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10/24/89 American Antenna v. Amperex Electronic

October 24, 1989

AMERICAN ANTENNA CORPORATION, PLAINTIFF-APPELLANT

v.

AMPEREX ELECTRONIC CORPORATION, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

546 N.E.2d 41, 190 Ill. App. 3d 535, 137 Ill. Dec. 417 1989.IL.1666

Appeal from the Circuit Court of Kane County; the Hon. Michael F. O'Brien, Judge, presiding.

APPELLATE Judges:

JUSTICE McLAREN delivered the opinion of the court. INGLIS and DUNN, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCLAREN

Plaintiff, American Antenna Corporation (American), appeals from an order of the circuit court of Kane County granting partial summary judgment in favor of defendant, Amperex Electronic Corporation (Amperex), on counts III and IV of plaintiff's complaint. In its order, the trial court granted summary judgment on the tort claims raised in counts III and IV and limited plaintiff to breach of contract actions on those counts. On appeal, plaintiff contends that (1) a tort claim for misappropriation of trade secrets may lie even though a contract governs the relationship between the parties, and (2) monetary and punitive damages are available in a misappropriation of trade secrets case. We affirm.

The facts in this case are largely undisputed. On May 20, 1982, Amperex entered into an agreement with AudioMobile Corporation (Audio) whereby Audio would develop and design car stereo components for Amperex and would manufacture a specific quantity of the components for sale by Amperex; Amperex would pay a specific sum for development and design and would pay a per-unit price for each component manufactured. The contract also provided that after Audio manufactured the components specified in the initial purchase order, Amperex could manufacture the components itself or could contract with a third party to manufacture the components using Audio's designs. If Amperex chose to take over the manufacturing, Audio would deliver the designs to Amperex and would assist Amperex in establishing a manufacturing process; Amperex would pay Audio a royalty of 4% of the net price of each component sold.

In September 1982 plaintiff, American Antenna Corporation (American), purchased the assets of Audio at a credit manager's sale. After Discussions between the parties, it was determined that American would continue production of the components for Amperex. By this time, the component designs were completed and had been turned over to Amperex, and a certain quantity of the components had been manufactured. Amperex issued new purchase orders reflecting the negotiations between Amperex and American. The new purchase orders contained a provision that American was "not responsible for any agreement signed by AudioMobile." After American encountered problems with production deadlines, the parties agreed that Amperex would pay an "expediting charge" for an accelerated production schedule and the per-unit price of the components would be changed. New purchase orders were issued reflecting these new agreements. Plaintiff apparently completed production of the components required under the modified purchase orders. During March 1983, Amperex began manufacturing the stereo components at its own facility.

The major disputed fact in this case is whether the parties agreed that the royalty provision which was part of the contract between Amperex and Audio was also made part of the agreement between Amperex and American. American contends that Amperex agreed to include an addendum to the November 1982 purchase orders reciting the royalty provision of the original contract; Amperex denies that it so agreed. It is undisputed that after Amperex began manufacturing the components, it did not pay American any royalties.

In July 1983 American filed suit against Amperex, alleging that American had fully performed its part of the purchase orders and that Amperex owed American $47,302.56. In its answer, Amperex denied that American had fully performed and denied that it owed American any money.

Amperex filed a counterclaim against American alleging, among other things, that American was using the plans and designs which resulted from the contract with Amperex to manufacture stereo components to compete with Amperex, and, therefore, American was breaching its fiduciary relationship with Amperex. Amperex sought, among other things, a declaration that Amperex had the sole proprietary right to use the designs and plans.

Thereafter, American filed its first amended complaint. Count I alleges that Amperex breached its contract with American by failing to pay royalties. Count II alleges that Amperex breached its contract by failing to pay the full amount due for development, design and manufacture of the components. Count III alleges that Amperex's right to use the plaintiff's designs arose from the May 20, 1982, agreement; that this agreement is no longer in effect, having been modified by subsequent purchase and change orders; that Amperex no longer has a legal right to use the designs; and that:

"y the sales of electronic components incorporating the particular and wholly unique trade secrets, proprietary and confidential information, technology and know-how of plaintiff, American Antenna, while purporting to be the designers and owner of the designs and trade secrets incorporated therein, defendant, Amperex, has knowingly breached the agreements with the plaintiff, misappropriated plaintiff's trade secrets, misrepresented the origin of the products and committed acts of unfair competition against the plaintiff."

Count IV alleges a violation of section 2 of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 262) and a violation of section 2 of the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1987, ch. 121 1/2, ...


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