Electro-Miniatures Corporation v. Wendon Company, Inc., and Fred Eccles, Wendon Company

771 F.2d 23, 1985 U.S. App. LEXIS 22589
CourtCourt of Appeals for the Second Circuit
DecidedAugust 20, 1985
Docket1199, Docket 85-7164
StatusPublished
Cited by17 cases

This text of 771 F.2d 23 (Electro-Miniatures Corporation v. Wendon Company, Inc., and Fred Eccles, Wendon Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Electro-Miniatures Corporation v. Wendon Company, Inc., and Fred Eccles, Wendon Company, 771 F.2d 23, 1985 U.S. App. LEXIS 22589 (2d Cir. 1985).

Opinion

LUMBARD, Circuit Judge:

Wendon Company appeals from a July 20, 1984 judgment of the District of Connecticut, following a jury verdict, holding it liable in the amount of $375,000 for wrongfully acquiring the trade secrets of ElectroMiniatures Corporation (hereinafter “EMC”) and from Judge Eginton’s refusal to order a directed verdict, a judgment n.o.v., a new trial or, alternatively, to resubmit special interrogatories to the jury. Wendon contends that insufficient evidence supports the jury’s conclusions: 1) that EMC possessed a trade secret; 2) that Wendon wrongfully acquired that trade secret; and 3) that Wendon’s wrongful acquisition injured EMC in the amount of $375,-000. In addition, Wendon argues that the jury’s findings are inconsistent, that Judge Eginton wrongfully admitted certain evidence of damages, and that certain of his statements made during trial prejudiced the defendant. Because we see no error in the jury’s findings or in the judge’s rulings or conduct, we affirm.

EMC and Wendon manufacture slip ring assemblies which are electro-mechanical devices that allow electricity to pass from fixed objects to rotating structures. They are used, primarily by the military, in such things as submarine periscopes, tank turrets, and rotating antennas. There are two basic designs for slip ring assemblies. One involves the bonding of a stamped silver ring to an insulating board. The other, a more advanced design, replaces the stamped silver ring with printed circuitry which, in turn, requires additional modifications. Demand for the latter type of slip ring — known as a printed circuit slip ring— increased in the mid-1970’s because it requires less silver.

In 1969, EMC purchased the slip ring business of Breeze, Inc., including its product line, machinery, catalogs, customer lists and more than 1,000 of its detailed drawings. EMC’s purchase enabled it for the first time to produce printed circuit slip ring assemblies. EMC paid Breeze in excess of $250,000 for the acquisition.

At the time of EMC’s acquisition, Fred Eccles was an engineer and salesman in Breeze’s slip ring division. In 1970, Eccles transferred to EMC, where he continued to work in sales, and in February 1974 he left EMC to become sales manager at Wendon. Subsequent to his arrival, Wendon began producing and selling large quantities of printed circuit slip ring assemblies.

On April 24, 1978, EMC filed this diversity suit alleging, among other things, that Wendon and Fred Eccles had misappropriated for their own use EMC’s drawings and other proprietary information vital to the *25 production of printed circuit slip ring assemblies. According to EMC, those drawings constituted a trade secret. EMC sought an accounting, damages and preliminary and permanent injunctions.

A jury trial was held before Judge Eginton in July 1984. Arnold Pollack, President of EMC, testified that prior to 1969 Breeze was the sole producer of printed circuit slip ring assemblies in the United States. In 1969, EMC went into that business by purchasing Breeze’s slip ring division. EMC’s primary objective, according to Pollack, was to acquire Breeze’s drawings, which would enable it to produce printed circuit slip ring assemblies without having to make the large investment otherwise necessary to develop the essential technology. EMC officials testified that the drawings purchased from Breeze bore a proprietary label and that, after acquiring the drawings, EMC restricted access to them in order to protect its investment.

Further, from the testimony of Eccles and other officials, EMC established that Wendon, despite its ability to produce conventional slip rings, had had little success in producing printed circuit slip ring assemblies prior to 1974. Wendon produced one or two such assemblies in 1964 and several others in 1968, but received no repeat orders. In 1967, Wendon contracted with Sperry Rand Corporation to produce printed circuit slip ring assemblies, but Wendon was unable to fill that order, and it ultimately sued Sperry, claiming that Sperry had failed to provide it with “a sufficient number of legible drawings and unambiguous specifications.” Eccles also admitted that at the time he arrived at Wendon in February 1974, the company had no orders for printed circuit slip ring assemblies and had had none since at least 1972.

In contrast, about six months after Eccles’ arrival, Wendon issued a catalog depicting a line of printed circuit slip ring assemblies, which EMC officials testified resembled those produced by EMC. Eccles conceded that Wendon had never manufactured those printed circuit slip ring assemblies prior to the issuance of the catalog in

September 1974. Subsequent to the catalog’s issuance, however, according to sales invoices that EMC put in evidence, Wendon produced and sold over $2 million worth of printed circuit slip ring assemblies, subassemblies, and component parts, making it only the second U.S. producer of that equipment. Further, Wendon conceded that its actual sales were greater than those indicated by the invoices. Pollack, EMC’s president, also testified that in 1978 Wendon, in response to an order referring only to an EMC part number, produced a printed circuit slip ring part that fit perfectly into an assembly produced by EMC. According to Pollack, Wendon could not have done that without access to EMC’s manufacturing drawings.

Finally, EMC established, through the testimony of Eccles and Julius Bogdan, Wendon’s president, that Wendon acquired during 1975 and 1976 eight sets of EMC drawings, at least some of which related to the manufacture of printed circuit slip ring assemblies and component parts.

In its defense, Wendon sought to explain its acquisition of those drawings: Eccles testified that Wendon received them from Breeze for the sole purpose of enabling Wendon to manufacture replacement parts for slip ring assemblies that Breeze had produced prior to 1969. According to Bogdan, Wendon, aided by the drawings, produced $15,791 worth of replacement parts for former Breeze customers. Eccles claimed that Wendon subsequently returned the drawings to Breeze, although he conceded that Wendon copied at least some of them.

In addition, Bogdan claimed that Wen-don’s production of printed circuit slip ring assemblies during the 1960’s established that Wendon was capable of producing those assemblies without access to EMC’s drawings. He also testified that Wendon had long manufactured the slip ring assemblies depicted in the 1974 catalog, but that it had done so using conventional slip rings rather than printed circuit slip rings. However, EMC officials countered with testimony that because of substantial design dif *26 ferences, a conventional slip ring assembly could not be converted into a printed circuit slip ring assembly by the mere inclusion of a printed circuit board.

Wendon also endeavored to establish that the technology necessary to the production of printed circuit slip ring assemblies was fully discussed in trade publications during the 1960’s and had been known to the entire industry since at least 1964. However, Wendon was unable to produce any article that, in fact, supported this claim.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Faunce v. Covello
S.D. California, 2022
USA POWER, LLC v. PacifiCorp
2010 UT 31 (Utah Supreme Court, 2010)
Schanfield v. Sojitz Corp. of America
663 F. Supp. 2d 305 (S.D. New York, 2009)
Cartel Asset Mgmt. v. Ocwen Financial Corp.
249 F. App'x 63 (Tenth Circuit, 2007)
Design Innovation, Inc. v. Fisher-Price, Inc.
463 F. Supp. 2d 177 (D. Connecticut, 2006)
Alexander A. Stratienko, M.D. v. Cordis Corporation
429 F.3d 592 (Sixth Circuit, 2005)
Stratienko v. Cordis Corp
Sixth Circuit, 2005
Linkco, Inc. v. Fujitsu Ltd.
232 F. Supp. 2d 182 (S.D. New York, 2002)
Stewart Title Co. v. First American Title Insurance
44 F. Supp. 2d 942 (W.D. Tennessee, 1999)
Raishevich v. Foster
9 F. Supp. 2d 415 (S.D. New York, 1998)

Cite This Page — Counsel Stack

Bluebook (online)
771 F.2d 23, 1985 U.S. App. LEXIS 22589, Counsel Stack Legal Research, https://law.counselstack.com/opinion/electro-miniatures-corporation-v-wendon-company-inc-and-fred-eccles-ca2-1985.