Sims v. Mack Truck Corp.

• Decision Date: 01 February 1980
• Docket Number: 78-2575.,Civ. A. No. 75-985
• Citation: 488 F. Supp. 592
• Parties: R. W. SIMS, R. W. Sims, Trustee, and R. W. Sims Trust v. MACK TRUCK CORPORATION.
• Court: U.S. District Court — Eastern District of Pennsylvania

488 F. Supp. 592

R. W. SIMS, R. W. Sims, Trustee, and R. W. Sims Trust v. MACK TRUCK CORPORATION.

Civ. A. Nos. 75-985, 78-2575.

United States District Court, E. D. Pennsylvania.

February 1, 1980.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

John A. Young, Fort Wayne, Ind., Stanley B. Kita, Philadelphia, Pa., for plaintiffs.

Jon A. Baughman, Philadelphia, Pa., for defendant.

OPINION

JOSEPH S. LORD, III, Chief Judge.

I. PRELIMINARY STATEMENT

Defendant Mack Truck has renewed its motion for summary judgment on plaintiffs' claims for conversion of trade secrets and other means of unfair competition. These claims, which comprise Count II of the amended complaint in Civil Action 75-985¹ are here on remand for "further proceedings" consistent with the opinion of the Court of Appeals in Sims v. Mack Truck Corp., 608 F.2d 87 (3d Cir. 1979).

On Count I the Third Circuit reversed this court's decision sustaining Sims' patent claims, 459 F.Supp. 1198 (E.D.Pa.1978) holding that the patent was obvious as a matter of law and therefore invalid. See 35 U.S.C. § 103 (1976). On Count II the Third Circuit vacated this court's grant of summary judgment in favor of Mack, 444 F.Supp. 1277 (E.D.Pa.1978), finding that although the parties were not direct competitors, their interests were nevertheless sufficiently adverse to give rise to tort liability for unfair competition under Pennsylvania law.

Plaintiffs are a family trust and its trustee (hereinafter "Sims").² Sims claims that Mack obtained his accumulated "know how" in the manufacture of front-discharge concrete mixers in 1963 while the parties were negotiating the purchase of a license under plaintiff's patent rights. As described in my previous opinion, the front-discharge configuration enjoys several advantages over the more conventional rear-discharge model. See 459 F.Supp. 1198, 1200-04. The parties agree that during these negotiations Sims conducted a Mack representative on a tour through the factory of his licensee, the Travel Batcher Corporation, and that Sims made a presentation to Mack officials. The 1963 negotiations eventually proved unsuccessful because Mack decided not to enter the front-discharge market at that time.

Plaintiff first contends that ten years later when Mack decided to enter the market, it misappropriated Sims' know-how consisting of "trade secrets and confidential information." Second, Sims claims that Mack disparaged the Sims truck in letters written to a federal agency and in a trade film, and that Mack instructed its distributors to do the same. Third, Sims alleges that Mack entered into "illegal and improper" tie-in arrangements with manufacturers of "bowls" or mixing drums mounted on the truck chassis.

II. TRADE SECRETS

A. Generally

The major thrust of defendant's motion for summary judgment is a frontal attack on the legal sufficiency of plaintiff's claims for theft of trade secrets. My previous grant of summary judgment on the trade secrets claims and the Court of Appeals' reversal of that decision was limited to the issue of plaintiff's "standing" to bring a claim for unfair competition as discussed above. Thus neither this court nor the Court of Appeals has had occasion to address the merits of plaintiff's unfair competition count. Therefore, I am free to consider the merits on this motion, free of the strictures of the doctrine of law of the case.

The function of a motion for summary judgment is to avoid a useless trial. To this end the court may examine the pleadings and other materials offered by parties for the purpose of determining if there is a genuine issue of material fact to be tried. Fed.R.Civ.P. 56(c). Summary judgment "shall be rendered forthwith" if it appears from an application of substantive law to the uncontroverted facts that the movant is entitled to judgment as a matter of law. Id. The movant, of course, bears the burden of persuasion but if the motion is properly supported with affidavits and other materials, as it is in this case, the adverse party may not rest on his pleadings but must, by affidavit or other means, "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Opposing affidavits must measure up to the standards of Rule 56(e) in that they (1) "shall be made on personal knowledge"; (2) "shall set forth such facts as would be admissible in evidence"; (3) and "shall show affirmatively that the affiant is competent to testify to the matters stated therein."

With these requirements in mind, I must note at the outset that plaintiff's response to the present motion is for the most part inadequate. Defendant's motion is supported by four affidavits which conform to the requirements of Rule 56(e) and supplemented by copious extracts from deposition testimony and answers to interrogatories. In response, plaintiff has submitted only his own nine-page affidavit, without any supplementary material. A single well-drawn affidavit could well suffice to meet defendant's offer, but plaintiff's affidavit is unfocused and generally unresponsive. Its "factual" statements are frequently couched in terms of plaintiff's "belief" or "opinion". "Conclusory statements, general denials, and factual allegations not based on personal knowledge would be insufficient to avoid summary judgment." Olympic Junior, Inc. v. David Crystal, Inc., 463 F.2d 1141, 1146 (3d Cir. 1972). These deficiencies are not helped by frequent unsupported factual assertions in plaintiff's brief. Self-serving statements of fact in a party's brief, not in proper affidavit form, may not be considered in determining if a genuine issue of material fact exists. Tunnell v. Wiley, 514 F.2d 971 (3d Cir. 1975); Smith v. Mack Trucks, Inc., 505 F.2d 1248 (9th Cir. 1974); James v. H.M.S. Port Lyttleton Port Line Limited, 51 F.R.D. 216 (E.D.Pa.1971).

It is agreed that Pennsylvania law governs the unfair competition claims.³ The essential elements of a claim for conversion of valuable business information under Pennsylvania law may be summarized as follows: (1) plaintiff owns a trade secret; (2) which was communicated to defendant; (3) within a confidential relationship; and (4) was used by the defendant to plaintiff's detriment. See Greenberg v. Croydon Plastics, 378 F.Supp. 806, 811 (E.D. Pa.1974); Milgrim, Trade Secrets § 7.071 (1978). The Pennsylvania Supreme Court has consistently adhered to this test. See Van Products Co. v. General Welding & Fabricating Co., 419 Pa. 248, 213 A.2d 769 (1965); MacBeth-Evans Glass Co. v. Schnellbach, 239 Pa. 76, 86 A. 688 (1913). The defendants in Van Products and MacBeth-Evans were former employees, but the same factors are applicable where the defendant allegedly obtained the information as a prospective licensee. See Smith v. Dravo Corp., 203 F.2d 369, 373 (7th Cir. 1953) (applying Pennsylvania law). In either case, information is gained through a confidential relation and breach of confidentiality is said to be the gravamen of the action. Van Products, supra, 419 Pa. at 254, 213 A.2d 769; see Restatement of Torts § 757 comment a. And, while considerations of personal economic freedom exert a strong influence in former employee cases, a similarly substantial social policy favoring a free flow of commercially useful information is present in the licensee cases.

Before examining plaintiff's trade secret claims it is necessary to arrive at a working definition of "trade secret". Though confidentiality may be the gravamen of the tort, it is clear that in Pennsylvania the existence of a trade secret is an antecedent requirement. Croydon Plastics, supra, 378 F.Supp. at 812. Where the presence of a trade secret is the "sine qua non" for recovery, see Schmidinger v. Welsh, 383 F.2d 455, 466 (3d Cir. 1967), the troublesome definitional question is all important.

Pennsylvania cleaves to the "property" view of trade secrets law. This view holds that legal protection for trade secrets derives in the first instance from their status as a species of intellectual property, rather than from the relationship between the parties. In a famous passage in E. I. DuPont de Nemour Powder Co. v. Masland, 244 U.S. 100, 102, 37 S.Ct. 575, 576, 61 L.Ed. 1016 (1917) Justice Holmes rejected the property view: "The word `property' as applied to trademarks and trade secrets is an unanalyzed expression of certain secondary consequences of the primary fact that the law makes some rudimentary requirements of good faith. . . . The starting point for the present matter is not property or due process of law, but that the defendant stood in confidential relations with the plaintiffs, or one of them." This is not the law in Pennsylvania and the Pennsylvania Supreme Court has taken pains to emphasize that it is not. In Van Products, Chief Justice Eagen deliberately reversed Mr. Justice Holmes' formulation declaring that, "The starting point in every case of this sort is not whether there was a confidential relationship, but whether, in fact, there was a trade secret to be misappropriated: . ." 419 Pa. 248, 268, 213 A.2d 769, 780 (citation and footnote omitted).⁴

My starting point here, as in Croydon Plastics, supra, 378 F.Supp. at 811, is the definition found in Restatement of Torts § 757, comment b: "A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." Quoted in Van Products, supra, 419 Pa. at 258-59, 213 A.2d 769, 775. This inclusive definition may be supplemented by the generally accepted principle that for business information to be secret, "a substantial amount of secrecy must exist." Restatement § 757, comment a at 6. General knowledge will vitiate trade secrecy protection. "That which has become public property cannot be recalled to privacy." Dravo, supra, 203 F.2d at 373. Related to this first...