Educational Sales Programs, Inc. v. Dreyfus Corp.

65 Misc. 2d 412, 317 N.Y.S.2d 840, 169 U.S.P.Q. (BNA) 117, 1970 N.Y. Misc. LEXIS 1082
CourtNew York Supreme Court
DecidedDecember 8, 1970
StatusPublished
Cited by36 cases

This text of 65 Misc. 2d 412 (Educational Sales Programs, Inc. v. Dreyfus Corp.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Educational Sales Programs, Inc. v. Dreyfus Corp., 65 Misc. 2d 412, 317 N.Y.S.2d 840, 169 U.S.P.Q. (BNA) 117, 1970 N.Y. Misc. LEXIS 1082 (N.Y. Super. Ct. 1970).

Opinion

Edward R. Greenfield, J.

This action evokes echoes of another Dreyfus case of long ago — marked by accusations of disloyalty, betrayal, and misappropriation of secrets. But [413]*413there the resemblance ends, for we are dealing here not with military secrets but with trade secrets, not with national honor and security but with business profits and commercial prestige.

Defendant Dreyfus Sales Corporation is the marketing and distributing organization for the Dreyfus Fund, one of the largest and most successful mutual funds in the world. Defendant Harvey I. Epstein is president of the sales corporation. Plaintiff is a corporation engaged in the business of sales training and promotion. It was headed by Herbert Abelow, a man of extensive experience in the sale of mutual funds, and a friend of Mr. Epstein.

In the fall of 1969, at a trade convention, Abelow approached Mr. Epstein to tell him about an exceptional idea he had, which he asked to be kept confidential. He also requested that if they did not reach an agreement on it, Dreyfus was not to use it. Epstein assured him that because of their long-standing relationship there was no cause for worry, and if Dreyfus did not use his idea, Abelow was free to take it to anyone else. Abelow thereupon disclosed his idea, which was to make tape players and monthly tape cassettes containing educational and promotional material available free of charge to independent mutual fund salesmen, with the players, cassettes and contents to be purchased from plaintiff. 7

Defendant had previously experimented with video and reel tapes for communication and education of its sales force, but what appealed to Epstein in Abelow’s idea was going directly to the independent fund salesman via tape cassettes. He indicated, however, that it would be too costly to supply the players and cassettes free of charge to salesmen. During the course of negotiations the plan was changed, to sell the program— players and one cassette a month on a technical aspect of fund sales — for $60 a year, with defendant bearing the cost of the players and the cassettes in part, and having the responsibility for advertising and promoting the program.

There were disagreements over the prices plaintiff was asking for the hardware, the use of defendant’s mailing list, and other matters, and although many memos were exchanged, no written agreement was consummated. Defendant decided not to buy the tapes and cassettes from plaintff corporation, but asked Abelow to work with it individually as a consultant on the program content. This suggestion was rejected, and all further contact between the parties was broken off in November of 1969.

[414]*414In January, 1970 Abelow received a flyer in the mail announcing the “Dreyfus Portable Sales Seminar”, the very name he had helped formulate, offering fund salesmen a free tape player and 12 monthly tape cassettes to ‘‘ increase product knowledge ” and “tell about proven sales techniques” for a total price of $60. Admittedly, in December of 1969, after negotiations with plaintiff had been terminated, Dreyfus proceeded with a tape cassette program of its own, purchasing the players and cassettes elsewhere, preparing the program content, and placing the promotional program advertising in publications going to the trade.

Plaintiff thereupon brought this action alleging that defendant, by wrongfully misappropriating plaintiff’s idea had breached its agreement of confidentiality, had been unjustly enriched, had breached its oral agreement to carry out the specifics of plaintiff’s suggested program at a guaranteed minimum price, and was guilty of fraud. By way of relief, plaintiff sought an injunction against defendant’s program, an accounting, and money damages.

The cause of action for fraud was dismissed during trial, and on the cause of action for breach of contract the issue of whether or not there was a meeting of the minds on the details of marketing and promoting the tape cassette program was submitted to the jury for a special verdict. The jury by its negative answer, found that despite all the negotiations no agreement between the parties had ever materialized. There remain for disposition the causes of action for breach of confidence and unjust enrichment which were expressly reserved for decision by the court.

The first cause of action alleges that plaintiff has been damaged because defendant’s breach of its promise of confidentiality has prevented plaintiff from selling its ‘ ‘ novel and unique program” to others. The second cause of action alleges that defendant has been unjustly enriched by the wrongful misappropriation of plaintiff’s unique and novel idea. Both causes of action turn on whether plaintiff’s idea was indeed novel, unique, and original. If it was not, it had no value as property, and would not suffice either as consideration for a promise of confidentiality, or as a basis for finding defendant was unjustily enriched.

There can be no question but that after the rupture of negotiations between the parties, defendant proceeded on its own with a program that was similar in many respects. It was offering players and 12 monthly tape cassettes to inde[415]*415pendent mutual fund salesmen under the name of ‘1 Dreyfus Portable 'Sales Seminar” at a price of $60, and the program content covered essentially the same topics as those suggested by plaintiff. While the use of tapes for education and sales training was known to the industry, and defendant had experimented itself on a limited basis, unquestionably it was the impetus of plaintiff’s suggestion which galvanized it into action. While there are points of difference as to the way the program was promoted, the genesis of the defendant’s ultimate actions was the proposal by plaintiff.

Defendant acted on plaintiff’s idea. Plaintiff sues for the theft of that idea. Does the use of that idea create the legal obligation of compensation? An idea is impalpable, intangible, incorporeal, yet it may be a stolen gem of great value, or mere dross of no value at all, depending on its novelty and unique- . ness. Its utility is not the test. An idea may be regarded as useful, and worth putting into execution, even though the imparting of it gives no claim for recovery to its originator. Thus in Soule v. Bon Ami Co. (201 App. Div. 794, affd. 235 N. Y. 609) plaintiff promised to tell defendant a method to increase its profits. The revelation that it should raise its prices was held not to entitle plaintiff to compensation. Similarly, in Lueddecke v. Chevrolet Motor Co. (70 F. 2d 345) the suggestion that the way to correct an improperly balanced car was to relocate some of the weightier components, though adopted, gave rise to no recovery; and in Anderson v. Distler (173 Misc. 261) where plaintiff offered to reveal a matter of great value, and then suggested defendant pay the premiums and not allow his elderly father-in-law’s insurance policies to lapse, which defendant did to his great financial advantage, plaintiff’s claim for compensation was disallowed. Not every “ good idea” is a legally protectible idea. A sensible suggestion must have more to it than good sense to be compensable. Its adoption may be the occasion for gratitude or the voluntary bestowal of tangible reward, but that does not of itself call into play legal compulsion.

Nothing is bestowed if the facts of a 66 secret ” imparted in confidence are already the subject of general knowledge. (National Starch Prods. v. Polymer Inds., 273 App. Div.

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Bluebook (online)
65 Misc. 2d 412, 317 N.Y.S.2d 840, 169 U.S.P.Q. (BNA) 117, 1970 N.Y. Misc. LEXIS 1082, Counsel Stack Legal Research, https://law.counselstack.com/opinion/educational-sales-programs-inc-v-dreyfus-corp-nysupct-1970.