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GLENAYRE ELECTRONICS, LTD. v. SANDAHL

September 16, 1993

GLENAYRE ELECTRONICS, LTD., PLAINTIFF,
v.
JOEL SANDAHL, INDIVIDUALLY, AND COMPLEX SYSTEMS, INC., AN ILLINOIS CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Richard Mills, District Judge:

OPINION

A case of intellectual property.

The specific issue is whether trade secrets were misappropriated.

We conclude not.

I. BACKGROUND

In July of 1989, Glenayre Electronics, Ltd. (Glenayre) purchased Quintron Corporation (Quintron) located in Quincy, Illinois, which became known as Glenayre Quincy. Its primary function was the development and manufacture of paging systems. In fact, two years earlier, Quintron began negotiations with SimulComm Partnership (SimulComm) for the acquisition or license of technology related to paging systems known as SCS technology.

During the negotiations in August of 1988, Joel Sandahl, the managing director of SimulComm, left it and joined Quintron. After Mr. Sandahl arrived at Quintron, a final licensing agreement was executed whereby Quintron would be the exclusive licensee of the SimulComm system. In January of 1990, Mr. Sandahl left Quintron, along with two other engineers, and formed Complex Systems (Complex). For approximately the next six months, Mr. Sandahl, operating through Complex, continued to provide consulting services to Glenayre.

Meanwhile, Glenayre claims that it was independently developing a new paging system entitled "Omega Gold." The Omega Gold system includes valuable trade secrets which are Glenayre's exclusive property. Consequently, it has determined that several patentable inventions are present in the Omega Gold system and is currently in the process of obtaining patent protection for them.

As part of this process, several technical documents, including patent applications, have been prepared by Glenayre's personnel and patent counsel. Glenayre maintains that it has not published or otherwise disseminated these documents or materials; nevertheless, it believes that Defendants obtained Glenayre's proprietary and trade secret information which they could use to acquire a competitive advantage.

In fact, Complex is developing a new paging system referred to as C-NET. At the time these proceedings were initiated, Complex's design of the C-NET system was the subject of an arbitration proceeding in Quincy, Illinois, between Glenayre and Complex regarding Complex's alleged violation of its noncompete agreement with Glenayre.

During a pre-trial hearing in relation to the arbitration proceedings, Mr. Sandahl stated that an atto had examined both the Glenayre and C-NET patent applications and found that Glenayre's application was a "clone" of Complex's. It is this event that led Glenayre to the conclusion that Complex somehow obtained a copy of its confidential and proprietary information relating to Omega Gold.

On April 3, 1992, Glenayre filed a complaint: Count I alleges common law misappropriation of trade secrets; Count II asserts a claim for statutory misappropriation of trade secrets; and Count III alleges that Defendants tortiously interfered with contractual relations. The Court granted the motion for a preliminary injunction; however, it allowed both parties to continue to pursue patent applications on the technology at issue. On May 24, 1993, the parties stipulated to a dismissal of Counts I and III. This cause is before the Court on Defendants' motion for summary judgment on Count II of the complaint, pursuant to Fed. R.Civ.P. 56.

II. SUMMARY JUDGMENT

Under Fed.R.Civ.P. 56(c), summary judgment shall be granted if the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Black v. Henry Pratt Co., 778 F.2d 1278, 1281 (7th Cir. 1985). The moving party has the burden of providing proper documentary evidence to show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists when "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2511, 91 L. Ed.2d 202 (1986). Unquestionably, in determining whether a genuine issue of material fact exists, the evidence is to be taken in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Once the moving party has met its burden, the opposing party must come forward with specific evidence, not mere allegations or denials of the pleadings, which demonstrates that there is a genuine issue for trial. Howland v. Kilquist, 833 F.2d 639 (7th Cir. 1987). "A scintilla of evidence in support of the nonmovant's position is insufficient to successfully oppose summary judgment; 'there must be evidence on which the jury could reasonably find for the [nonmoving party].'" Brownell v. Figel, 950 F.2d 1285 (7th Cir. 1991) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2511-12, 91 L.Ed.2d 202 (1986)). Moreover, a party opposing a motion for summary ...


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