Ferranti Electric, Inc. v. Harwood

43 Misc. 2d 533, 251 N.Y.S.2d 612, 1964 N.Y. Misc. LEXIS 1632
CourtNew York Supreme Court
DecidedJune 25, 1964
StatusPublished
Cited by18 cases

This text of 43 Misc. 2d 533 (Ferranti Electric, Inc. v. Harwood) 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
Ferranti Electric, Inc. v. Harwood, 43 Misc. 2d 533, 251 N.Y.S.2d 612, 1964 N.Y. Misc. LEXIS 1632 (N.Y. Super. Ct. 1964).

Opinion

William B. Brennan, Jr., J.

In this action, plaintiff Ferranti Electric, Inc., a New York corporation (hereinafter referred to as “Ferranti”), which is a wholly-owned sub[534]*534sidiary of Ferranti, Ltd., a British concern, seeks a permanent injunction against the defendants restraining them from engaging in the manufacture and sale of magnetostrictive delay lines, from communicating plaintiff’s trade secrets in respect thereof to others, and from any endeavor to sell said devices to plaintiff’s customers.

Ferranti, since the year 1957, has been engaged in the development, production and eventual sale of longitudinal and torsional magnetostrictive delay lines, which are memory devices used as component parts of certain radar installations and computers. It claims that its former employees, the defendants Harwood, Lindemann and Sapsowitz entered into a conspiracy with the defendant Wild, president and sole stockholder of the defendants Digital Devices, Inc. (hereinafter referred to as “Digital”) and Wild and Associates, Inc. (hereinafter referred to as “Associates”) to appropriate plaintiff’s trade manufacturing processes for their own use and in violation of the confidence under which Harwood had learned of these processes. All defendants deny any conspiracy or breach of confidence and all maintain, further, that the processes relied upon by the plaintiff do not constitute trade secrets and, accordingly, should not be protected as such.

The defendant Harwood, previously employed by the parent company in England, joined Ferranti in 1957. A graduate engineer, he was in large part responsible for inaugurating plaintiff’s delay line program, and later as chief engineer became fully familiar with the over-all production and manufacturing techniques employed by the plaintiff in producing magnetostrictive delay lines. Defendants Lindermann and Sapsowitz joined Ferranti in 1959 and 1960, respectively, and each worked in an engineering capacity of some importance. All three became employees of Digital in the month of August, 1962, and within approximately two months thereafter six additional Ferranti employees, technicians, assemblers, machinists and draftsmen, also left plaintiff’s employ and were hired by Digital.

The defendant Wild was, in the year 1961, the president of Associates, which concern acted as sales representative for a number of manufacturing concerns in the field of electronic memory devices. Associates represented companies producing all types of said devices with the single exception of magnetostrictive delay lines. Wild became interested in the delay line field in 1961 and attempted to establish a sales representative relationship with Ferranti in that year. This never materialized due to the fact that another company which Associates repre[535]*535sented was in competition with Ferranti in connection with a different device. In October of 1961, one Fahnestock, an associate of Wild, was chairing a symposium on memory devices and contacted Mr. Davies, general manager of Ferranti, with a view toward having one of Ferranti’s employees give a short lecture on delay lines. Harwood was asked by Davies to perform this service, and, significantly, was in no way restricted or confined in the manner in which he would approach the topic. Wild first met Harwood on that occasion and, apparently impressed, invited him to lunch approximately one month later, at which time a general discussion took place about the performance of delay lines.

It does not appear that any further meeting between Harwood and Wild occurred until June of 1962. During this six-month period Wild, having been unsuccessful in obtaining a sales representative relationship with any delay line manufacturer, decided to reactivate a then dormant Wild Corporation, Digital, and to embark upon the production of delay lines. In furtherance of this plan, he hired one Wicks who up to that time had been employed by Control Electronics Corporation, one of Ferranti’s competitors in the delay line field. Wicks went on the payroll in January, 1962, and proceeded to assemble six or eight magnetostrictive delay lines which he used to demonstrate to the sales force of Associates the functions and performance of this type of memory device.

In June of 1962, Wild was ready to go into production, and it was at this juncture that he again contacted Harwood. Wild was considering hiring a production engineer for delay line manufacture and wanted Harwood’s professional evaluation of certain named individuals who were under consideration. At this point Harwood, who was disenchanted with the management at Ferranti, indicated to Wild that he himself might be interested in a new association. Two days later, Wild called Harwood and made him a firm offer of $20,000 a year to join Digital as vice-president and general manager, the salary representing an increase of $5,000 over what Harwood was earning at Ferranti. Harwood did not immediately accept the offer, but returned to England to discuss with the parent company the possibility of returning to its employ. On August 6, he accepted Wild’s offer and joined Digital on August 13, 1962.

When Sapsowitz and Lindemann, who were also dissatisfied with conditions at Ferranti, heard of Harwood’s departure, they contacted him directly and requested employment. Within a few days they were both hired by Digital and given salary increases.

[536]*536The issues presented for determination are: first, whether the processes relied upon by Ferranti constituted trade secrets, and, second, whether or not there was any wrongful misappropriation of those processes by Harwood, Lindemann and Sapsowitz. After some 18 days of trial, during which almost 3,000 pages of testimony were taken and during which literally hundreds of exhibits were admitted in evidence, the court concludes that plaintiff’s processes were not trade secrets entitled to protection and that, in any event, there was no wrongful misappropriation.

Plaintiff’s Processes

It is not claimed that the end product, i.e., the longitudinal or torsional magnetostrictive delay line, is a trade secret. Plaintiff claims, however, that, as a result of substantial capital investment and a laborious and painstaking period of trial and error, it has developed manufacturing and testing techniques which are entitled to protection, has developed sources of supply of specific materials which are secret and entitled to protection, and has a customer list which is entitled to protection.

The customer list can be disposed of summarily. It is in no way a trade secret, but a compilation of the largest and best-known companies and concerns in the electronics field in this country. All of them were known to Wild years before Harwood’s arrival, and to call such a list secret is ludicrous.

Aside from customer lists, plaintiff claims no less • than 45 trade secrets and these 45 would seem to involve every step in the entire process of production. It is thus not a particular special process or even a group of special processes which is claimed as a secret, but the entire body of knowledge assimilated by Harwood, Lindemann and Sapsowitz during their years with Ferranti. This is perhaps the essential difficulty with plaintiff’s position in this case.

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43 Misc. 2d 533, 251 N.Y.S.2d 612, 1964 N.Y. Misc. LEXIS 1632, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ferranti-electric-inc-v-harwood-nysupct-1964.