769 F.2d 842 (1st Cir. 1985), 84-1652, CVD, Inc. v. Raytheon Co.
|Citation:||769 F.2d 842|
|Party Name:||717 CVD, INCORPORATED, et al., Plaintiffs, Appellees, v. RAYTHEON COMPANY, Defendant and Third-Party Plaintiff, Appellant.|
|Case Date:||July 30, 1985|
|Court:||United States Courts of Appeals, Court of Appeals for the First Circuit|
Argued March 6, 1985.
As Amended on Denial of Rehearing and Rehearing En Banc
Sept. 23, 1985.
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Jack Brown, Phoenix, Ariz., with whom Lawrence G.D. Scarborough, Bonnie P. Tucker, Victoria S. Lewis, Brown & Bain, P.A., Phoenix, Ariz., Philip M. Cronin, Roger D. Matthews, Devra G. Bailin, Withington, Cross, Park & Groden, Boston, Mass., and Charles H. Resnick, Lexington, Mass., were on brief for appellant.
Blair L. Perry, Boston, Mass., with whom Hale & Dorr, Boston, Mass., was on brief for appellees.
Before COFFIN and TORRUELLA, Circuit Judges, and RE, [*] Judge.
RE, Chief Judge:
In this action, brought under the antitrust laws of the United States, defendant Raytheon Company (Raytheon) appeals from a judgment, entered pursuant to a special jury verdict, in the District Court for the District of Massachusetts. The judgment awarded plaintiff CVD, Inc. ("CVD") treble damages of $3,180, plus attorneys' fees and costs, granted plaintiffs declaratory relief, and dismissed the defendant's counterclaims.
The dispute between plaintiffs, CVD, Inc., Robert Donadio and Joseph Connolly, both former Raytheon employees, and defendant Raytheon pertains to the manufacture of zinc selenide (ZnSe) and zinc sulfide (ZnS) by a process known as chemical vapor deposition (cvd). On August 28, 1981, plaintiffs Donadio, Connolly, and CVD initiated this action, contending that defendant Raytheon attempted to monopolize the market for ZnSe and ZnS made by the cvd process, in violation of 15 U.S.C. Sec. 2 (1982), and that a licensing agreement between the plaintiffs and Raytheon was an unreasonable restraint of interstate commerce and trade in violation of 15 U.S.C. Sec. 1 (1982). The complaint sought damages and a declaratory judgment that the agreement between Raytheon and CVD, purporting to license the cvd process, was void and unenforceable. The defendant counterclaimed for breach of contract, misappropriation of trade secrets, breach of fiduciary duty, and violation of the Massachusetts consumer protection statute.
After a 27 day trial, in response to special interrogatories formulated by the court, the jury returned a verdict for the plaintiffs. Raytheon, who had previously moved for a directed verdict, filed motions for judgment notwithstanding the verdict, and for a new trial. These motions were denied, and judgment was entered for the plaintiffs. Defendant Raytheon thereupon filed a timely notice of appeal.
Raytheon asks this Court to order that, notwithstanding the verdict, judgment be entered for Raytheon on the ground that there was insufficient evidence to support the verdict of the jury. In the alternative, Raytheon urges that the verdict should be set aside, since, in its view, it is against the weight of the evidence. Raytheon also contends that the jury's finding of damages on the plaintiffs' antitrust claim should be set aside because the plaintiffs suffered no antitrust injury. In addition, Raytheon raises several subsidiary arguments that will be discussed in this opinion.
Since we find that the jury verdict was supported by sufficient evidence, and that Raytheon's contentions and other assertions of error are without merit, the judgment of the district court is affirmed.
Raytheon, a Delaware corporation with executive offices in Massachusetts, is a diversified company specializing in commercial and military electronics, materials and weapons. In 1959, plaintiff-appellee Donadio was hired as an engineer in the Advanced Materials Department at Raytheon. He was employed there until he resigned in the fall of 1979 in order to form CVD. Plaintiff-appellee Connolly was hired by Raytheon in 1972, and was employed there continuously until he also left to form CVD. Donadio and Connally had signed employment agreements promising to protect Raytheon's proprietary information. Both were involved in the manufacture of zinc selenide and zinc sulfide by chemical vapor deposition (ZnSe/cvd or ZnS/cvd). This process combines vaporized zinc solids with hydrogen sulfide or hydrogen selenide in specially modified, high-temperature (approximately
900? centigrade) vacuum furnaces. The resulting solid materials are further processed into high precision optical materials which are used to make, among other things, infrared windows for lasers, high-speed aircraft, and missiles. These materials are the only suitable materials for certain demanding optical uses. Most of Raytheon's work on these materials had been done under contracts with the federal government. As part of its obligation under these contracts, Raytheon was required to provide periodic reports that detailed the technology and processes used in the production operation.
In the fall of 1979, Donadio informed his supervisor, Dr. James Pappis, the manager of the Advanced Materials Department, that he intended to leave Raytheon to start a new company to manufacture ZnS and ZnSe by the cvd process. Pappis replied that this would present legal difficulties in light of Donadio's employment agreement and Raytheon's trade secrets. The next day Pappis consulted with Leo Reynolds, a patent attorney with Raytheon, who spoke with Pappis briefly, and examined some drawings and the government reports for the purpose of determining whether the cvd process contained trade secrets.
The following day Donadio and Connolly met with Pappis, Reynolds, Joseph Pannone, the Patent Counsel for Raytheon, and another Raytheon executive. Reynolds told Donadio and Connolly that they could not manufacture ZnS and ZnSe by the cvd process without using Raytheon trade secrets. Although Donadio disputed Reynolds' assertion that trade secrets were involved, Reynolds threatened to sue if they began to manufacture ZnS/cvd or ZnSe/cvd without a license from Raytheon. Soon thereafter, Donadio and Connolly were asked to leave Raytheon.
After this meeting, Donadio retained an attorney, Jerry Cohen, who specialized in intellectual property. In discussions with Raytheon, Cohen took the position that there were no trade secrets in Raytheon's chemical vapor deposition process since the technology had been published in government reports, and, therefore, was in the public domain. Raytheon asserted, and later attempted to prove at trial, that important details were not included in the reports, and that, consequently, the reports were too vague to permit anyone to reproduce the cvd system. Cohen asked Reynolds for a list of what Raytheon claimed to be trade secrets. Reynolds refused to comply with the request on the ground he could not provide an "all-inclusive" list. At a later meeting, Reynolds read orally a list of claimed secrets but Cohen disputed all the items on the list.
In attempting to settle the dispute, Cohen proposed an agreement in which CVD would not be obligated to pay royalties if CVD could prove that no Raytheon trade secrets were used in its operations. This proposal was refused. Several other formulas for resolving the dispute were also discussed. Raytheon, however, held firm to its position that the plaintiffs could not manufacture ZnS/cvd or ZnSe/cvd without using Raytheon trade secrets, and insisted on a royalty rate based upon a flat percentage of revenue or volume for a ten-year period. Eventually, on February 15, 1980, an agreement was signed, providing for a 15% royalty on earnings for ZnSe and 8% for ZnS. No payments were ever made by CVD under the contract, however, and in 1981 plaintiffs filed the present action.
Standard of Review
The standard of review in setting aside a jury verdict is quite narrow. In order to set aside a verdict, and grant a new trial, the trial judge must find that "the verdict is against the clear weight of the evidence, or is based upon evidence which is false, or will result in a clear miscarriage of justice." Coffran v. Hitchcock Clinic, Inc., 683 F.2d 5, 6 (1st Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 571, 74 L.Ed.2d 933 (1982); Borras v. Sea-Land Service, Inc., 586 F.2d 881, 886-87 (1st Cir.1978). A jury verdict that is supported by the evidence may not be set aside simply because the trial judge or the appellate court would have reached a different result.
In this case, there is evidence which contradicts the plaintiffs' position. Nevertheless, the jury was not required to believe the defendant's evidence. See Ford Motor Co. v. Webster's Auto Sales, Inc., 361 F.2d 874, 885 (1st Cir.1966). When conflicting evidence is presented, from which contradictory inferences may be drawn, it is the role of the jury to make the ultimate determinations of fact. See, e.g., Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1, 9 (1st Cir.1979), cert. denied, 446 U.S. 983, 100 S.Ct. 2964, 64 L.Ed.2d 839 (1980).
After having heard 25 days of evidence presented at trial, the trial judge found sufficient evidence to support the verdict of the jury. It is basic that the appellate court will overturn the trial court's decision only if there has been an abuse of discretion. Coffran, supra, 683 F.2d at 6.
The standard for granting a judgment non obstante veredicto (n.o.v.) is even more burdensome and narrow. A motion for judgment n.o.v. " 'is properly granted only when, as a matter of law, no conclusion but one can be drawn.' " United States v. Articles of Drug Consisting of the Following, 745 F.2d 105, 113 (1st Cir.1984), cert. denied sub nom. --- U.S. ----, 105 S.Ct. 1358, 84 L.Ed.2d 379 (1985) (quoting, Rios v. Empresas Lineas Maritimas...
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