Case Title: Omega Optical, Inc. v. Chroma Technology Corp.

Citation: 174 Vt. 10, 800 A.2d 1064

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2002-04-12T00:00:00Z

Document:
Omega Optical, Inc. v. Chroma Technology Corp. (1999-566); 174 Vt. 10; 
800 A.2d 1064

[Filed 12-Apr-2002]
[Motion for Reargument Denied 10-May-2002]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.


                                No. 1999-566


Omega Optical, Inc.	                         Supreme Court

                                                 On Appeal from
     v.	                                         Windham Superior Court


Chroma Technology Corporation, 	                 January Term, 2001 
Richard Stewart, et al. 


Robert Grussing III, J.

Bernard D. Lambek and Patricia K. Turley of Zalinger Cameron & Lambek, P.C., 
  Montpelier, and R. Mark Halligan, Philip D. Segrest, Jr. and Steven E. 
  Feldman of Welsh & Katz, Ltd., Chicago, Illinois, for Plaintiff-Appellant.

Craig Weatherly of Gravel & Shea, Burlington, Richard H. Munzing of Weber, 
  Perra & Munzing, P.C., Brattleboro, and Heidi E. Harvey, Blair L. Perry, 
  Jolynn M. Lussier and Michael E. Zelinger of Fish & Richardson P.C., 
  Boston, Massachusetts, for Defendants-Appellees.


PRESENT:  Dooley, Morse, Johnson and Skoglund, JJ., and Allen, C.J. (Ret.), 
          Specially Assigned


       MORSE, J.  Omega Optical appeals from a judgment of the superior court
  in favor of  defendant Chroma Technology Corporation and several other
  named defendants in Omega's action  for trade secret misappropriation,
  conversion, breach of loyalty, tortious interference with business 
  relations, unfair competition, conspiracy and breach of contract.  Omega
  argues on appeal: (1) the  court erred in its determination of the proof
  necessary to demonstrate trade secret misappropriation,  and it is entitled
  to judgment as a matter of law on that claim; (2) the court similarly erred
  on each 

 

  of its remaining claims, with the exception of its claims for breach of
  contract and conversion, and it  is entitled to judgment in its favor on
  each of the claims; (3) the court erroneously determined that  Omega's
  proof of damages was not sufficiently definite so as to allow for an award
  without resorting  to speculation or conjecture; (4) Omega is entitled to
  an award of punitive damages as a matter of  law; and, finally, (5) the
  court failed to make adequate findings regarding its crediting of the 
  individual defendants' testimony in light of Omega's theory and requested
  findings that a joint  defense agreement undermined the credibility of that
  testimony.  We affirm.

       This case arises out of events spanning several months starting in
  early 1991, in which a  number of Omega Optical employees left the company
  and went into business together under the  name of Chroma Technology
  Corporation.  Chroma began making thin-film optical interference  filters
  used in fluorescence microscopy, a product that Omega had developed and
  also produces.  On  October 1, 1996, Omega brought suit against Chroma and
  ten of its employees.  Following a twenty-two-day bench trial, the trial
  court issued a 111-page decision finding in favor of defendants on all of 
  Omega's claims. 

       Omega's appeal centers on its argument that, because defendants
  acquired substantial  amounts of information that the court found was
  "protectible as a trade secret," it is entitled to  judgment as a matter of
  law, notwithstanding the trial court's extensive findings that Omega failed
  to  take reasonable steps to protect the information.  The court concluded
  under the evidence that  defendants owed no duty of confidentiality with
  regard to the information.

       As a preliminary matter, and as Omega points out, because the
  operative facts of this case  occurred before July 1, 1996, the effective
  date of the Vermont Trade Secret Act, the common law  predating the act
  applies to this case.  See 9 V.S.A. § 4609 (providing the VTSA does not
  apply to 

 

  misappropriation occurring before its effective date); see also McClary v.
  Hubbard, 97 Vt. 222, 229,  122 A. 469, 473 (1923) (recognizing right of
  action for misappropriation of a trade secret).  But as  the trial court
  noted, the act and the Restatement (Third) of Unfair Competition provide
  guidance  with regard to Omega's common law claim for misappropriation of
  trade secrets. 

       In general, liability for trade secret misappropriation in the
  employment context requires  proof of both the existence of a trade secret
  as well as unauthorized disclosure or use of the secret in  breach of a
  duty of confidence.  Aries Info. Sys., Inc. v. Pacific Mgmt. Sys. Corp.,