed that, although this window was distinguishable from Wilborn's, it contained some Wilborn parts and bore the Wilborn emblem. Whether these parts were taken from Wilborn or were obtained on the market was not established. There is no evidence in the record that this mock-up window was used for the purpose of misrepresentation or deception. The fact that Wilborn's emblem was on it negates such a conclusion. The defendants' explanation was that the sample window was made in haste at the start of its business, when some Brandex parts were still unavailable, and was assembled to demonstrate the workability of its planned product.

A vice-president of Wilborn testified that the "variable blind stop" was a trade secret not used by anyone else in the industry. On the other hand, he testified that the Five Star Window Company used a blind stop that was somewhat similar to Wilborn's and that a company in Minnesota was using three of the four sizes of Wilborn blind stops. He further testified that the variable blind stop was pictured in Wilborn advertising; that cross-sectional drawings of the blind stop and its application were published in Wilborn catalogues; that the blind stop was not kept confidential and that anyone in the trade who wanted to make it would only have to follow the specifications in the catalogues.

The fact that a customers list was used was not disputed. The only difference was in the contentions of the parties in regard to the ownership of the list. Wilborn claimed that a private list was taken and used. The defendants claimed that the list belonged to Heniff. Heniff had brought a list of customers with him when he came to Wilborn; but Miller was given a list by Wilborn. While most of Brandex' customers were also customers of Wilborn, the evidence disclosed that Heniff and Miller were the only Wilborn salesmen handling the tilt-sash line and that they knew all Wilborn's customers. Further, as salesmen they received a monthly report of the commissions they had earned together with a list of those who had made purchases the preceding month.

[1-4] Unfair competition exists where the defendant's conduct is likely to cause confusion in the trade as to the source of the products or is likely to lead the public to believe that the defendant is in some way connected with the plaintiff. Lady Esther v. Lady Esther Corset Shoppe, 317 Ill. App. 451, 46 N.E.2d 165 (1943). A conspiracy is a combination of persons to do an unlawful act or to perform a lawful act in an unlawful way. Reel v. City of Freeport, 61 Ill. App.2d 448, 209 N.E.2d 675 (1965). A conspiracy to injure another's business, when executed to his damage, is actionable. See Doremus v. Hennessy, 176 Ill. 608, 52 NE 924 (1898). A trade secret is a plan or process, tool, mechanism or compound known only to its owner and those employees to whom it is necessary to confide. Snyder v. Hamilton, 39 Ill. App.2d 352, 189 N.E.2d 97 (1963).

[5-9] An employee is under an obligation not to divulge the trade secrets of his employer imparted to him in confidence. Schulenburg v. Signatrol, Inc., 50 Ill. App.2d 402, 200 N.E.2d 615 (1964). He is also under a duty not to take and use a customer list compiled by his employer, Boylston Coal Co. v. Rautenbush, 237 Ill. App. 550 (1925), though if he acts in good faith and without misrepresentation he may solicit customers whose names are obtained from memory. American Cleaners & Dyers v. Foreman, 252 Ill. App. 122 (1929). Furthermore, an agent must not put himself in a position which is adverse to that of his principal during the continuance of the agency. Moore v. Pinkert, 28 Ill. App.2d 320, 171 N.E.2d 73 (1961). Acts constituting violations of these duties are actionable in themselves, though they may also constitute part of an actionable conspiracy to injure the business of another.

The master found that the defendants were not guilty of unfair competition; that they did not commit any actionable breach of trust by reason of their employment; that the "variable blind stop" was not a trade secret and that the only customers list in evidence was the one introduced by the defendants themselves and that this had been substantially prepared by Heniff before going to work for Wilborn. None of these findings was contrary to the weight of the evidence — let alone its manifest weight. Disputed questions of fact resolved by a master and approved by a ...


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