745 F.2d 1423 (Fed. Cir. 1984), 84-838, Syntex Ophthalmics, Inc. v. Novicky

Docket Nº:Appeal Nos. 84-838, 84-857.
Citation:745 F.2d 1423
Party Name:223 U.S.P.Q. 695 SYNTEX OPHTHALMICS, INC., et al., Appellees, v. Nick N. NOVICKY, et al., Appellants. George F. TSUETAKI, et al., Appellees, v. Nick N. NOVICKY, et al., Appellants.
Case Date:October 03, 1984
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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745 F.2d 1423 (Fed. Cir. 1984)

223 U.S.P.Q. 695

SYNTEX OPHTHALMICS, INC., et al., Appellees,


Nick N. NOVICKY, et al., Appellants.

George F. TSUETAKI, et al., Appellees,


Nick N. NOVICKY, et al., Appellants.

Appeal Nos. 84-838, 84-857.

United States Court of Appeals, Federal Circuit

October 3, 1984

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[Copyrighted Material Omitted]

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Keith V. Rockey, Chicago, Ill., argued, for appellant Novicky.

James W. Gould, New York City, argued for appellee Syntec. With him on the brief were Joseph A. DeGirolamo, New York City, of counsel, and Holland C. Capper, Chicago, Ill., of counsel.

Before DAVIS, Circuit Judge, NICHOLS, Senior Circuit Judge, and BALDWIN, Circuit Judge.

DAVIS, Circuit Judge.

Appellant Novicky seeks review of four related decisions of the United States District Court for the Northern District of Illinois: (1) a grant of summary judgment for appellee Syntex, deciding that Syntex has title to all of the patents and patent applications naming Novicky as inventor; 1 (2) a decision holding that Novicky misappropriated Syntex's trade secrets; 2 (3) a final injunction, enjoining Novicky for a twenty-year period from using or disclosing Syntex's trade secrets; 3 and (4) a denial of Novicky's motion to remand the proceedings back to state court. 4

We affirm the grant of summary judgment on the patent issue as to six of the eight patents and applications covered by that decision and remand to the District Court the question of Syntex's title as to the other two patents. On the issue of trade secret misappropriation, we affirm the District Court's holding that Novicky misappropriated Syntex's trade secrets, but reverse the court's twenty-year injunction and remand for reasons explained infra. Finally, we affirm the District Court's denial of Novicky's motion to remand the state action back to state court.



A. The Polycon project and Novicky's employments: The roots of this complex

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litigation 5 go back to 1977. Early in that year, the appellees, Syntex Ophthalmics, Inc. and Arapahoe Chemicals, Inc. (collectively referred to as "Syntex") 6 embarked on a joint venture for research and commercial development of a contact lens material from which rigid gas-permeable contact lenses could be made. 7 They called their venture the "Polycon project". Appellant Novicky, who had been employed by Arapahoe since 1973, was selected to be a chemist on the Polycon project. This litigation arises out of that employment relationship.

When first employed by Arapahoe in 1973, Novicky signed a standard Syntex employment agreement, promising confidentiality and assigning to Syntex all ideas and inventions conceived or developed by him while at Syntex. The agreement provided, in pertinent part:

  1. Disclosure of Information and Assignment and Ownership of Ideas. The Employee agrees to fully disclose, deliver, transfer and assign to Employer, his entire right, title and interest in and to any and all ideas, methods, inventions, devices and improvements, whether patentable or not, originating with, conceived, acquired or developed by Employee, either solely or jointly with others during any times, whether during working hours or not, when the Employee is employed by Employer, if the same be reasonably related to Employer's actual operations. All such ideas, methods, inventions, devices, and improvements are hereafter jointly and severally referred to as "ideas".

    The parties hereto agree that for purposes of Paragraphs (3) and (4) herein, the Employee shall be deemed as Employee of the Company twenty-four (24) hours a day for every day during the year notwithstanding any leaves of absence, vacations, or other leave.

  2. Secrecy: The Employee recognizes and acknowledges that various secrets and/or facts as defined below, are valuable, special and unique assets of the Employer's business. The Employee agrees that during the term of his employment he will use the aforementioned various secrets and/or facts only in connection with his employment with Employer, and that during and after the term of his employment he will not use or disclose any of the various aforementioned secrets and/or facts either on his own behalf or the behalf of any other person or entity.

    The phrase "secrets and/or facts" as used herein shall include, in addition to its usual meaning, any processes, ideas and other information pertaining to research, development, production, and other business or activities of Employer (and/or Employer's customers), and Employer's list of customers.

    At least in its initial phases, the Polycon project was based on two U.S. patents (the Gaylord patents) and some preliminary manufacturing batch sheets 8 which Syntex had purchased as part of its acquisition of Polymer Optics Corporation. The patents disclose processes for synthesizing certain

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    silicone monomers and using them to create an oxygenpermeable plastic lens material. Novicky's role in the project was to develop processes for the commercial development of this contact lens material which would optimize a combination of properties such as high oxygen permeability, wettability, rigidity, and transparency. 9 The procedures Novicky and others followed in the preparation of the Polycon material and its component ingredients were recorded on "Arapahoe batch sheets" which were used as a basis for further refining the Polycon process. Novicky was also involved in developing or revising analytical procedures to determine if the raw, intermediate, and finished materials would satisfy the Food and Drug Administration's (FDA's) requirements. The details of the relevant specifications and analytical methods were recorded on Specification and Analytical Method sheets and incorporated in an FDA master file.

    In addition to his regular duties, Novicky experimented with alternative silicone monomers, trying to improve the permeability of the lens material to be used in manufacturing the contact lenses. Syntex had already designated a specific silicone monomer (T-2) to be used in the Polycon material for which it was seeking FDA approval.

    In December 1977, Novicky prepared, signed, and had two Syntex employees witness a patent disclosure dealing with certain of the alternative silicone monomers he had developed. Those monomers and the processes related to them were apparently the basis for two patents Novicky obtained in 1980 and 1981, U.S. Patent Nos. 4,242,483 and 4,248,989 (the " '483 and '989 patents", or the so-called "private patents").

    On May 12, 1978, Novicky's employment with Syntex was terminated. Four days later, on May 16, 1978, Novicky prepared a second patent disclosure statement regarding other monomers he claimed to have discovered for use in making gas-permeable lens materials (one of which was later designated the S-9 monomer and patented under U.S. Patent No. 4,216,303 (the " '303 patent")). According to Novicky, the discovery contained in the May 16th disclosure had been prompted by his "review" of a 1961 German article on silicone chemistry subsequent to leaving Syntex.

    In August 1978, Novicky began negotiating with Tsuetaki, a Chicago optometrist and the president and sole owner of a small optical company (Fused Kontacts of Chicago, Inc.) 10 for the sale of the technology embodied in the May 16th patent disclosure. Tsuetaki and Novicky agreed that Tsuetaki would hire Novicky as a chemist to develop a commercial operation for the manufacture of the new lens material. Novicky signed an employment agreement, promising, inter alia, to assign to Tsuetaki all patentable and unpatentable inventions, developments, or improvements he produced, within or without the scope of his employment, for the life of the agreement (August 31, 1978--August 31, 1982) plus six months. Novicky resigned his job with Tsuetaki in May 1980.

    B. The state and federal litigation: In July 1980, Tsuetaki sued Novicky in the Cook County Circuit Court (an Illinois trial court) for breach of his employment contract. After a sixteen-day bench trial, the state court issued its decision in January 1981. Tsuetaki v. Novicky, No. 80 CH 4724 (Ill.Cir.Ct. Jan. 13, 1981). It held, inter alia, that the employment agreement was binding and ordered Novicky to assign to Tsuetaki "any and all interest" he had in the patents he had obtained and the patent applications he had filed pertaining to contact lens technology. The state court also

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    enjoined Novicky from "disclosing to any person or entity the contents ... of any laboratory books and records dealing with the experiments, research, progress, and development of the technology involved in the manufacture of contact lenses ..." and from "disseminating matters confidential to George Tsuetaki and/or Fused Kontacts of Chicago, Inc."

    While the state proceedings were pending, Syntex filed this suit (in November 1980) in the federal District Court below, against Tsuetaki and Novicky for misappropriation of trade secrets. Later, Syntex amended its complaint to add an additional count claiming title to certain patents and patent applications naming Novicky as inventor, and seeking relief for patent infringement. The court's jurisdiction was invoked under 28 U.S.C. Sec. 1332 and 28 U.S.C. Sec. 1338. In May 1981, the court severed Syntex's patent infringement claims, pending resolution of the patent title and the trade secret questions. 11

    One consequence of the federal proceedings was that Tsuetaki initiated contempt proceedings (in February 1981) against Novicky and Syntex in state court. Tsuetaki claimed that Novicky had disobeyed the court's January 1981 order against "disseminating matters confidential to George Tsuetaki" by improperly conferring with Syntex's attorney about patent rights, disclosures...

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