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Illinois Tool Works Inc. v. Kovac





APPEAL from the Circuit Court of Lake County; the Hon. LLOYD A. VAN DEUSEN, Judge, presiding.


Plaintiff, Illinois Tool Works Inc. (ITW), appeals from the judgment of the circuit court of Lake County, following a bench trial, finding the issues in favor of defendants-appellees, dismissing the complaint for injunctive and other relief, and later, denying ITW's post-trial motion. Defendants, Michael Kovac (Kovac), Ernest R. Cunningham, Jr. (Cunningham), and Grip-Pak, Inc. (G-P), cross-appealed from the circuit court's denial of defendants' motion under section 41 of the Civil Practice Act (Ill. Rev. Stat. 1973, ch. 110, par. 41) and Supreme Court Rule 209 (ch. 110A, par. 209), for an order to tax the defendants' reasonable expenses and attorneys' fees against ITW.

ITW is a multidivisional corporation whose Hi-Cone Division is engaged in the manufacture and sale of various forms of plastic multipack carriers used in packing beer, soft drinks and juice. Kovac was in the employ of ITW as "house attorney," primarily in the field of patent law, from July, 1963, to February 12, 1971. Cunningham was employed by ITW as an engineer from October, 1961, to November 1, 1968. (A third defendant, Packaging Industries, Inc. (Packaging), a manufacturer of plastic products and packaging machinery for plastic products, and G-P's licensee, was dismissed as a party defendant on its own motion at the close of plaintiff's case. Packaging was party to this appeal and it also cross-appealed from the circuit court's denial of its motion under section 41 of the Civil Practice Act for its reasonable expenses and attorneys' fees in defending ITW's suit. Subsequently, ITW's appeal from Packaging's dismissal at the close of the plaintiff's case and Packaging's cross-appeal were withdrawn.)

ITW's complaint filed May 21, 1973, in effect, alleged a conspiracy by defendants to misappropriate and exploit ITW's confidences and secrets in violation of the attorney-client relationship, and in violation of "Patent and Confidential Information Employment Agreements" executed by Kovac and Cunningham, and of the duty implicit in their employment relations. In addition, it alleged that in furtherance of such conspiracy they fabricated prototypes of plastic multipack carriers and are threatening to market them, as was shown by defendants' exhibiting them at the trade show in May, 1973. It further alleged that "[t]hese activities by Kovac and [Packaging] were a tortious act." The complaint sought (1) to enjoin the defendants from producing, developing and marketing plastic multipack carriers resulting from "secrets and confidences" acquired by defendant Kovac in his attorney-client relationship with ITW, or which would be in violation of the duties implicit in Kovac's and Cunningham's employment relationship and their employment agreements with ITW, and from using or disclosing such information, and (2) to enjoin G-P and Packaging from entering into and continuing any relationship with Kovac and Cunningham relating to the production, development and marketing of plastic multipack carriers resulting from information obtained by Kovac and Cunningham in the course of their relationship with ITW. By an amendment to the complaint filed almost one year later, on May 13, 1974, ITW sought an order directing defendants to assign to ITW "all patents, patent applications and patent rights resulting from their use of confidential information obtained during the course of Kovac and Cunningham's employment by ITW."

Defendants, Kovac, Cunningham and G-P, filed their answer asking for dismissal with prejudice of ITW's complaint, as amended, and for a finding that malice is the gist of the action alleged by ITW. They also filed their counterclaim which sought, inter alia, to enjoin ITW from seeking to enforce the employment agreements executed by Kovac and Cunningham and from further interference with defendants' business activities.

Following the filing of the complaint the parties conducted extensive discovery, took interrogatories and depositions (including those of Kovac and Cunningham taken by ITW which extend over 1350 pages of transcript, and that of Robert Beart, ITW's senior vice-president and general patent and legal counsel). Defendants produced on ITW's demand therefor, about 3000 documents, including samples and prototypes of their products.

The trial commenced on July 24, 1974. It consumed 21 court days during which over 300 exhibits were received, including many patents and other multipaged documents. The testimony of 11 witnesses, including that of Kovac and Cunningham, was received. The trial transcript covers over 3000 pages. On November 14, 1974, the trial court, after receiving briefs and proposed findings of fact and conclusions of law and orders from the adverse parties, entered its judgment dismissing ITW's complaint, as amended, with prejudice. On February 24, 1975, the trial court denied ITW's post-trial motion and defendants' *fn1 motion for an order requiring ITW to pay defendants' reasonable expenses and attorneys' fees. The appeal and cross-appeal are from those orders.

ITW contends that (1) the evidence established that Kovac, as ITW's former lawyer-employee, violated his duty of confidence to ITW, and (2) the trial court erred in denying the injunctive and other relief (i.e., assignment by Kovac, Cunningham and G-P of patents, patent applications or patent rights resulting from such alleged violation). In the judgment appealed from the trial court found and concluded (omitting parenthetical references to appropriate exhibits) as follows:

"1. That the inventions relating to Grip-Pak I and II including the carriers per se, the methods of manufacturing the carriers, and the methods of applying the carriers to a multiple of containers in the form of bottles or cans were independently invented by Cunningham.

2. The Grip-Pak I bottle carrier and method of assembling the carrier to form multiple packs are not identical with, based upon, or derived from any of the items which plaintiff claims as trade secrets and confidences, including, but not limited to, (1) Wayne Lyon documents; (2) multiple thickners overlap disclosure; (3) reinforced fingerholes or burned aperture disclosure; (4) method of assembly of the Beart band; Cunningham-Stockdale bottle carrier.

3. The Grip-Pak II scrapless carrier and the method for making the carrier are not identical with, derived from, or based upon any of the items which plaintiff claims are its trade secrets or confidences, including, but not limited to, (1) Poupitch rings; (2) Ron Owen disclosure; (3) carrier perforations.

4. The double tube device shown in figures 7 and 8 of the Ron Owen patent application was derived by plaintiff and Ron Owen from Cunningham's Grip-Pak II invention.

5. The 1966 and 1967 employment agreements of Cunningham and Kovac, respectively, are valid agreements.

6. Cunningham and Kovac have not violated any of the terms of the aforesaid agreements.

7. Cunningham and Kovac did not use or disclose to each other or to others any of the plaintiff's secrets or confidences; Kovac did not breach any duty he owed to plaintiff as a lawyer or as an employee; Cunningham did ...

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