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Mblcorp. v. Diekman





Appeal from the Circuit Court of Cook County; the Hon. Albert S. Porter, Judge, presiding.


Rehearing denied March 1, 1983.

This is an interlocutory appeal of the trial court's order of April 29, 1982, denying plaintiff MBL (USA) Corporation's motion for a preliminary injunction and dissolving a temporary restraining order entered on December 23, 1980. Plaintiff seeks to enjoin the alleged misappropriation and disclosure of its trade secrets and other confidential proprietary information by defendant, a former employee of plaintiff. After a lengthy hearing, the trial court, basing its decision upon 48 specific findings and its conclusions of law, determined that there was no likelihood of plaintiff's success at trial on the merits. Plaintiff contends that the decision is contrary to the manifest weight of the evidence and therefore an abuse of discretion.

At trial, plaintiff asserted that its trade secrets and proprietary information were being misappropriated and disclosed to third persons by defendant in violation of an employer-employee confidentiality agreement and defendant's fiduciary duty. In its decision, the trial court summarized what plaintiff considered to be its trade secrets as follows:

"1. A production process and technology which enables Chemi-Flex [a division of plaintiff corporation] to produce urethane flat belts and timing belts and products within an extremely short cycle time (often six minutes or less) through a centrifugal molding technique which does not require the use of a vacuum to degas (or eliminate entrapped air from) the urethane or reinforcing materials at any stage of the production process. This technology includes, in combination, the use of unique specialized molds and molding machinery; the use of centrifugal forces ([sic] or the angular speeds which are related to the r.p.m. and the diameter of the mold utilized substantially in excess of those generally used or known in the industry; the heating of the urethane compounds to temperatures substantially lower than those recommended, specified and used in the industry; the use of a temperature differential between that of the mold and molding machine and the temperature of the urethane mix poured into the mold; and the use of a `pot life' for the urethane compound substantially less than that generally used in the industry;

2. The design specifications for the molds, machinery and equipment used by Chemi-Flex;

3. The product specifications and formulas used by Chemi-Flex in the manufacture of urethane belts and products for its customers;

4. The identities of the customers of Chemi-Flex and the data, including production and product data, developed by Chemi-Flex with respect to such customers and products; and

5. Specialized products and molds, including the Teletype Corporation carrier belts, multi-durometer (or hardness) belts and products, such as the Teletype Corporation bumpers and IBM tractor belts; `six-hold,' or `six-cavity,' molds; and a system of interchangeable mold cores and barrels."

Plaintiff is owned by two Japanese corporations. Plaintiff purchased all the stock of Chemi-Flex, Inc., an Illinois corporation manufacturing urethane timing belts and flat belts and related products. Chemi-Flex, Inc., was formed by Earnest Meeder. Defendant *fn1 and Meeder met while both were employed at the J.W. Johnson Company. Defendant was hired at J.W. Johnson beginning in 1968, as a summer assistant during high school and college. Defendant received an engineering degree from Iowa State University in 1972, then was employed full-time by Chemi-Flex. Defendant was employed in various positions at Chemi-Flex until he was fired in 1978. Defendant was rehired by Chemi-Flex in February of 1979 after plaintiff had purchased Chemi-Flex. Defendant was again fired from his position as production manager in September 1979.

Defendant assisted Earnest Meeder in the ongoing development of the centrifugal molding process, now claimed as a trade secret, beginning with his summer employment at J.W. Johnson and continuing through September 1979. Even during the period that defendant was not employed full-time with Chemi-Flex between February 1978 and February 1979, he served as a consultant to Chemi-Flex.

Earnest Meeder purchased the centrifugal molding machine he was developing at J.W. Johnson Company and in 1971, formed Chemi-Flex, Inc. Throughout the corporate existence of Chemi-Flex, Inc., many people, including defendant, assisted in the ongoing development of the centrifugal molding process culminating in 1978 with the use of 15 machines designed to accommodate production needs.

While employed by Chemi-Flex from 1972 through 1978, defendant was restrained by an employer-employee confidentiality agreement. *fn2 However, when defendant was rehired in 1979, he refused to sign such an agreement when asked to do so by plaintiff's president, believing it was too restrictive and unfair. No further discussions about the agreement took place, and defendant never signed the agreement. In September 1979, defendant was again fired. According to defendant, he was fired because of continuing disputes over company hiring policies and the manner in which the company was being run. Although defendant stated that he was fired at that time, one of plaintiff's officers testified that defendant left the company voluntarily.

Following his second tenure with Chemi-Flex, defendant formed two companies, Surface Additions, Inc., and FBN Industries, Inc., and began to design centrifugal molding machines and designs for other belt-producing equipment. A Chemi-Flex division employee assisted ...

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