1 Circuit Judge Ann Claire Williams was a member of the panel

when this case was orally argued on March 29, 2007. Subsequently, Judge Williams deemed it appropriate to recuse herself from further participation in the case and Circuit Judge

William J. Bauer was designated to join the panel as her

replacement. Judge Bauer has read the briefs and listened to

a recording of the oral arguments. He has, in all respects,

fully participated in the case since joining the panel.

In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 06-3012

PATRIOT HOMES, INC. and PATRIOT

MANUFACTURING, INC.,

Plaintiffs-Appellees,

v.

FOREST RIVER HOUSING, INC., doing

business as STERLING HOMES,

Defendants-Appellants.

____________

Appeal from the United States District Court for the

Northern District of Indiana, South Bend Division.

No. 05 C 471—Allen Sharp, Judge.

____________

ARGUED MARCH 29, 2007—DECIDED JANUARY 10, 2008

____________

Before BAUER,

1

 FLAUM, and EVANS, Circuit Judges.

EVANS, Circuit Judge. Two companies, Patriot Homes

and Forest River Housing, compete in the modular hous-
2 No. 06-3012

ing manufacturing industry. Patriot sued Forest River

Housing’s subsidiary, Sterling Homes, and four former

Patriot employees (now Sterling employees) for copying

their home designs. Sterling appeals the district court’s

preliminary injunction order which enjoined it from

misappropriating Patriot’s copyrights, confidential information, trade secrets, and computer files.

The parties have had, for several years, a rather contentious relationship. In 2004, Forest River tried to

purchase Patriot. When Patriot declined Forest River’s

overtures, Forest River did an end run and hired away four

of Patriot’s employees (they are named as individual defendants in this case) and then formed a new

company, Sterling, to build modular homes. Before leaving Patriot, the four employees copied information from

the company’s computers and brought the materials

with them when they joined Sterling. Patriot’s former

general manager assumed the role of general manager of

Sterling. Sterling allegedly used the information taken

from Patriot’s computers to build and sell homes. In the

spring of 2005, Sterling distributed brochures containing

exact copies of Patriot’s floor plans. Sterling’s homes,

however, were less expensive. Patriot filed suit, alleging

copyright infringement under 17 U.S.C. §§ 101 et seq. and

violations of the Computer Fraud and Abuse Act (CFAA),

18 U.S.C. § 1030. Patriot sought preliminary and permanent injunctive relief against Sterling to prevent the

disclosure or use of its information and trade secrets, an

order requiring Sterling to return all of Patriot’s confidential information and trade secrets that are allegedly

under Sterling’s control, compensatory damages, punitive

damages, and pre- and post-judgment interest.

Sterling does not deny that Patriot’s former employees

took information from Patriot’s computers before they

jumped ship, nor does it deny that it has used the information. Sterling contends, however, that all of Patriot’s
No. 06-3012 3

alleged trade secret and/or confidential information is

readily ascertainable and in the public domain. As a result,

Sterling maintains that its use of the information was not

improper. To understand this contention, a brief look at

the modular home business is helpful.

Modular home manufacturers must obtain approval

from the states where they hope to sell their homes. To

obtain state approval, each company must submit to the

state the systems manuals, quality assurance manuals,

model drawings, and substantiating engineering calculations for the homes that the manufacturer plans to

sell in that state. Patriot primarily sells its homes in

Big Ten territory: Indiana, Ohio, Michigan, and Illinois.

It has submitted the required information to each state.

After the preliminary injunction hearing, Sterling sent

Freedom of Information Act (FOIA) requests to Indiana,

Michigan, and Illinois requesting copies of the documents

that Patriot submitted for state approval. In response to

the requests, Indiana produced thousands of documents,

including Patriot’s systems manuals, quality assurance

manual, and individual modular submissions. None of

these documents were marked confidential. Michigan and

Illinois produced similar documents in response to Sterling’s requests, including various systems manuals.

Patriot wrote to each state demanding that it take immediate remedial action to preserve the confidential

nature of these documents; however, none of the states

complied or indicated that the documents were improperly produced. Although none of the documents

were marked confidential, Patriot contends that the

information it submitted to each state is proprietary

and confidential. Sterling asserts that the only alleged

trade secret/confidential information not contained in

materials obtained from the FOIA requests are: (1) bills

of material; (2) prewrites; (3) pricing information contained in the prewrites; (4) order forms; and (5) informa-
4 No. 06-3012

tion regarding which models are the best sellers. Otherwise, everything that Patriot contends is confidential and

trademarked was produced in response to the FOIA

requests.

In June of 2006, the district court entered a preliminary

injunction against Sterling enjoining it from:

[u]sing, copying, disclosing, converting, appropriating,

retaining, selling, transferring, or otherwise exploiting Patriot’s copyrights, confidential information, trade

secrets, or computer files.

The preliminary injunction also required Sterling to:

[c]ertify that copied data and materials of Patriot’s

property, confidential information and trade secrets

on computer files and removable media (CDs, DVDs,

tapes, etc.) have been deleted or rendered unusable.

Sterling does not quibble with the injunction’s prohibition

on using the computer files obtained from Patriot’s computers; it asserts, however, that the remainder of the

injunction is so vague as to constitute only a general

prohibition not to break the law, leaving it without guidance as to when its actions might violate the injunction.

We review the district court’s decision to grant a preliminary injunction for abuse of discretion. Foodcomm

Int'l v. Barry, 328 F.3d 300, 303 (7th Cir. 2003). Rule 65(d)

of the Federal Rules of Civil Procedure requires that the

injunction set “forth the reasons for its issuance; . . . be

specific in terms; . . . [and] describe in reasonable

detail, and not by reference to the complaint or other

document, the act or acts sought to be restrained.” See

also Marseilles Hydro Power, LLC v. Marseilles Land

and Water Co., 299 F.3d 643, 646 (7th Cir. 2002) (stating

that any injunction issued by a federal district court

must be detailed and specific to ensure proper enforcement through contempt proceedings or otherwise); PMC,
No. 06-3012 5

Inc. v. Sherwin-Williams Co., 151 F.3d 610, 619 (7th Cir.

1998) (finding that an injunction must “be precise

and self-contained, so that a person subject to it who

reads it and nothing else has a sufficiently clear and

exact knowledge of the duties it imposes on him that if

he violates it he can be adjudged guilty of criminal

contempt”). This requirement of specificity spares courts

and litigants from struggling over an injunction’s scope

and meaning by informing those who are enjoined of “the

specific conduct regulated by the injunction and subject

to contempt.” Marseilles Hydro Power, 299 F.3d at 647

(citing Consumers Gas & Oil, Inc. v. Farmland Indus.,

Inc., 84 F.3d 367, 371 (10th Cir. 1996)); Hispanics United

of DuPage County v. Village of Addison, 248 F.3d 617, 620

(7th Cir. 2001).

The preliminary injunction entered by the district court

uses a collection of verbs to prohibit Sterling from engaging in certain conduct, but ultimately it fails to detail

what the conduct is, i.e., the substance of the “trade secret”

or “confidential information” to which the verbs refer.

While the law prohibits using another’s trade secrets,

American Can Co. v. Mansukhani, 742 F.2d 314, 328 (7th

Cir. 1984), it is not clear from the injunction order what

the trade secret or confidential information is in this

case. Patriot claims that its trade secret is the “playbook”

for constructing modular homes consisting of its blueprints, engineering calculations, quality control manuals,

and other documents. But it does not deny that much of

this information was readily available when Sterling

submitted FOIA requests because at that time Patriot

had not asked the states to keep the information confidential.

In American Can, a case involving a similar issue, the

plaintiff accused the defendant, a former employee, of

misappropriating its trade secrets for a certain type of

commercial jet ink. We found that the district court
6 No. 06-3012

erred in issuing a preliminary injunction enjoining the

defendant from misappropriating the plaintiff’s trade

secrets without determining whether the defendant’s new

inks were in fact substantially derived from plaintiff’s

trade secrets. 742 F.2d at 326 (finding that the district

court erred when it failed to consider “the public information about plaintiff’s ink formulas, particularly as

revealed in patent documents, and [defendant’s] own

knowledge and experience” in determining the scope of

the injunction).

Patriot argues that there is no requirement that a

court identify each and every element of copyright originality or trade secret and that the injunction identified

specific proscribed acts. We disagree. The district court

did not specify what information is a trade secret;

the parties also dispute what information is protected.

Sterling cannot tell, and neither can we, whether using

the information it obtained through the FOIA requests

would violate the injunction. While it is not always easy

to ascertain what information is a trade secret or confidential at this stage of the proceedings, the district

court still must make this determination in order to

clearly delineate Sterling’s responsibilities pursuant to

the injunction. Id. at 332 (“The problem of framing an

appropriate order may be particularly acute in trade

secret cases, but trade secret injunctions that are too

vague must be set aside.”) (Internal citations omitted.) In

fact, Patriot stated during oral argument that the only

way Sterling might know that it violated the injunction

order is to look at the transcript from the preliminary

injunction hearing. This requires a lot of guesswork on

Sterling’s part in order to determine if it is engaging

in activities that violate the injunction, since the order

itself is a little more than a recitation of the law. See IDS

Life Ins. Co. v. SunAmerica Life Ins. Co., 136 F.3d 537, 543

(7th Cir. 1998) (finding that a provision of an injunction
No. 06-3012 7

2 Separately, Sterling filed a motion to dismiss Patriot’s CFAA

claim, which the district court denied; however, we need not

resolve this issue because the district court’s decision was

interlocutory and not immediately appealable unless Sterling

received certification to appeal, which it did not.

that enjoins the defendant from inducing the plaintiffs’

sales agents and former sales agents to engage in “unlawful insurance practices” but failing to specify the practices does not comply with Rule 65(d)); City of Mishawaka

v. Am. Elec. Power, 616 F.2d 976, 990 n.18 (7th Cir. 1980)

(vacating an injunction enjoining defendants “from monopolizing or attempting to monopolize the distribution

and sale of electric power” because the injunction was too

vague to identify the activities enjoined); E.W. Bliss Co. v.

Struthers-Dunn, Inc., 408 F.2d 1108, 1113 (8th Cir. 1969)

(finding that a preliminary injunction stating that “[a]ll

defendants separately and jointly are restrained from

using or disclosing trade secrets and confidential technical information of plaintiff to any person, firm or corporation” is impermissibly vague). Cf. Syntex Ophthalmics, Inc. v. Tsuetaki, 701 F.2d 677, 684 (7th Cir. 1983)

(upholding a preliminary injunction where the district

court’s order placed defendants on notice of the restrained

acts and provided a procedure for interpreting and applying the injunction and distinguishing between plaintiff’s

trade secrets and information in the public domain).

For these reasons, we VACATE the preliminary injunction because it lacks specificity as required by Rule 65(d).2

Accordingly, we REMAND for proceedings consistent with

this opinion. The Defendants-Appellants are awarded

their costs.
8 No. 06-3012

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—1-10-08