Surgidev Corp. v. Eye Technology, Inc.

• Citation: 828 F.2d 452
• Decision Date: 04 September 1987
• Docket Number: No. 86-5465,86-5465
• Parties: SURGIDEV CORPORATION, a California corporation, Appellee, v. EYE TECHNOLOGY, INC., a Delaware corporation; Robert J. Fitzsimmons; Frederick G. Kalfon; Debra J. McCoy; James A. Greiling, Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 452

828 F.2d 452

4 U.S.P.Q.2d 1090

SURGIDEV CORPORATION, a California corporation, Appellee, v. EYE TECHNOLOGY, INC., a Delaware corporation; Robert J.

Fitzsimmons; Frederick G. Kalfon; Debra J.

McCoy; James A. Greiling, Appellants.

No. 86-5465.

United States Court of Appeals,

Eighth Circuit.

Submitted May 14, 1987.

Decided Sept. 4, 1987.

Duane W. Krohnke, Minneapolis, Minn., for appellants.

Paul L. Gardner, Los Angeles, Cal., for appellee.

Before ROSS, ^* Circuit Judge, HENLEY, Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.

JOHN R. GIBSON, Circuit Judge.

Eye Technology, Inc., and four of its associates (collectively, "ETI"), all former employees of Surgidev Corporation, appeal from the district court's ¹ orders enjoining ETI from engaging in certain business activities as a result of its misappropriation of Surgidev trade secrets and its tortious interference with Surgidev's contractual relations. See Surgidev Corp. v. Eye Technology Inc., 648 F.Supp. 661 (D.Minn.1986). ETI challenges certain factual findings supporting the propriety and length of the injunction, disputes the conclusion that ETI tortiously interfered with one of Surgidev's contractual relationships, and contests the district court's refusal to modify its order based on ETI's acquisition of another company. We affirm the orders of the district court.

The district court's opinion outlines the factual background of this litigation in generous detail. Briefly, Surgidev manufactures intraocular lenses ("IOLs"), devices that are surgically implanted by ophthalmologists to restore the vision of many cataract patients. The primary buyers of IOLs are the approximately five thousand ophthalmologists certified to implant IOLs; of these ophthalmologists, however, about ten percent of them, the so-called high volume implanters, perform sixty to seventy percent of all implantations. Id. at 672.

Surgidev was founded in 1976 by Myron Lippman, an electrical engineer who developed technologies for manufacturing IOLs. In 1979, Dennis Grendahl purchased eighty percent of Surgidev from Lippman, and those two along with Robert Fitzsimmons, an IOL sales and marketing veteran, combined to make Surgidev a dominant IOL manufacturer by 1982. Id. A chief reason for this success was that Surgidev was the first to produce haptics, the devices that connect the IOL lens to the human eye, made entirely of polymethylmethacrylate ("PMMA"). Lippman developed this process, known as the PMMA monofilament process. In October 1982, disagreements between Grendahl and Lippman forced Lippman to leave Surgidev. Before departing, Lippman and Surgidev entered an agreement, titled the "Deal Memo," in which Lippman transferred to Surgidev the PMMA monofilament process.

The individual defendants in this litigation were all at one time key employees of Surgidev's marketing and sales division. Id. at 672, 674. Between February and August of 1985, they all resigned from their positions at Surgidev, and, subsequently, joined the newly formed ETI, a competitor of Surgidev's in the IOL industry.

Surgidev brought this action alleging, among other things, that ETI misappropriated Surgidev trade secrets and tortiously interfered with Surgidev's contractual relations. Surgidev sought injunctive relief aimed in part at preventing ETI from engaging in business activities relating to these trade secrets and to Surgidev's contractual relations with Lippman. After a trial, the district court granted in part Surgidev's requested injunctive relief, which, most significantly for purposes of this appeal, prohibited ETI from soliciting any of Surgidev's customers that qualify as high volume implanters through December 31, 1987. Id. at 701. After the issuance of this order, ETI filed a motion for reconsideration, which was denied in all respects relevant to this appeal. Id. at 701-03.

ETI raises four issues on appeal: (1) whether the district court's factual findings supporting its conclusion that ETI misappropriated Surgidev trade secrets are clearly erroneous; (2) whether the length of the injunction is inequitable; (3) whether the district court erred in concluding that ETI unlawfully interfered with contractual relations between Surgidev and Lippman; and (4) whether the district court abused its discretion in refusing to modify the injunction based on ETI's acquisition of another IOL company.

I.

ETI challenges the district court's factual findings supporting its conclusion that ETI misappropriated Surgidev trade secrets. In many instances, ETI unabashedly asks this court to evaluate the evidence before the district court and reject the district court's detailed factual findings. Accordingly, a brief discussion of our limited standard of review is appropriate. Pursuant to Fed.R.Civ.P. 52(a)'s clearly erroneous rule, a district court's factual findings may not be reversed unless "the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct 1504, 1511, 84 L.Ed.2d 518 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948)). Appellate courts must defer to the factual findings of trial judges who, by virtue of their opportunity to hear and evaluate the witnesses and their expertise acquired over the course of many factfinding proceedings, are eminently more qualified to make factual findings. Id. at 574, 105 S.Ct. at 1512. The clearly erroneous rule saves judicial resources, id. at 574-75, 105 S.Ct. at 1512-13, and assures the parties that the trial is the principal factfinding proceeding, rather than just a "tryout on the road." Id. at 575, 105 S.Ct. at 1512 (quoting Wainwright v. Sykes, 433 U.S. 72, 90, 97 S.Ct. 2497, 2508, 53 L.Ed.2d 594 (1977)).

Therefore, the clearly erroneous standard does not allow an appellate court to reverse a factual finding simply because it is convinced it would have decided the case differently. Id. at 573, 105 S.Ct. at 573. Moreover, "[w]here there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous." Id. at 574, 105 S.Ct. at 1512 (emphasis added). Finally, in applying the standard, we must construe the evidence in the light most favorable to the party prevailing below, and the burden is on the objecting party to clearly demonstrate error in the factual findings. Craft v. Metromedia, Inc., 766 F.2d 1205, 1212 (8th Cir.1985), cert. denied, 475 U.S. 1058, 106 S.Ct. 1285, 89 L.Ed.2d 592 (1986).

ETI first disputes the district court's finding that Surgidev treated its customer information as confidential. See 648 F.Supp. at 692-94. Surgidev was required to take efforts "reasonable under the circumstances" to maintain the secrecy of its customer information. Uniform Trade Secrets Act ("UTSA") Sec. 1(4)(ii), 14 U.L.A. 542 (1980). ² In support of its finding that Surgidev treated this customer information as confidential, the district court found that Surgidev put its employees on notice by requiring employees to sign non-disclosure agreements, 648 F.Supp. at 693; Surgidev restricted vistor access to its sales and administrative headquarters, id.; Surgidev kept customer information documents in locked files, id. at 694; and Surgidev distributed customer information data only on a "need-to-know" basis, id. Notwithstanding these conclusions, ETI argues that the district court's confidentiality finding is clearly erroneous because Surgidev failed to warn departing employees who took jobs with other IOL companies of the secrecy of Surgidev's customer information. Even if this assertion were true, it does not render the district court's confidentiality finding clearly erroneous. Only reasonable efforts, not all conceivable efforts, are required to protect the confidentiality of putative trade secrets. See UTSA Sec. 1(4)(ii) Commissioners' Comment, 14 U.L.A. at 543; cf. Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 901-03 (Minn.1983) (inadequate efforts). Even if Surgidev failed to remind departing employees of the secrecy of its customer information, the actions the district court found it did take were sufficient to "signal[ ] to its employees and to others that certain information is secret and should not be disclosed." Electro-Craft, 332 N.W.2d at 902. We thus reject ETI's contention that the district court clearly erred in finding that Surgidev took reasonable efforts to protect the secrecy of its customer information. ³

ETI next contests the district court's finding that the identity of Surgidev's high volume implanters is not generally known or readily accessible to others. See 648 F.Supp. at 682-84. The district court premised its finding primarily on the testimony of three witnesses, each an employee of a Surgidev competitor. In sum, they testified that the identity of an IOL company's high volume implanters is considered confidential and that they did not know the identity of Surgidev's high volume implanters. See id. at 682. ETI now attacks the credibility of these witnesses and points to alleged inconsistencies in their statements. Accordingly, ETI contends that we should disregard this testimony in favor of the testimony of their expert witness, who stated that while he was an executive at two IOL companies those companies were able to learn the identity of Surgidev's customers. Factual findings based on the credibility of witnesses can "virtually never" be clear error. See, e.g., Craft v. Metromedia, Inc., 766 F.2d at 1212. The district court was in the best position to assess the arguably contradictory testimony of both sides. After reviewing this evidence, we tend to agree with the district court's assessment, and we certainly are not left with a definite and firm conviction that the district court mistakenly found that the identity of Surgidev's high volume implanters is not...