Motorola, Inc. v. Computer Displays Intern., Inc.

• Decision Date: 22 June 1984
• Docket Number: No. 83-2279,83-2279
• Citation: 222 U.S.P.Q. 844,739 F.2d 1149
• Parties: MOTOROLA, INC., Plaintiff-Appellee, v. COMPUTER DISPLAYS INTERNATIONAL, INC., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1149

739 F.2d 1149

222 U.S.P.Q. 844

MOTOROLA, INC., Plaintiff-Appellee, v. COMPUTER DISPLAYS INTERNATIONAL, INC., et al., Defendants-Appellants.

No. 83-2279.

United States Court of Appeals Seventh Circuit.

Argued March 26, 1984 Decided June 22, 1984 As Amended on Denial of Appellant's Motion For Rehearing July 25, 1984 Appellee's Motion For Rehearing Denied August 22, 1984.

Stanley J. Tomsa, Mason, Kolehmainen, Rathburn & Wyss, Chicago, Ill., for defendants-appellants.

Gerald D. Hosier, Hosier, Niro & Daleiden, Chicago, Ill., for plaintiff-appellee.

Before BAUER, WOOD and ESCHBACH, Circuit Judges.

ESCHBACH, Circuit Judge.

The issue presented is whether Computer Displays International, Inc. ("CDI") violated a consent decree entered into between CDI and Motorola, Inc. on June 24, 1982. The district court found a violation and we affirm.

I.

The plaintiff, Motorola, manufactures a variety of electronic products, including cathode ray tube ("CRT") display monitors. ¹ One of Motorola's display monitor product lines is the Model DS 110? monitor ("DS"). Motorola first displayed the DS monitor in a private hotel suite during the June 1980 National Computer Conference in Anaheim, California. Single engineering samples of the DS monitor were thereafter sold or given to 50-75 selected Motorola customers. On January 19, 1981, Motorola obtained a copyright for the DS monitor service manual, which contained a service schematic diagram. The DS monitor, however, was not introduced to the public until the May 1981 National Computer Conference in Chicago.

While Motorola was developing the DS series line, the three individual defendants were Motorola employees. Robert Gatza was the Director of Marketing for Motorola's Display Operations; Chris Petri worked directly under Gatza at Motorola; and Thomas Fair was the Purchasing Agent for Motorola's Electrical Purchasing Group. On October 13, 1980, Gatza's superior informed him that he should seek other employment because of a personality conflict; Gatza was retained on the Motorola payroll, however, through February 28, 1981. Rather than join another company, Gatza and Petri incorporated CDI in November, 1980. When Motorola learned of Petri's involvement with Gatza and CDI, Petri was also terminated effective February 28, 1981. Fair resigned from Motorola on June 29, 1981 to take a position with CDI.

In January, 1981, Gatza, using a pseudonym, gave the parameters for a display monitor deflection yoke ² to a Motorola supplier, DOK of America, Inc., for a quotation on the cost of producing such a yoke. On February 23, Gatza approached another Motorola supplier, Electronic Components Corp., concerning the manufacture and supply of a power transformer. ³ The specifications given by Gatza for both the yoke and the power transformer were identical to those used for the same components in Motorola's DS monitor. CDI surreptitiously obtained a complete DS monitor in early February and began reverse engineering ⁴ from the DS monitor in early March. In May, CDI began marketing and selling its Model MPG 110? display monitor ("MPG"), which was substantially identical to Motorola's DS monitor.

As a result of the great similarity between the DS and MPG monitors, Motorola filed suit against CDI alleging trademark and copyright infringement, breach of employment contracts, and misappropriation of confidential information. This action terminated with the signing of a consent decree on June 24, 1982. The consent decree provided, in relevant part:

7. Robert G. Gatza, Chris A. Petri and Thomas S. Fair ..., by reason of their prior employment with Motorola Display Systems Unit in positions of trust and confidence collectively had access to and knowledge of that Motorola confidential and/or proprietary information respecting research, design, development, manufacturing, sources of supply, marketing and business plans for cathode ray tube display modules in general, and Motorola Model DS3000 and DS4000 series display product lines in particular (hereinafter "said Motorola information").

....

9. Defendants ... are permanently enjoined from: (a) using, publishing or otherwise disclosing to others said Motorola information; ... and (e) engaging in business activities with respect to cathode ray tube display modules that will inevitably result in, or pose a substantial risk of the use or disclosure of said Motorola information.

10. Defendants are permanently enjoined from manufacturing, using and selling the display modules currently designated by CDI as its Model MPG series and all models embodying Motorola information ....

The decree did not bar CDI from introducing a new 110? display monitor so long as it was not the MPG series monitor and did not embody "Motorola information." Indeed, a settlement agreement signed the same day as the consent decree specifically allowed CDI to introduce a new 110? monitor after October 1, 1982. To facilitate protection of Motorola confidential and/or proprietary information, CDI agreed to submit a prototype of any new model thirty days in advance of its introduction. Subsequently, CDI informed Motorola that it would begin marketing a new monitor (the Model CDI monitor) on October 1, 1982.

CDI shipped a prototype of the Model CDI to Motorola on July 30, but Motorola refused to approve the new Model CDI. In a letter dated August 27, Motorola informed CDI that it found "the circuitry utilized in the next generation monitor [the Model CDI] ... [to be] essentially the same as the prior MPG series monitors." Negotiations between Motorola and CDI ensued, but no agreement was reached by the end of September. When it became apparent that CDI would market the Model CDI without Motorola's approval, Motorola filed a motion with the district court on September 28, asking for a temporary restraining order on the sale of the Model CDI monitor and for a rule to show cause why CDI should not be found in contempt of the June 24 consent decree.

On October 1, the district court held a hearing on Motorola's motion, at which Motorola and CDI presented testimony on the identity of the two display monitors. The district court denied Motorola's motion for a temporary restraining order. The court also ruled preliminarily that Motorola had not borne its burden of proving that the monitors were the same, but it continued the hearing on this issue to October 25. The district court did warn CDI:

I think the defendant CDI is at risk. In other words, I have not found that you are not violating the injunction or that the products are different. I am saying for the moment on this one-day hearing I have not been persuaded that the plaintiff has sustained its burden of demonstrating ... that the products are the same. There are risks inherent in what you are doing.

Accepting these risks, CDI commenced marketing and selling the Model CDI monitor after the hearing.

Hearings on Motorola's contempt motion were then held on ten days over a period of three months, during which time the district court heard an additional 1200 pages of testimony and considered numerous exhibits and depositions on the question whether CDI's new display monitor was barred by the June 24 consent decree.

The district court ruled from the bench on July 1, 1983 that CDI was in contempt of the June 24 consent decree. The district court asserted two grounds for reaching this conclusion. First, the court applied the patent law doctrine of equivalents and held that the Model CDI monitor was the same as the Model MPG monitor. Second, the court interpreted the consent decree to mean that any information that was confidential and/or proprietary to Motorola at the time the individual defendants left Motorola could not be incorporated into any CDI display monitor even though that information might later become publicly available. Finding that Motorola's entire DS monitor was confidential when the defendants left Motorola, the court held that the use of substantially similar circuitry in Motorola's DS monitor and CDI's MPG and Model CDI monitors constituted a use of Motorola confidential information in violation of the consent decree. In addition, the district court found that the deflection yoke, power transformer, and mounting brackets used in both the MPG and Model CDI monitors originated with Motorola's DS monitor and, thus, also constituted a use of confidential Motorola information. ⁵ Although the district court found CDI in violation of the consent decree, the court expressly reserved the question of compensatory damages due Motorola as a result of that breach. CDI appeals. ⁶

II.

During oral argument, we sua sponte raised the issue of appellate jurisdiction and ordered the parties to file supplemental briefs limited to this issue within ten days. ⁷ Both sides argue that we have appellate jurisdiction, though each asserts a different ground. Motorola contends that our jurisdiction can be based only on the fact that the district court's contempt order was a final order under 28 U.S.C. Sec. 1291. CDI argues in the alternative that the district court's order was a final order under Sec. 1291, a collateral order under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), or an order "granting, continuing, [or] modifying ... [an] injunction[ ]" under 28 U.S.C. Sec. 1292(a)(1).

A.

We turn first to CDI and Motorola's argument that the district court's order was a final order. While it is true that most post-judgment orders are final decisions within the ambit of Sec. 1291, not all are. To be final, the post-judgment order must still dispose completely of the issues raised. Sportmart, Inc. v. Wolverine World Wide, Inc., 601 F.2d 313, 316 (7th Cir.1979). An order finding a party in civil contempt disposes of all the issues raised only if it includes both a finding of contempt and the imposition of a sanction. Shuffler v. Heritage Bank, 720 F.2d 1141, 1145 (9th Cir.1983); ...