Wilson v. Barton & Ludwig, Inc.

• Decision Date: 04 October 1982
• Docket Number: No. 63900,63900
• Citation: 296 S.E.2d 74,163 Ga.App. 721
• Parties: , 220 U.S.P.Q. 375 WILSON v. BARTON & LUDWIG, INC. and Barton & Ludwig Home Rental, Inc.
• Court: Georgia Court of Appeals

Page 74

296 S.E.2d 74

163 Ga.App. 721, 220 U.S.P.Q. 375

WILSON v. BARTON & LUDWIG, INC. and Barton & Ludwig Home Rental, Inc.

No. 63900.

Court of Appeals of Georgia.

Oct. 4, 1982.

Michael L. Wetzel, Atlanta, for appellant.

F. Carlton King Jr., John G. Parker, Atlanta, for appellees.

CARLEY, Judge.

Wilson, appellant, brought an action against Barton & Ludwig, Inc. and Barton & Ludwig Home Rental, Inc., appellees, alleging the wrongful appropriation of his idea or plan for leasing and managing residential rental properties. Appellant's suit also included a claim for wrongful termination of his employment, a claim which he contends was later dismissed voluntarily.

In November 1976, appellant contacted Barton & Ludwig with regard to an idea he believed to be "tailor made" for the realty company. His idea was to form a home rental program organized around a core of central management but with the actual placement of rental coordinators in satellite offices to procure and lease the properties. An officer of Barton & Ludwig responded positively to appellant's plan and initially proposed that appellant become the head of such a home rental division for Barton & Ludwig and receive as compensation one-half of the division's pretax operating profits. Appellant accepted this proposal. However, there were no immediate profits generated by the division from which to compensate appellant as had been contemplated under the initial agreement. Accordingly, as the plan was implemented, appellant was given a cash advance and then placed on a salary. After nine months, appellant was terminated as manager of the home rental division, given two months severance pay less advances, and transferred to another department. He left Barton & Ludwig altogether approximately six months later without having received any portion of the profits produced by the home rental division. Appellant then brought the action that is the subject of this appeal.

After extensive discovery, appellees moved for summary judgment. The trial court granted summary judgment in favor of appellees, holding, as a matter of law, that appellant's idea for a home rental program was too vague and too lacking in novelty to constitute a property right, that the idea was not divulged in a confidential relationship, and that there was an accord and satisfaction when appellant's position with the home rental division was terminated. The trial court also granted appellees summary judgment as to appellant's claim for the wrongful termination of his employment. The appellant appeals, asserting that the court erred in granting summary judgment as to his claim of wrongful misappropriation of his idea and as to appellees' defense of accord and satisfaction. Also, appellant contends that his claim of wrongful termination had been voluntarily dismissed prior to the entry of the order granting appellees summary judgment on that claim and that, therefore, that portion of the trial court's order should be vacated.

1. The basis for appellant's theory of recovery for the misappropriation of his idea is the existence of an implied contract between the parties to compensate appellant for his idea and the prevention of unjust enrichment of appellees. In Monumental Properties of Georgia, Inc. v. Frontier Disposal, Inc., 159 Ga.App. 35, 37(3), 282 S.E.2d 660 (1981), this court recognized a claim for relief for the misappropriation or conversion of an unpatented or unpatentable product or idea. The subject of Monumental Properties was a unique design for a garbage disposal system. The plaintiff's right of recovery was based upon the long recognized property right in the product of one's mental labors. Monumental Properties, 159 Ga.App. at 37, 282 S.E.2d 660, supra. See Alexis Inc. v. Werbell, 209 Ga. 665, 668, 75 S.E.2d 168 (1953); Walker v. Berger, 148 Ga. 326, 331(4), 96 S.E. 627 (1918); Stewart v. Hook, 118 Ga. 445, 446-447, 45 S.E. 369 (1903). To establish his right to recover, the plaintiff had to show that the design or idea was exclusive, that is, not available in the market place, and that the duty not to misuse the design or idea arose out of a contract or some confidential relationship existing between the parties. Monumental Properties, 159 Ga.App. at 38, 282 S.E.2d 660, supra. Where the plan had been divulged to the defendant in confidence with the expectation of compensation for the use of the idea, the court was willing to construe the arrangement between the parties as "an implied agreement not to use or divulge the information." Monumental Properties, 159 Ga.App. at 38, 282 S.E.2d 660, supra. See generally Textile Rubber & Chemical Co. v. Shook, 243 Ga. 587, 589(1), 255 S.E.2d 705 (1979); Thomas v. Best Manufacturing Corp., Division of Tillotson Corp., 234 Ga. 787, 789(3), 218 S.E.2d 68 (1975); Outside Carpets, Inc. v. Industrial Rug Co., Inc., 228 Ga. 263, 268-269, 185 S.E.2d 65 (1971).

In contrast with Monumental Properties where the misappropriated idea was a product design, the instant case involves an idea that is more abstract--a business management concept. While we have found no Georgia case addressing the exact fact situation before us now, we adopt the clear and concise expression of the elements essential to a recovery for the wrongful appropriation of an abstract idea as set forth in Official Airlines Schedule Information Service, Inc. (OASIS) v. Eastern Air Lines, Inc., 333 F.2d 672 (5th Cir. 1964): "[T]he idea must be novel; (2) the disclosure of the idea must be made in confidence, and (3) the idea must be adopted and made use of by the defendant." OASIS, 333 F.2d at 673-674, supra. A fourth essential element which we also adopt is that the idea be sufficiently concrete in its development to be usable. See Hamilton National Bank v. Belt, 210 F.2d 706, 708 (D.C.Cir.1953).

In deciding whether appellees were erroneously granted summary judgment as to appellant's claim for misappropriation of his idea, we turn first to the "novelty" requirement. The cases addressing protection of trade secrets from unauthorized disclosure are particularly helpful in defining the requirement of novelty since virtually the same requirement has been imposed in order to prove the existence of a trade secret. A trade secret is not entitled to the status of a property right if it pertains to matters "which are generally known in the trade..." Outside Carpets, 228 Ga. at 268, 185 S.E.2d 65, supra. A manufacturer seeking protection of a purported trade secret must show "that its business procedures or methods are peculiar to it and not generally available to all other similar businesses...." Taylor Freezer Sales Co., Inc. v. Sweden Freezer Eastern Corp., 224 Ga. 160, 164, 160 S.E.2d 356 (1968). See Vendo Co. v. Long, 213 Ga. 774, 777, 102 S.E.2d 173 (1958). Accordingly, if an abstract idea or concept is to be protected as a property right, it must be novel and original, and not a matter already in use and within the public's knowledge. See Monumental Properties, 159 Ga.App. at 38, 282 S.E.2d 660, supra. See also OASIS, 333 F.2d at 674, supra. An idea lacking in novelty or originality constitutes something less than a property right and is therefore insufficient to serve as consideration for a promise of confidentiality or as a basis for asserting unjust enrichment. See Alexis Inc. v. Werbell, 209 Ga. at 669, 75 S.E.2d 168, supra; 5 Mer.L.Rev. 208 (1953). Further, it is necessary to determine whether an idea is novel or original to know whether the defendant has appropriated an idea that is the property of the plaintiff (Stewart v. Hook, 118 Ga. at 446-447, 45 S.E. 369, supra) or has merely put to use a concept already in the public's knowledge. See Textile Rubber, 243 Ga. at 591, 255 S.E.2d 705, supra; Outside Carpets, 228 Ga. at 268, 185 S.E.2d 65, supra. See also Havighurst, The Right to Compensation for an Idea, 49 N.W.U.L.Rev. 295, 307 (1954). Public policy considerations also require that business, trade, and the professions be free from encumbrance with alleged property rights in ideas or concepts unless such ideas or concepts are truly unique and original.

The appellees contend, and the trial court agreed, that the question of novelty should be determined as a matter of law. The appellant urges that the determination of novelty is one of fact and that factual questions remain with regard to the novelty of his idea or plan. The body of judicial authority is divided on whether novelty is an issue of law (see generally OASIS, 333 F.2d at 674, supra; Stevens v. Continental Can Co., Inc., 308 F.2d at 105, supra) or whether it is an issue of fact (see generally Capital Films Corp. v. Charles Fries Productions, Inc., 628 F.2d 387, 394-395 (5th Cir. 1980); OASIS, 338 F.2d at 674 (Rives, J. specially concurring) and 676 (on petition for rehearing), supra; Boop v. Ford Motor Co., 278 F.2d 197 (7th Cir. 1960); Hamilton National Bank, 210 F.2d 706, supra; Smoley v. New Jersey Zinc Co., 106 F.2d 314 (3d Cir. 1939); Galanis v. Proctor & Gamble Corp., 153 F.Supp. 34 (S.D.N.Y.1957)) or whether it is neither possible nor preferable to set forth a rule that would be appropriate in all cases. Thomas v. R.J. Reynolds Tobacco Co., 350 Pa. 262, 38 A.2d 61, 64 (1944). In this state, the determination of the existence of a trade secret, which must have the element of exclusivity, has been treated as a fact question. Thomas v. Best Mfg. Corp., 234 Ga. 787, 218 S.E.2d 68, supra; Outside Carpets, 228 Ga. 263, 185 S.E.2d 65, supra. There appears to be no reason to depart from this "trade secret" approach in a case involving an idea for real estate marketing. See Monumental Properties, 159 Ga.App. at 38, 282 S.E.2d 660, supra.

To a great extent, the factual determination of novelty depends upon the existence or absence of evidence that the idea has already been in use and is within the public's knowledge. See Monumental Properties, 159 Ga.App. 35, 282 S.E.2d 660, supra; Outside Carpets, ...