Surgidev Corp. v. Eye Technology, Inc.

• Decision Date: 17 November 1986
• Docket Number: Civ. No. 4-85-1376.
• Citation: 648 F. Supp. 661
• Parties: SURGIDEV CORPORATION, a California corporation, Plaintiff, v. EYE TECHNOLOGY, INC., a Delaware corporation, and Robert J. Fitzsimmons, Frederick G. Kalfon, James A. Greiling and Debra J. McCoy, Individuals, Defendants.
• Court: U.S. District Court — District of Minnesota

648 F. Supp. 661

SURGIDEV CORPORATION, a California corporation, Plaintiff, v. EYE TECHNOLOGY, INC., a Delaware corporation, and Robert J. Fitzsimmons, Frederick G. Kalfon, James A. Greiling and Debra J. McCoy, Individuals, Defendants.

Civ. No. 4-85-1376.

United States District Court, D. Minnesota, Fourth Division.

October 10, 1986.

On Motion to Amend November 17, 1986.

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Hugh D. Jaeger, Minneapolis, Minn., and Wayne Willenberg, Martin Horn, and David M. Simon, Spensley, Horn, Jubas & Lubitz (of counsel), Los Angeles, Cal., for plaintiff.

Duane W. Krohnke, Calvin Litsey, James L. Volling, and James C. Wine, Faegre & Benson, Minneapolis, Minn., for defendants.

MEMORANDUM AND ORDER

MacLAUGHLIN, District Judge.

                                             TABLE OF CONTENTS
                FACTS .................................................................. 668
                The Intraocular Lens Industry .......................................... 669
                Surgidev ............................................................... 672
                Non-Disclosure Agreements .............................................. 675
                ETI .................................................................... 676
                DISCUSSION ............................................................. 679
                A. Choice of Laws ...................................................... 679
                B. Trade Secrets ....................................................... 680
                   1. Customer Information ............................................. 680
                      a. Hollingsworth analysis ........................................ 681
                      b. Hospitals and/or Clinics ...................................... 686
                   2. IOL and PMMA Monofilament "Know-How" and New Products ............ 687
                      a. Trade Secret Ownership ........................................ 687
                         (1) Not Generally Known or Easily Ascertainable ............... 688
                             (a) Not Generally Known—PMMA Monofilament ................. 688
                             (b) Not Generally Known—
                                   IOL Manufacturing Know-How .......................... 689
                             (c) Not Generally Known—New Products ...................... 689
                             (d) Not Generally Known—
                                   Remaining Categories of Customer Information ........ 690
                                 (i) Influential Ophthalmologists ...................... 690
                                (ii) Consultants & Non-Medical Consultants ............. 691
                               (iii) Medical Monitor ................................... 691
                         (2) Provide a Competitive Advantage ........................... 692
                         (3) Confidentiality ........................................... 692
                      b. Disclosure, Legal Relationship, and Use ....................... 694
                      c. Duration ...................................................... 696
                C. Breach of Contract .................................................. 696
                

                DISCUSSION
                D. Tortious Interference ..................................... 699
                CONCLUSION ................................................... 700
                

This matter is before the Court on plaintiff's motion for preliminary and permanent injunctive relief. Plaintiff's motion will be granted in part and denied in part.

FACTS

Plaintiff Surgidev Corporation (Surgidev) is a California corporation with its principal place of business in Goleta, California, engaged in the manufacture and sale of intraocular lenses (IOLs). Defendant Eye Technology, Inc. (ETI), is a Delaware corporation headquartered in St. Paul, Minnesota, also engaged in the manufacture and sale of IOLs. Defendants Robert J. Fitzsimmons, Frederick G. Kalfon, James A. Greiling and Debra McCoy are former Surgidev officers and employees now associated with ETI. This is an action alleging unfair competition, misappropriation of trade secrets, breach of contract, breach of fiduciary duty, conversion, and tortious interference with contractual relations and prospective economic advantage. Jurisdiction lies under the Court's diversity powers, 28 U.S.C. § 1332, and venue is proper by virtue of 28 U.S.C. § 1391. Plaintiff seeks preliminary and permanent injunctive relief, as well as compensatory and punitive damages. By stipulation and order dated February 12, 1986, and pursuant to Rule 65(a)(2) of the Federal Rules of Civil Procedure, plaintiff's motion for preliminary injunctive relief was consolidated with plaintiff's prayer for permanent injunctive relief. A consolidated hearing was conducted March 10-19, 1986. Additional arguments were heard and evidence taken April 15, 1986, and June 30, 1986.

Plaintiff originally submitted to the Court a proposed form of injunction. The following is taken verbatim therefrom. Plaintiffs seek to enjoin defendants from:

1. Soliciting for employment or attempting to solicit for employment or hire any SURGIDEV employees for a period of two years from the date of filing;

2. Hiring any SURGIDEV employees for a period of six months after they have left the employment of SURGIDEV;

3. Having Myron Lippman perform any services on behalf of ETI and/or its employees, agents, officers and all persons acting in concert with it with actual notice of this order until October, 1987;

4. Purchasing or obtaining PMMA monofilament from MYRON LIPPMAN, Lippman Engineering Co. (LENCO) and/or L.I.M.R. or their officers, agents, servants, employees and attorneys and any and all persons in active concert or participation with them;

5. Having MYRON LIPPMAN, Lippman Engineering Co. (LENCO) or L.I.M.R. and/or their officers, agents, servants, employees and attorneys and any and all persons in active concert or participation with them make and/or supply PMMA monofilament until 1992;

6. Having Myron Lippman, Lippman Engineering Co. (LENCO) or L.I.M.R. and/or any and all persons in active concert with them teach any of the defendants how to manufacture PMMA monofilament until 1992;

7. Soliciting or attempting to solicit any of the doctors listed on Appendix A hereto as customers and/or shareholders of ETI until 1988;

8. Soliciting or attempting to solicit any of the hospitals and/or clinics listed on Appendix B hereto as customers of ETI until 1988;

9. Soliciting or attempting to solicit any of the doctors and/or customers listed below from working or cooperating with ETI and its officers, directors, employees, agents and those acting in concert with them from designing, developing and/or manufacturing the products indicated below:

                Name                         Product
                Richard Lindstrom            Surgical Viscous Adjunct
                Richard Lindstrom            Super Balanced Salt Solution
                L.G. Leiske                  Posterior Chamber Lens
                Evan Jones                   In the Bag Lens
                

10. Designing, developing and/or manufacturing any Surgical Viscous Adjunct for a period of two years; and

11. Selling any IOLs made by any of the defendants for a period of nine months.

Plaintiff subsequently amended its proposed form of injunctive relief in certain material respects, as discussed in this memorandum.

By order dated May 22, 1986, the Court entered a partial injunction pending final judgment in the case. This memorandum and order incorporates findings of fact and conclusions of law as required by rule 65 of the Federal Rules of Civil Procedure.

The Intraocular Lens Industry

Both Surgidev and ETI are engaged in the manufacture and sale of IOLs — medical devices implanted by ophthalmologists in the human eye to correct vision loss resulting from removal of the eye's natural crystalline lens during cataract surgery. A cataract is a progressive clouding or opacification of the eye's natural lens which obstructs the passage of light and impairs vision. The lens is a transparent structure located behind the iris and the pupil. Together with the cornea, the outermost or external segment of the eye fronting the iris, the lens focuses images onto the retina, the light sensitive tissue that lines the inner rear portion of the eye. Opacification of the lens is an irreversible process occasioned by loss of the lens' water content. There are three major classes of cataracts: those induced by the natural process of aging (approximately ninety percent of all cataracts), congenital cataracts, and cataracts induced by trauma.

Since at least the mid-1950's surgical removal of the opacified lens and implantation of an artificial lens has been an accepted technique for treatment of cataracts.¹ The IOL implantation technique was pioneered by Dr. Harold Ridley, an English ophthalmologist. During World War II, Ridley treated British aviators who sustained injuries when fragments of cockpit canopies penetrated their eyes. These canopies were constructed of polymethylmethacrylate (PMMA). Ridley concluded that the PMMA was inert within body tissue. Thereafter, Ridley developed a method whereby an opacified lens may be surgically removed and replaced with an artificial lens composed of PMMA. Due to technical setbacks, the implantation technique did not immediately gain widespread acceptance, and until the mid-1970's cataract spectacles and contact lenses were the preferred methods of treating cataracts. Since that time, however, medical acceptance of IOL implantation has increased steadily, due primarily to Food and Drug Administration (FDA) approval of new IOL designs, improved microsurgical techniques, and the fact that implantation represents a lesser intrusion on the patient's lifestyle than do spectacles or contact lenses. Unlike spectacles and contact lenses, IOLs require no maintenance and do not magnify vision or obstruct peripheral vision. Today, ninety-four percent of all cataract patients are treated with IOL implantation.

The most common technique for performing IOL implantation is known as extracapsular extraction, or ECCE. In an ECCE operation the surgeon removes the anterior or front portion of the lens capsule and lens cortex and nucleus while...