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

P ATRIOTH OMES , I NC . and P ATRIOT M ANUFACTURING , I NC ., Plaintiffs-Appellees

, v.

F ORESTR IVERH OUSING , I NC ., doing business as S TERLING H OMES , 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.

____________ A RGUED M ARCH 29, 2007—D ECIDED J ANUARY 10, 2008

____________

Before B AUER , 1 F LAUM , and E VANS , Circuit Judges

. E VANS , 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, Sterlin g Homes, and four former Patriot employees (now Ster ling employees) for copying their home designs. Sterling appeals the district court’s preliminary injunction order which enjoined it from misappropriating Patriot’s co pyrights, 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 fourof Patriot’s employees (they are named as individual defendants in this case) and then formed a newcompany, 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 joinedSterling. 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 re turn all of Patriot’s confidential information and trade secrets that are allegedly under Sterling’s control, comp ensatory damages, punitive damages, and pre- and po st-judgment interest. Sterling does not deny that Patriot’s former employees took information from Patriot’s computers before they jumped ship, nor does it denythat it has used the information. Sterling contends, howe ver, that all of Patriot’sNo. 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 us e 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 substa ntiating engineering calculations for the homes thatthe 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 requiredinformation to each state.

After the preliminary injuncti on hearing, Sterling sent Freedom of Information Act (F OIA) requests to Indiana, Michigan, and Illinois requesti ng copies of the documents that Patriot submitted for st ate approval. In response to the requests, Indiana produce d 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 docume nts 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 statescomplied 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 asse rts that the only alleged trade secret/confidential information not contained in materials obtained from the FOIA requests are: (1) billsof 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 inresponse to the FOIA requests. In June of 2006, the district court entered a preliminary injunction against Ster ling enjoining it from:
[u]sing, copying, disclosi ng, converting, appropriating, retaining, selling, transfe rring, 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; . . . [a nd] 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 thos e who are enjoined of “the specific conduct regulated bythe injunction and subject to contempt.” Marseilles Hydro Power , 299 F.3d at 647 (citing Consumers Gas & Oil, In c. 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 ente red 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 calculatio ns, quality control manuals, and other documents. But it does not deny that much of this information was readilyavailable when Sterling submitted FOIA requests because at that time Patriothad 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 court6 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 docume nts, and [defendant’s] own knowledge and experience” indetermining the scope of the injunction).
Patriot argues that there is no requirement that a court identify each and ever y element of copyright originality or trade secret and th at 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 easyto 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 secre t injunctions that are too vague must be set aside.”) (I nternal 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 re quires 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 injunctionNo. 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 fr om 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 enjo ining 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 fromusing 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 restrainedacts and provided a procedure for interpreting and applying the injunction and distin guishing between plaintiff’s trade secrets and informatio n in the public domain).
For these reasons, we V ACATE the preliminary injunction because it lacks specificit y as required by Rule 65(d). 2 Accordingly, we R EMAND for proceedings consistent with this opinion. The Defend ants-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