Baxter Intern., Inc. v. Morris
| Decision Date | 16 November 1992 |
| Docket Number | No. 92-2079,92-2079 |
| Citation | 976 F.2d 1189 |
| Parties | , 7 IER Cases 1377, 24 U.S.P.Q.2d 1429 BAXTER INTERNATIONAL, INC., Baxter Healthcare Corp., Baxter Diagnostics, Inc., Appellants, v. Roger J. MORRIS, Dr., Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
David J. Parsons, Chicago, Ill., argued (Harry W. Wellford, Jr., Stephen D. Smith, St. Louis, Mo., and Joan M. Fencik, on the brief), for appellants.
Curtis C. Calloway, St. Louis, Mo., argued (Gary M. Smith, on the brief), for appellee.
Before McMILLIAN, JOHN R. GIBSON, and BEAM, Circuit Judges.
Baxter International Inc., Baxter Healthcare Corp., and Baxter Diagnostics, Inc. (collectively "Baxter"), appeal from an order of the United States District Court for the Eastern District of Missouri 1 enjoining Dr. Roger J. Morris from disclosing trade secrets he acquired during his employment with a division of Baxter for a period of one year. Baxter challenges the terms and length of the injunction and the district court's refusal to enforce a contractual noncompetition covenant. We affirm.
Dr. Morris is a research scientist with a Ph.D. in physical biochemistry from the University of Salford. In early 1988, Morris, then employed as a professor at Florida State University, responded to an employment opportunity advertisement placed in a trade journal by Microscan. Microscan is a California-based division of Baxter Diagnostics, Inc., which is a wholly-owned subsidiary of Baxter International, Inc. All three Baxter corporations are incorporated in Delaware with principal places of business in Deerfield, Illinois.
Microscan extended an invitation to interview Morris in California. During the interview, Morris was offered employment in research and indicated his intention to accept. The parties agreed to a salary, but did not reach agreement on when Morris would start employment. Morris returned to Florida, where he made his decision on a starting date and telephoned a representative of Microscan to inform him of the decision. Microscan sent Morris an offer letter and an employment agreement which he signed and returned as requested.
The employment agreement signed by Morris emphasizes that Microscan entrusts Morris, as an employee, with confidential information. The agreement contains a noncompete covenant providing that:
[i]n consequence of such entrusting and such consideration, I [Morris] WILL NOT RENDER SERVICES, DIRECTLY OR INDIRECTLY, FOR A PERIOD OF ONE YEAR AFTER THE TERMINATION OF MY EMPLOYMENT WITH TRAVENOL 2 to any Competing Organization in connection with any Competing Product within such geographic limits as Travenol and said Competing Organization are, or would be, in actual competition.
Joint Appendix at 18 p 5. 3 The agreement also provides that "to promote uniformity in the interpretation of this and similar agreements, this agreement shall be governed by the laws of Illinois." Joint Appendix at 19 p 16.
While employed at Microscan, Morris worked on various projects both as a researcher and a manager. Morris was involved with projects in the areas of bacteria identification and susceptibility determination, blood culture testing, and molecular probe technology. Morris also had access to Microscan's strategic business plans regarding these projects.
On January 31, 1992, Morris resigned his position at Microscan and accepted employment in Missouri with bioMerieux Vitek, Inc. ("Vitek"), one of Microscan's competitors. Vitek hired Morris to manage bioscience projects, initially as deputy director and eventually as director of biosciences. Both Microscan and Vitek research, develop, manufacture, and sell diagnostic equipment for use in microbiological laboratories. Microscan and Vitek are essentially the only two competitors in this particular field. The district court found that while Vitek currently dominates the market, Microscan poses a threat to Vitek because it has cut significantly into Vitek's market share. 4
On February 25, 1992, Baxter filed a two-count complaint seeking injunctive relief against Morris in the District Court for the Eastern District of Missouri. Jurisdiction was based on diversity pursuant to 28 U.S.C. § 1332. The first count seeks to enjoin Morris from misappropriating trade secrets. The second count seeks enforcement of the noncompete provision in Morris's contract with Baxter that prohibits Morris from working for Vitek for one year from the date he left Microscan.
Morris filed a motion on March 4, 1992, seeking a declaration that the law of California applies to the noncompete covenant notwithstanding a contractual provision declaring that the agreement shall be interpreted under Illinois law. On March 16, 1992, the court issued a memorandum and order holding that California law applies to the noncompete covenant. The district court made oral findings of fact and conclusions of law regarding Baxter's claims for injunctive relief on April 30, 1992. Under the common law of trade secret misappropriation, the court enjoined Morris for one year from using or disclosing certain items of confidential information that he acquired at Microscan. The court denied Baxter relief under the noncompete covenant, however, finding the covenant void under California law. On May 4, 1992, the court entered an order setting out in writing the terms of the April 30, 1992, injunction, and denying Baxter's motion to amend the judgment, except to order Morris to circulate a copy of the court's order to persons at Vitek who will have contact with Morris. 5 On May 20, 1992, we denied Baxter's emergency motion for stay pending appeal.
Baxter presents three issues on appeal: (1) did the district court err in refusing to enjoin Morris from employment with Vitek in order to protect Baxter's trade secrets; (2) did the district court err in limiting the injunction prohibiting Morris from disclosing trade secrets to one year; and (3) did the district court err by refusing to enforce the covenant not to compete in Morris's employment agreement with Baxter. We have jurisdiction pursuant to 28 U.S.C. § 1291. 6
Baxter argues on appeal that the district court's order erroneously permits inevitable disclosure of Microscan's trade secrets to Vitek. Baxter contends that the overlap between Microscan and Vitek in certain research and development areas makes disclosure of Microscan's technological and business planning trade secrets inevitable if Morris is allowed to work for Vitek.
As a general rule, Missouri courts 7 will grant equitable protection for an employer's interest in trade secrets. A.B. Chance Co. v. Schmidt, 719 S.W.2d 854, 857 (Mo.Ct.App.1986); Mo-Kan Cent. Recovery Co. v. Hedenkamp, 671 S.W.2d 396, 399 (Mo.Ct.App.1984). Although an exact definition of trade secrets is impossible, Missouri courts rely on six factors in determining whether given information is a trade secret:
"(1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others."
National Rejectors, Inc. v. Trieman, 409 S.W.2d 1, 19 (Mo.1966) (en banc) (). The burden of proving the existence of trade secrets lies with the party seeking protection. Carboline Co. v. Jarboe, 454 S.W.2d 540, 549 (Mo.1970).
After considering the six factors in National Rejectors, the district court found that Baxter had met its burden of proving that at least some of the information in question constituted trade secrets. The court also found that Morris had acquired trade secrets from Microscan which deserved protection. Accordingly, the district court entered an order providing that Morris may work for Vitek in any capacity, but enjoining Morris from using or disclosing certain enumerated trade secrets that he acquired while employed with Microscan. Baxter does not contest the court's findings, but argues that adequate protection of Microscan's trade secrets requires that Morris be enjoined from employment with Vitek, if not altogether, at least from working on the same type of projects as he worked on at Microscan. 8
On appeal, we will not disturb the district court's balancing of the equities absent a clearly erroneous factual determination, an error of law, or an abuse of discretion. Calvin Klein Cosmetics Corp. v. Lenox Lab. Inc., 815 F.2d 500, 503 (8th Cir.1987); West Publishing Co. v. Mead Data Central, Inc., 799 F.2d 1219, 1222 (8th Cir.1986). Accord A.B. Chance Co., 719 S.W.2d at 857 () (emphasis added). Under Missouri law, the restraint imposed on a former employee to protect trade secrets must not be greater than required for the protection of the former employer. See Mo-Kan Central Recovery Co., 671 S.W.2d at 399. Although a former employer is not required to await actual harm before seeking relief, "[i]njunctive relief must be based on a real apprehension that future acts are not just threatened but in all probability will be committed." A.B. Chance Co., 719 S.W.2d at 857. Accord Packard Elevator v. I.C.C., 782 F.2d 112, 115 (8th Cir.1986).
The district court found that Morris is able to undertake employment with Vitek in a management capacity without divulging Microscan's trade secrets. Joint Appendix at 170. The...
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