Campbell Soup Co. v. ConAgra, Inc.
| Decision Date | 13 October 1992 |
| Docket Number | No. 91-5997,91-5997 |
| Citation | 977 F.2d 86 |
| Parties | CAMPBELL SOUP COMPANY v. CONAGRA, INC.; Sallie W. Rosenthal ConAgra, Inc. and Sallie Rosenthal, Appellants. |
| Court | U.S. Court of Appeals — Third Circuit |
Stephen M. Orlofsky, Blank, Rome, Comisky & McCauley, Cherry Hill, N.J., Leo A. Knowles (argued), McGrath, North, Mullin & Kratz, Omaha, Neb., Carlo Scaramella, Richter & Scaramella, Cherry Hill, N.J., for appellants.
David H. Pittinsky (argued), Patrick T. Davish, Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa., and John M. Coleman, Sr. Vice President--Law and Public Affairs and Corporate Secretary, John M. Mason, Chief Litigation Counsel, James K. Baughman, Corporate Counsel, Campbell Soup Co., Camden, N.J., for appellee.
Present: BECKER, HUTCHINSON and ALITO, Circuit Judges.
ConAgra, Inc. (ConAgra) appeals an order of the United States District Court for the District of New Jersey granting appellee Campbell Soup Company's (Campbell's) application for a preliminary injunction. Campbell Soup Company v. ConAgra, Inc., 801 F.Supp. 1298 (D.N.J.1991). The district court enjoined ConAgra from using or exploiting a patent on a process for creating a non-fried frozen chicken product which is supposed to taste like it has been fried when it has not (non-fried chicken) and from using the process embodied in the patent in researching, marketing or selling non-fried frozen chicken products. ConAgra raises a variety of arguments on appeal as to why the district court erred in granting a preliminary injunction, including Campbell's failure to make a clear showing of immediate irreparable harm. 1 We agree with ConAgra on this point and will vacate the order granting the preliminary injunction and remand to the district court for further proceedings.
Sallie W. Rosenthal (Rosenthal) grew up on a poultry farm and pursued an education in poultry science. Rosenthal holds a Bachelor of Science degree in Food Science and a Master of Science degree in Food Science and Poultry and Avian Sciences, both from Cornell University. In March of 1984, Rosenthal began working for Campbell and signed a "Patent Trade Secret Agreement Relating To Invention, Business Ideas And Trade Secrets" (agreement). The agreement provided, in relevant part:
All inventions (whether patentable or not and whether new developments or improvements) and all business ideas that are used by or useful to the Company in operating its business which I conceive while employed by it, shall be the Company's property. Any such inventions and ideas I conceive of within one year after my employment terminates shall also be the Company's property if they result from and relate to my work for the Company.
Joint Appendix (Jt.App.) at 925. Rosenthal was assigned to work for Campbell's Swanson line of frozen foods.
Approximately one month after joining Campbell, Rosenthal became involved with Swanson's "Never-Fried Chicken" project. The project covered Swanson's efforts to produce a frozen chicken product for consumer consumption that tasted like fried chicken without being fried. Many of Campbell's competitors in the frozen food industry had also been trying for years to develop a non-fried chicken product. Jerry Webb (Webb), Research Program Leader for Campbell, described the status of Campbell's work on that project at the time of Rosenthal's arrival as follows:
[T]he process at that time was to take a piece of chicken, skinless chicken, inject the piece of chicken with salt phosphate solution, precook the chicken, boil it at this time, we are talking about early 1984, then predust, badder [sic] and bread that part, the breader containing beaded shortening and oil spray and then cook it through a high temperature MPO [Multi-Purpose Oven] and freeze the product.
Id. at 569. Webb testified that it was the entire process, and not the individual elements making it up, which allowed Campbell to eliminate the "fry" step from the process. On June 5, 1984, Rosenthal authored a memorandum describing the unique aspects of the Never-Fried Chicken process, including the use of a humidified or MPO oven to bake the breaded chicken, the use of encapsulated fat or margarine spray to improve the coating flavor and the use of the special bread crumbs and the oven to perfect the appearance of the chicken.
In early 1985, Rosenthal had an interview for a position with ConAgra. ConAgra sells the "Banquet" line of frozen foods and is one of Campbell's main competitors. Rosenthal falsified her employment application to ConAgra by checking off "no" in response to a question asking whether she had any "agreement with employers or others concerning inventions" she had made or might make in the future. Id. at 927. On March 4, 1985, Campbell terminated Rosenthal after she told them she had accepted a position with ConAgra. Seven weeks later Campbell sent a letter to ConAgra regarding the agreement Rosenthal had with Campbell and identifying the Campbell projects Rosenthal worked on, including a non-fried chicken project that according to Campbell, involved trade secrets.
When Rosenthal started at ConAgra, David Scherpf (Scherpf), ConAgra's Director of Product Development for Banquet Foods, left it to Rosenthal to decide which projects she could and could not work on based on her agreement with Campbell. At that time ConAgra was pursuing a project similar to Campbell's Never-Fried Chicken project, which ConAgra called "Light & Crispy" or "Nova Chicken" (Nova Chicken). Unlike Campbell, ConAgra had yet to eliminate all frying steps from its preparation process for Nova Chicken.
Shortly after her arrival at ConAgra, Rosenthal was assigned to the Nova Chicken project. In a March 18, 1985 memorandum written by Ron Wesley (Wesley), a ConAgra employee who had been working on ConAgra's Nova Chicken project, Wesley described to Rosenthal the methods ConAgra was using to try to eliminate the frying step in its project. The memorandum does not mention the use of a bread crumb mixture using encapsulated fat or the spraying or misting of a liquid margarine mix to form the coating of the never-fried chicken project. It does mention use of an MPO or humidified oven to bake a skinless chicken injected with a solution that contains phosphate and sodium that has been predusted, battered, breaded and par-fried (an industry term for "partially" fried).
Rosenthal's lab notes show that within two months of joining ConAgra she was experimenting with processes that did not involve a fry or par-fry step. In her experiments she was using an MPO or humidified oven at about the same temperatures used at Campbell and a thirteen-percent beaded shortening, steps similar to Campbell's. Shortly thereafter, the Nova Chicken project was branded "Top Secret" by ConAgra and it began preparing Nova Chicken for commercial exploitation.
In July of 1986, Rosenthal and ConAgra filed their first patent application for the Nova Chicken process. Their application was wholly rejected three times and partially rejected once, but finally approved by the United States Patent Office in January of 1990. Before securing the patent ('438 Patent), ConAgra test-marketed its product during mid-1986. It was a failure and ConAgra does not intend to market it.
There is no evidence in the record that Campbell continued to work on the Never-Fried Chicken project after 1987. (See A.571) Apparently Campbell put the project on hold until 1991, twelve months after Rosenthal and ConAgra received their patent, when Campbell again began to work on the project. To date Campbell has been unable to produce an acceptable non-fried chicken product. 2
Campbell never formally designated the Never-Fried Chicken project as a trade secret but did undertake certain precautions to preserve secrecy. All employees working on the project were required to sign agreements similar to Rosenthal's. Employees were told to keep the Never-Fried Chicken research under lock and key in their desks. Campbell's Camden and Farmington research facilities were secured and no one could enter without an escort. Also, as happened in this case, once an employee announced that he or she was leaving to join a competitor, Campbell thereafter excluded the employee from its research facilities and sent a "warning" letter to the new employer. The formula for the Never-Fried Chicken product, however, was not kept in Campbell's vault with other top-secret formulae, apparently because it was not yet in production.
On March 15, 1991, Campbell filed a six-count complaint in the United States District Court for the District of New Jersey alleging breaches of contract and fiduciary duty against Rosenthal, tortious interference against ConAgra and misappropriation of trade secrets and unjust enrichment against both ConAgra and Rosenthal. The complaint also alleged that ConAgra and Rosenthal engaged in a civil conspiracy against Campbell. Three days later, Campbell moved for a preliminary injunction against ConAgra and Rosenthal. On July 18, 1991, Campbell filed an amended complaint alleging the same six causes of action but changed the description of the proprietary information Campbell was seeking to protect.
Over a one-week period in late August and early September of 1991, the district court conducted hearings on Campbell's motion for a preliminary injunction. In an order entered on November 13, 1991, the district court granted Campbell's application for a preliminary injunction. The order enjoined ConAgra "from using or exploiting the '438 patent in any way whatsoever including, but not by way of limitation, the marketing, licensing or selling of any product based upon the '438 patent," and
from using the following process to research, market or sell any non-fried frozen food product:
1) injecting skinless chicken with a phosphate solution;
2) predusting the injected...
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