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Packard Instrument Co. v. Reich





APPEAL from the Circuit Court of Cook County; the Hon. FRANCIS T. DELANEY, Judge, presiding.


Plaintiff, Packard Instrument Company, brings this interlocutory appeal from an order denying its motion for a preliminary injunction which sought to restrain defendants, Andrew R. Reich, Peter Mertens, Jr., and Radiomatic Instruments and Chemical Company, Inc., from selling certain scientific instruments.

Packard, a corporation, is involved in the invention, development, marketing, and manufacture of scientific instruments for the scientific research market. Reich and Mertens were employed by Packard until their resignations on October 1, 1978, and September 1, 1978, respectively. Upon leaving Packard, Reich and Mertens went to work at Radiomatic, a corporation which they formed and incorporated in 1978. Radiomatic is engaged in the manufacture and sale of instruments used in scientific research. In a March 1979 trade publication, Radiomatic advertised two microprocessor controlled scientific instruments for sale: the "Flo-One," a flow system for radiation detection, and the "Oxi-One," a sample oxidizer.

Packard's complaint for injunction alleged, in part, that Reich, as former director of research, had access to Packard's highly confidential research and marketing information concerning liquid scintillation equipment incorporating microprocessors; that Mertens, as former product specialist, had been involved in the planning and marketing of a sample oxidizer under development by Packard; that the two men organized Radiomatic for the purpose of manufacturing and developing products competitive to those sold by Packard; and that the two instruments are directly competitive with some of Packard's existing products. Packard further charged that Reich and Mertens breached their employment agreements with Packard by planning and organizing a competing business while employed by Packard; by refusing to offer Packard "originations" they developed at Packard; and by contacting customers on behalf of Radiomatic within one year of terminating their employment with Packard. Packard alleged that it had no adequate remedy at law and that it would suffer irreparable injury if defendants continued to sell the instruments.

At the hearing on the request for a preliminary injunction, the following relevant evidence was adduced: Packard maintains several laboratories and an engineering department. Its laboratories are locked at all times, and only certain personnel are provided with keys. To insure the confidentiality of developments at Packard, employees are instructed to record their ideas and data in laboratory notebooks which are stored in a locked area. An instruction in the notebook provides: "This notebook and its contents are the exclusive property of the Company. It is confidential and the contents are not to be disclosed to anyone unless authorized by the Company * * *." In addition, employees are requested to sign an employment agreement which reads, in relevant part, as follows:

"As a result of employment of EMPLOYEE by EMPLOYER * * *, EMPLOYEE will be informed of and placed in knowledgeable contact with EMPLOYER's research development and design projects, manufacturing procedures and problems, sales programs and relationships to customers generally and specifically, or long range planning programs. EMPLOYEE has already learned, or will have disclosed to him, many facets of EMPLOYER's confidential business information and trade secrets which are not known or available to the public, including some or all of the following:

(a) The nature of inventions made by him or co-employees, and evaluations of their potential commercial importance and patentability;

(b) Plans for contemplated improvements in existing Products or new Products, * * *;

(c) Details of the engineering design of Products * * *;

(d) Manufacturing methods or procedures pertaining to Products * * *;

EMPLOYEE acknowledges that all of the foregoing constitutes valuable, confidential information and assets which, if disclosed to, or used to the advantage of, any of EMPLOYER's competitors, would involve serious and irreparable detriment to EMPLOYER and its business efforts.

Further EMPLOYEE acknowledges that he may be dealing with research, design, development * * *, and that he will be using EMPLOYER's facilities and work time in attempting to solve problems or reach desired objectives. To the extent that inventions, discoveries, ideas or proposals pertaining to Products or EMPLOYER's business are conceived by EMPLOYEE, all rights (including patent rights) therein logically and fairly belong to Employer. * * *

In cognizance of the foregoing, * * * and in further consideration of EMPLOYER employing him and the salary or other compensation paid to him by EMPLOYER * * *, EMPLOYEE herewith binds himself and agrees to the following:

2. EMPLOYEE hereby agrees to assign, and does hereby assign, to EMPLOYER, its successors and assigns, all of his right, title and interest in and to ideas, discoveries, proposals and inventions (whether patentable or unpatentable) which (a) he may make or conceive either solely or jointly with others during the EMPLOYMENT, and which (b) relate to any subject or problem associated with EMPLOYER's engineering, research, development, manufacturing or sales activities involving EMPLOYER's Products or commercial developments or activities logically related to Products. The ideas, proposals, discoveries, and inventions as defined in the preceding ...

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