Imperial Chem. Indus. Ltd. v. National Distillers & Chem. Corp.

• Decision Date: 29 December 1965
• Docket Number: No. 136,Docket 29830.,136
• Parties: IMPERIAL CHEMICAL INDUSTRIES LIMITED, Plaintiff-Appellant, v. NATIONAL DISTILLERS AND CHEMICAL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

354 F.2d 459 (1965)

IMPERIAL CHEMICAL INDUSTRIES LIMITED, Plaintiff-Appellant, v. NATIONAL DISTILLERS AND CHEMICAL CORPORATION, Defendant-Appellee.

No. 136, Docket 29830.

United States Court of Appeals Second Circuit.

Argued November 18, 1965.

Decided December 29, 1965.

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John R. Schoemer, Jr., New York City (Philip D. Pakula, Richard J. Barnes, and Townley, Updike, Carter & Rodgers, New York City, on the brief), for plaintiff-appellant.

Edward J. Ross, New York City (Stephen R. Lang, and Breed, Abbott & Morgan, New York City, on the brief), for defendant-appellee.

Before WATERMAN, SMITH and ANDERSON, Circuit Judges.

ANDERSON, Circuit Judge:

This action for a preliminary injunction against the disclosure of trade secrets is before this court for the second time. The basis for the first appeal was the District Court's denial of the plaintiff-appellant's motion for a preliminary injunction. On the appeal from that decision this court remanded for further proceedings not inconsistent with the opinion.¹ Thereafter the District Court held hearings on May 27 and June 16, 1965 and again denied ICI's motion for a preliminary injunction on the grounds: (1) that ICI did not have a protectable trade secret, (2) that there was no showing of irreparable injury and the remedy at law would be adequate if it succeeded at the trial in showing that it did suffer damage, (3) that the agreements between ICI and National, and the legal action taken by ICI, raise substantial antitrust questions, and (4) that the disclosures made by National to Toyo subsequent to the handing down by this court of its decision on the first appeal render the application for injunctive relief moot.

Dispositive of this appeal is our opinion that the District Court's finding and conclusion that ICI failed to prove that it would suffer irreparable injury if National were not restrained from permitting Toyo to retain the disclosures already made to it and from making further disclosures to Toyo, cannot be held to be a clear abuse of discretion.

The trial judge repeatedly asked the appellant if it had evidence of irreparable harm to offer, but little or no such evidence was produced. The appellant appears to have relied upon a kind of claimed presumption, flowing from a showing of its ownership of a trade secret, as sufficient for the purpose. While the existence of a trade secret and the wrongful use of it by the licensee is evidence basic to proof of irreparable harm, it is by no means conclusive on that issue and does not operate as a matter of law to foreclose the trial judge from the exercise of discretion on the application for a preliminary injunction.

Thus, in Foundry Services, Inc. v. Beneflux Corporation, 206 F.2d 214, 216 (2d Cir. 1953), the court found no error in the trial court's finding that a trade secret existed, but nevertheless dissolved a preliminary injunction on the ground that the plaintiff-appellee had failed to show that it would suffer irreparable harm if the injunction was not granted. Preliminary relief has also been denied where the harm to the defendant strongly outweighed any benefit that the plaintiff-appellant would have derived from the granting of such relief. Schreyer v. Casco Products Corp., 190 F.2d 921 (2d Cir. 1951), cert. denied, 342 U.S. 913, 72 S.Ct. 360, 96 L.Ed. 683 (1952).

A preliminary injunction is an extraordinary equitable remedy and it will be granted only upon a showing by the applicant that it will probably succeed on the trial and that it will suffer irreparable injury if the defendant is not restrained from certain activity pending the trial. Societe Comptoir De L'Industrie etc. v. Alexander's Department Stores, Inc., 299 F.2d 33, 35, 1 A.L.R.2d 752 (2d Cir. 1962).

The court below was vested with discretion in deciding whether to grant or deny ICI's application and its denial will not be disturbed on appeal unless it amounted to a clear abuse of the trial court's discretion. United States v. W. T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953); United States v. Corrick, 298 U.S. 435, 437-438, 56 S.Ct. 829, 80 L.Ed. 1263 (1936); Carroll v. American Federation of Musicians, 295 F.2d 484, 488 (2d Cir. 1961). We do not find such an abuse of discretion in the present case.

It is unnecessary to discuss the other grounds relied upon by the court below in denying temporary injunctive relief. The appellant, however, contends that, in view of the fact that the trial judge's exercise of discretion rested in part upon his conclusion that the appellant had no trade secret, this matter should again be remanded for reconsideration because the issue of whether or not the appellant actually owned a trade secret had been resolved by this court, and Judge MacMahon of the trial court thereafter exceeded the mandate from this court by entertaining and making a new finding and conclusion on that issue.

The original findings included the statement that there was "* * * no unified description anywhere in the literature of the process, design or operation of ICI's Mark I stirred autoclave reactor. Although the components of such reactor are available in the literature, development of the know-how as a totality successfully and safely to operate a commercial process using such a reactor based upon information in the public domain would have required vast research, at great expense in money and time, plus considerable trial and error over an extended period of time." There was also a finding that the operation of the stirrer by an electrical motor contained within the vessel was secret and not a matter of public knowledge. At the later proceedings held pursuant to the mandate of this court, Judge MacMahon made a completely contrary finding and said, "* * * after reconsideration of the entire record on the earlier hearing, that the design, construction, process and operation of ICI's Mark I autoclave reactor, i. e., the way in which all of the features are interrelated, the know-how by which it was done, the method of making it work, the interrelationship of the parts and their combination, is neither secret, novel, nor unique, and that the whole concept is a matter of public knowledge." He went on to say that his earlier finding had been in error.

At the hearings of May 27th and June 16, 1965, following the first appeal, no significant evidence was added to what had been produced at the original hearing; and it is surprising that an error of...