Minuteman, Inc. v. Alexander

Citation140 Wis.2d 868,412 N.W.2d 902
PartiesNOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. MINUTEMAN, INC., Plaintiff-Appellant, v. L. D. ALEXANDER, GEORGE CASH AND AMITY, INC., Defendants-Respondents. 86-2248.
Decision Date23 July 1987
CourtCourt of Appeals of Wisconsin

Circuit Court, Dane County

Affirmed in part, reversed in part and remanded

Appeal from an order of the circuit court for Dane county: P. Charles Jones, Judge.

Before GARTZKE, P.J., DYKMAN and EICH, JJ.

PER CURIAM.

Minuteman, Inc. appeals from an order denying a temporary injunction in a trade secrets case. The following issues are presented: did the trial court abuse its discretion in refusing to temporarily enjoin the use and disclosure of a trade secret which was obtained without permission; did it err in concluding that Minuteman's customer list and inquiry list were not trade secrets; and did it abuse its discretion in failing to temporarily enjoin other alleged unfair practices not involving trade secrets. We conclude that the trial court abused its discretion by relying on erroneous findings in denying the injunction as to the trade secret formula, but that it did not err or abuse its discretion in any other regard. We therefore affirm in part, reverse in part and remand.

Amity and Minuteman are direct competitors in the antique furniture stripping and refinishing business. L. D. Alexander and George Cash were employed by Minuteman until their resignations on April 7, 1986. They both joined Amity soon thereafter.

Minuteman alleged that Alexander and Cash misappropriated the formula for its furniture stripper known as Stripper '76, as well as two computer lists--an 'inquiry' list which included names of persons responding to advertisements and making inquiries of Minuteman, and a 'customer' list which included names of its customers coded to identify substantial and recent purchasers as well as the type of chemicals purchased. It sued for damages and injunctive relief. It requested a temporary injunction enjoining respondents from using or disclosing the Stripper '76 formula and from contacting persons on its inquiry and customer lists pending disposition of the lawsuit. The parties stipulated to a temporary restraining order. Minuteman then sought further injunctive relief.

The trial court concluded that the Stripper '76 formula is a trade secret under sec. 134.90(1)(c), Stats. It found that Cash obtained the formula without permission but there was insufficient evidence that he turned it over to Amity or that it was used to prepare Amity's stripper. It denied Minuteman's request to restrain Amity from producing, selling or advertising any hot stripper which is a change of their current formula or which is a new product without first providing thirty day's notice to Minuteman.

The court found that Amity used Minuteman's customer and inquiry lists in compiling its mailing list, but concluded that the lists were not trade secrets.

The court further found insufficient evidence to support Minuteman's broad allegations of industrial espionage, criminal theft and breach of contract in furtherance of a civil conspiracy to compete unfairly. It concluded that damages would be an adequate remedy if those allegations could be proven, that Minuteman did not prove irreparable harm and that it had not established a reasonable probability of success on the merits. It denied the injunction. We granted Minuteman leave to appeal.

Section 134.90(3)(a)1., Stats., provides that a trial court may grant an injunction against a person who misappropriates a trade secret, but ch. 813, Stats., governs the granting of any injunction or restraining order. Section 813.02(1) is the authority for issuing a temporary injunction. A temporary injunction shall not be issued under this section unless the movant has shown a reasonable probability of success on the merits, the injunction is necessary to preserve the status quo, the movant lacks an adequate remedy at law, and without the injunction to preserve the status quo pendente lite, the permanent injunction sought would be rendered futile. Werner v. A. L. Grootemaat & Sons, Inc., 80 Wis.2d 513, 520, 259 N.W.2d 310, 313-14 (1977) (footnotes omitted). Denial of a temporary injunction is within the trial court's discretion, and the sole question on appeal is whether the trial court abused its discretion. Id. at 519, 259 N.W.2d at 313 (footnote omitted).

Minuteman argues that the trial court erred by not temporarily enjoining respondents from using or disclosing the Stripper '76 formula. Respondents do not challenge the conclusion that the Stripper '76 formula is a trade secret, or the finding that Cash took it without permission. They contend that injunctive relief is inappropriate based on the finding that the formula could be discovered by reverse engineering.

The trial court found that stripper compounds are readily available and Stripper '76 could probably be reverse engineered. These findings must be affirmed unless clearly erroneous. Sec. 805.17(2), Stats. They would support denial of the temporary injunction since Minuteman would not be irreparably harmed by failure to enjoin use or disclosure of the formula if it could be discovered in other ways.

The trial court relied on a report prepared by a Professor Vaughan in finding that stripper compounds are very common and their ingredients are well known and readily available. The report is not included in the record, was apparently not part of the evidence presented to the trial court at trial, Professor Vaughan did not testify and counsel for Minuteman claims he has not seen the report. We therefore conclude that we cannot rely on the report to uphold these findings.

Minuteman's employees testified that the Stripper '76 formula could not be reverse engineered. Respondents contend that the following response to a question whether a product such as Amity's stripper could be analyzed to discover its components, supports the finding:

Well, yes and no. It depends on why--I mean to have something analyzed, it can cost you, even a simple product like that, would cost anywhere from three hundred to five hundred plus dollars, and if its something that I felt that I could come up with a formulary information, either through one of the tests that are available or through a chemical house where I could use their chemists, shall we say to save me that money, I would do it...

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