or publicly available at the time it was disclosed to Toolz; or (3) it was disclosed to Toolz bya
third party not under any obligation of confidence to David White. Def. Mem., p.6;PXE 44, F
q1.

Toolz claims that it already knew about Manufacturer X from publicly available sources
at the time David White disclosed the information, citing affidavits from James W. Lyon,
Managing Director of Hong Kong Operations of Toolz, Ltd., and Qin Yunli, General Manager of
Representative Y, the trading company for Manufacturer X. Lyon states that Toolz was in
contact with Representative Y, which represents Manufacturer X, as early as August 2000, Lyon
Aff. ¢13. At that time, Toolz was investigating manufacturers that could produce, among other
things, optical levels, and looked primarily to Chinese manufacturers because they were already
making parts for Toolz’ laser measuring devices. Id. (4-5, 10-12. One of the first companies
Toolz contacted was Representative Y. Id. 913. Toolz produced a letter from Representative Y
dated August 12, 2000, several months before Toolz began discussions with David White in
2001, and claims that the document establishes that Toolz already knew about Manufacturer X
when it signed the Confidentiality Agreements, Ex. C to DX 3.

Plaintiff argues that even if Toolz knew about Manufacturer X as a manufacturer of
optical products, it did not know about David White’s relationship with Manufacturer X prior to
receiving the information in connection with its potential purchase of the David White assets. Pl.
Reply, p. 1. This appears to be a distinction without a difference; if Toolz independently knew
about and was in contact with Manufacturer X in 2000, its identity could not become confidential
merely because David White later disclosed its relationship with the manufacturer in connection

with a confidentiality agreement in 2001. Moreover, Toolz has also presented evidence that the



employees sign confidentiality agreements; that it revealed the identity of Manufacturer X to a
limited number of employees on a need-to-know basis; or that it kept information about
Manufacturer X in a secure location with limited access. Compare RKI, Inc. v. Grimes, 177 F.
Supp. 2d 859, 874-75 (N.D. Ill. 2001) (reasonable efforts to protect confidential information
included disclosure to employees on a “need-to-know” basis, password-protected computer
databases and employee confidentiality agreements); PepsiCo, Inc. v. Redmond, No. 94 C 6838,
1996 WL 3965, at *16 (N.D. Ill. Jan. 2, 1996) (confidential information was disclosed on a need-
to-know basis and regularly marked as confidential, and all employees with access to the
information signed confidentiality agreements).

Plaintiff cites several cases which purportedly establish that the identity of a manufacturer
is confidential. In Sigma Chemical Co. v. Harris, 794 F.2d 371 (8" Cir. 1986), the court agreed
that product and vendor files containing, among other things, “the supplier’s name, and price and
quality information regarding products purchased from that vendor,” were trade secrets because
the plaintiffs “knowledge of which suppliers supplied which chemicals at the requisite quality
and price was not in the public domain.” In addition, the plaintiff had expended great cost and
effort over 40 years to develop the information, which would have been difficult for a competitor
to duplicate. Jd. at 373-74. See also Ackerman y, Kimball International, Inc., 634 N.E.2d 778,
783-84 (Ind. App. 1994) (lists of the plaintiffs numerous suppliers and their pricing schedules
were protectable trade secrets in part because “it would be difficult for one of [plaintiff's]
competitors to compile . . . a comprehensive supplier list” and obtain pricing information). Here,
conversely, plaintiff is not seeking to protect vendor files containing supplier, pricing and quality

information. And plaintiff only has one manufacturer so it cannot argue that it has a trade secret


But this alleged acknowledgment does not refute Toolz’ evidence that the information was
publicly disclosed at trade shows and in catalogs, which would defeat plaintiff's claim of
confidentiality. See, e.g., Pope v. Alberto-Culver Co., 296 Ill. App. 3d 512, 518, 694 N.B.2d 615,
619 (1998) (defendant did not breach confidentiality and nondisclosure agreement where
information at issue was not a confidential trade secret). Nor does it establish that the identity of
Manufacturer X was kept confidential prior to April 2001. And the mere fact that Manufacturer
X and David White/CST may have “stipulat{ed] that the identity of David White’s (and even
CST’s) manufacturing source is ‘Confidential Information” does not establish any such
stipulation between plaintiff and Toolz. Pl. Reply, p. 4. Indeed, unlike the Manufacturing
Agreements, the Confidentiality Agreements do not specifically list manufacturing source as
confidential.

Weighed against this evidence from Toolz is the following evidence from plaintiff: (1)
Soucy testified at the October 30, 2002 hearing that “the name of the manufacturer was among
the confidential information that was produced to Toolz under the confidentiality agreements
with David White”; and (2) Toolz’ counsel cleared the courtroom before asking questions about
Manufacturer X and asked that the Court redact the manufacturer’s name from its written opinion
on the TRO. PI. Reply, pp. 1-2, 4. However, Soucy’s opinion is not especially persuasive
because he is not an attorney and cannot speak to whether the information is confidential from a
legal standpoint. Def. Mem., p. 8. Similarly, the actions of Toolz’ attorney do little to establish
that the identity of Manufacturer X was confidential as contemplated by the Confidentiality
Agreements. As Toolz notes, “[cJounsel’s caution at a TRO hearing does not convert public

information into confidential information.” Def. Mem., p. 9.



identity of the David White manufacturer was publicly available and easily ascertainable in the
tooling industry. According to Lyon and Qin, trade shows provide the largest source of
information regarding Chinese manufacturers. Lyon Aff. {]6-7; Qin Aff. 3-4. Representative
Y attends many trade shows during which it explains the products Manufacturer X manufactures,
and any interested party may inquire about Manufacturer X and the companies to which it has
supplied products. According to Qin, she has “in the past told potential buyers that
{Manufacturer X] manufactured optical products for David White, and will continue to provide
buyers with such information if they ask me for it.” Qin also states that if Representative Y is
not specifically displaying David White products at a particular trade show, it will freely divulge
that information upon request. Qin Aff. {{3-6. Lyon adds that he personally attends trade shows
in China and that “a company representative need only ask the manufacturer’s representative at
the fair to whom they provide products to or peruse the manufacturer’s product catalogs to gain
such information.” Lyon Aff. {4{6-8, 11; Ex. A to Lyon Aff.

Plaintiff argues that Qin’s affidavit is unreliably vague because she does not identify any
specific person she told about David White’s relationship with Manufacturer X. In addition,
Lyon never states that he in fact learned that Manufacturer X was David White’s manufacturer
from the trade shows. Pl. Reply, p. 3. At this stage of the proceedings, however, the affidavits
taken together are sufficient to raise a substantial question as to whether that information was
easily ascertainable in the tooling industry. Plaintiff also notes that in April 2001, Qin signed a
Manufacturing Agreement with David White on behalf of Representative Y expressly
acknowledging that the identity of David White’s manufacturer was confidential. Manufacturer

X entered into a similar Manufacturing Agreement with CST on May 8, 2002. Pl. Reply, pp. 3-4.


maintain its secrecy or confidentiality.” 765 ILCS 1065/2; Mangren Research and Development
Corp. v. National Chemical Co., 87 F.3d 937, 942 (7 Cir. 1996).

Toolz claims that the identity of Manufacturer X was not secret because Toolz learned
about the company “entirely independent of David White” and “through publicly available
information.” Def. Mem., pp. 10-11. As noted, Toolz has presented evidence that
Representative Y attends trade shows where it freely provides information about its business and
the companies it represents, including Manufacturer X and David White, and that this
information is also available in product catalogs. Qin Aff. {{]3-5; Lyon Aff. (8. This raises a
substantial question as to whether the identity of plaintiff's manufacturer was “sufficiently
secret” to constitute a trade secret. See, e.g., Mangren Research and Development Corp., 87 F.3d
at 942 (secrecy requirement “precludes trade secret protection for information generally known
within an industry even if not to the public at large”); Service Centers of Chicago, Inc. v.
Minogue, 180 Ill, App. 3d 447, 454, 535 N.E.2d 1132, 1136 (1989) (real value of trade secret
“lies in the fact that it is not generally known to others who could benefit [from] using it”).

Moreover, Toolz has also raised at least some question as to whether plaintiff made
reasonable efforts to maintain the secrecy of its manufacturer. See, e.g., Thermodyne Food
Service Products, Inc. v. McDonald’s Corp., 940 F. Supp. 1300, 1306-07 (N.D. Ill. 1996) (“if the
owner failed to undertake reasonable efforts to prevent the trade secret from falling into the
hands of competitors, the law will not provide the owner a remedy; in essence, the owner will be
deemed to have abandoned the trade secret”). Plaintiff argues that it took steps to protect the
information by making Toolz and Manufacturer X sign confidentiality and manufacturing

agreements, respectively. Pl. Reply, p. 5. However, plaintiff presented no evidence that it had


Minute Order Form (06/97)

United States District Court, Northern District of Hlinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge John W. Darrah than Assigned Judge Nan R. Nolan
CASE NUMBER 02 C 7156 DATE 1/6/2003
CASE David White Instruments, LLC vs. TLZ, Inc., et al.
TITLE
[in the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(1) a Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) a Answer brief to motion due . Reply to answer brief due.
(4) a Ruling/Hearing on set for at
(5) a Status hearing[held/continued to] [set for/re-set for] on set for _ at -
(6) o Pretrial conference[held/continued to] [set for/re-set for] on set for at
(7) Qo Trial[set for/re-set for] on. at
(8) Go [Bench/Jury trial] [Hearing] held/continued to at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
DFRCP4(m) O Local Rule 41.1 OOFRCP41(a)(1) 0 FRCP41(a)(2).
qo) of [Other docket entry} | David White’s supplemental motion for TRO is denied. To preserve the
confidentiality of certain information, the Court has prepared a public memorandum opinion and order
as well as a sealed version containing proprietary materials. Sentences in the sealed version which differ
from the public version have been bolded and italicized. Enter memorandum opinion and order under
seal, dated 12/19/02, and memorandum opinion and order.
(a1) oO [For further detail see order (on reverse side offattached to) the original minute order.]

No notices required, advised in open court. Document

No notices required.
number of tices

JA

Notices mailed by judge’s staff.

Notified counsel by telephone.

& | Docketing to mail notices.

Mail AO 450 form.

\ yg SA

Copy to judge/magistrate judge. + Wh
nod SONA
Ve yaa)

date mated noice

courtroom

deputy’s ] wd L-

initials Ail ts
Date/time received i
_centeal Clerk's Office
we

mailing deputy initials



need not address the issue of irreparable harm. Thomas & Betts Corp. v. Panduit Corp., 65 F.3d
654, 664 (7" Cir. 1995); Glaxo Group Ltd. v. Ranbaxy Pharmaceuticals, Inc., 262 F.3d 1333,
1339 (Fed. Cir. 2001). Nevertheless, the Court notes that this factor also weighs against granting
a TRO.

Irreparable harm is harm that cannot be compensated by money damages. Graham v,
Medical Mutual of Ohio, 130 F.3d 293, 296 (7" Cir. 1997) (“the injury must be of a particular
nature, so that compensation in money cannot atone for it”) (internal quotations omitted).
Plaintiff claims that it will suffer irreparable harm without a TRO because the Confidentiality
Agreements contain a provision stating that plaintiff “shall be entitled to injunctive... relief...
to prevent a breach or threatened or continuing breach of this Agreement.” Pl. Mem., p. 6.
Given the Court’s finding that plaintiff has not shown a reasonable likelihood of success on the
issue of breach, this is not sufficient to demonstrate irreparable harm,

Plaintiff also argues that it will be harmed because Toolz was able to “expedite
introduction of its accused products from mere concept sketches to functional prototypes in a
matter of weeks.” Pl. Mem., p. 6. However, plaintiff has not made a sufficient showing that it
could not be adequately compensated with money damages in the absence of a TRO. See, e.g.,
Roland Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380, 386 (7" Cir. 1984) (irreparable
harm is “harm that cannot be prevented or fully rectified by the final judgment after trial”). And
given the Court’s finding that plaintiff has not shown a reasonabie likelihood of establishing a
trade secret, there is no basis for presuming the inadequacy of legal remedies. Compare IDS Life

Insurance Co. v. SunAmerica, Inc., 958 F. Supp. 1258, 1281 (N.D. Ill. 1997) (“[t]he inadequacy

11


based on “knowledge of which suppliers supplied which [parts]” of its optical levels. Sigma
Chemical, 794 F.2d at 373-74. Nor has plaintiff presented any evidence that it spent
considerable effort and money to locate Manufacturer X in the first place.

Contrary to plaintiffs suggestion, Raven v. A. Klein & Co., 195 N.J. Super. 209, 478
A.2d 1208 (1984), has very little persuasive value because the court did not explain why the
identity of the plaintiffs past and present suppliers was a trade secret. Jd. at 214, 478 A.2d at
1210. And Sovereign Chemical Co. y. Condren, Nos. 18285 and 18465, 1998 WL 195876 (Ohio
App. Apr. 22, 1998), is distinguishable on its facts. In Sovereign Chemical, the plaintiff sought
to protect the identity of a certain chemical it discovered could be used as an antioxidant in the
rubber industry. The supplier marketed that chemical for use in the adhesive industry, and
knowledge of the supplier would automatically disclose that the plaintiff was using the chemical
in the rubber industry. Thus, the identity of the supplier was subject to protection. Plaintiff, on
the other hand, does not allege that knowledge of its supplier, in and of itself, would disclose any
confidential trade secrets. Moreover, unlike plaintiff, the company in that case entered into
confidentiality agreements with key employees, repeatedly admonished employees about the
secrecy of the identity of the plaintiff's chemical supplier, and refused to divulge the information
to any competitors, suppliers or customers.

On the facts before the Court, plaintiff has failed to demonstrate a reasonable likelihood
of establishing that the identity of its manufacturer is a trade secret for purposes of a TRO.
B. Irreparable Harm

Having determined that plaintiff presented insufficient evidence of a reasonable

likelihood of success on the merits of its breach of contract and trade secret claims, the Court

10


On balance, plaintiff has not shown that it has a better than negligible likelihood of
establishing that the identity of Manufacturer X was confidential information under the
Confidentiality Agreements. Thus, plaintiff does not have a reasonable likelihood of success on
its claim for breach of those Agreements for purposes of a TRO. See Washington v. Indiana
High School Athletic Association, Inc., 181 F.3d 840, 846 (7" Cir. 1999) (“[iJn the preliminary
injunction context, a ‘likelihood of success’ exists if the party seeking the injunctive relief shows
that it has a ‘better than negligible’ chance of succeeding on the merits”).

2. Trade Secret Misappropriation

To prevail on a claim for improper use of a trade secret under the Illinois Trade Secrets
Act,’ plaintiff must establish (1) the existence of a trade secret (not generally known in the
industry); (2) misappropriation of the trade secret by Toolz; and (3) use of the trade secret in
Toolz’ business. Composite Marine Propellers, Inc. v. Wan Der Woude, 962 F.2d 1263, 1265-66
(7" Cir. 1992); MJ & Partners Restaurant Limited Partnership v. Zadikoff, 10 F. Supp. 2d 922,
933 (N.D. Ill. 1998); Delta Medical Systems v. Mid-America Medical Systems, Inc., 331 Ul. App.
3d 777, 772 N.E.2d 768, 780 (2002). The burden is on plaintiff to demonstrate that Toolz
misappropriated “concrete [trade] secrets.” Composite Marine Propellers, 962 F.2d at 1266. To
be a trade secret, information must be “sufficiently secret to derive economic value, actual or
potential, from not being generally known to other persons who can obtain economic value from

its disclosure or use; and is the subject of efforts that are reasonable under the circumstances to

3 Toolz suggests that Wisconsin law may apply to the trade secret claim because

David White was a Wisconsin company. Def. Mem., p. 10 n.3. Illinois and Wisconsin have both
adopted the Uniform Trade Secrets Act, so the Court need not resolve this issue for purposes of
this motion fora TRO. See 765 ILCS 1065/1 et seq.; Wis. Stat. Ann. §134.90.

7



DISCUSSION

A TRO is an “extraordinary and drastic” remedy that should only be granted upon a clear
showing of need. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997); Cooper v. Salazar, 196 F.3d
809, 813 (7" Cir. 1999). A plaintiff seeking a TRO or preliminary injunction must show: (1) a
reasonable likelihood of success on the merits; (2) irreparable harm if the preliminary injunction
is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction’s favorable
impact on the public interest. Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343,
1350 (Fed. Cir. 2001); Jones v. InfoCure Corp., 310 F.3d 529, 534 (7" Cir. 2002). Plaintiff's
TRO motion can only be granted if it establishes both of the first two factors; i.e., likelihood of
success on the merits and irreparable harm. Amazon.com, 239 F.3d at 1350. If plaintiff
establishes the first factor by making a clear showing of both validity and infringement, it is
entitled to a rebuttable presumption of irreparable harm. Purdue Pharma L.P. v. Boehringer
Ingelheim GMBH, 237 F.3d 1359, 1363 (Fed, Cir. 2001).
A Likelihood of Success

1. Breach of Confidentiality Agreements

To demonstrate a likelihood of success on the merits of a claim for breach of the
Confidentiality Agreements, plaintiff must show (1) the existence of a valid contract; (2)
performance by plaintiff; (3) breach by Toolz; and (4) resultant injury to plaintiff. Gonzalzles v.
American Express Credit Corp., 315 Ill. App. 3d 199, 206, 733 N.E.2d 345, 351 (2000). Toolz
argues that plaintiff cannot establish a breach because the identity of Manufacturer X does not
constitute Confidential Information. Under both Agreements, information is not confidential if

(1) it was known to Toolz prior to the time it was disclosed by David White; (2) it was published


FACTUAL BACKGROUND’

In early 2001, Toolz was approached about purchasing the assets of David White, LLC.
Toolz entered into negotiations with David White and obtained information about the company
pursuant to two Confidentiality Agreements dated March 19, 2001 and February 11, 2002,
respectively. Both agreements prohibit Toolz from using David White’s “Confidential
Information.” PX E, F. Toolz ultimately bid on certain of the David White assets but lost to
CST/berger, which purchased substantially all of the assets on May 24, 2002. Plaintiff David
White Instruments, LLC was formed as an affiliate of CST/berger to sell the David White
product line, including the manual and automatic optical levels at issue in this case.

At the October 30, 2002 hearing on the first TRO, Daniel Hill, Toolz’ Product Manager,
and Steven Soucy, Toolz’ Director of Finance, testified that Toolz is using Manufacturer X to
make its optical levels. Plaintiff now claims that the identity of its manufacturer constitutes
“Confidential Information” under the Confidentiality Agreements and a protectable trade secret.
Pl. Add’] Mem., pp. 4-5, 8-10. Plaintiff seeks a TRO to prevent Toolz from further using
Manufacturer X to produce its allegedly infringing products. Toolz argues that it knew about
Manufacturer X before it received any information from David White and that, in any event,
information about Manufacturer X and its customers is publicly available. Thus, Toolz says, the

identity of David White’s manufacturer is not confidential and there is no basis for a TRO.

2 This opinion assumes familiarity with the facts set forth in the Court’s November

12, 2002 Memorandum Opinion and Order.



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DAVID WHITE INSTRUMENTS, LLC,
f/k/a DAVID WHITE FORMATION,
Plaintiff,
vs.

Case No. 02 C 7156

TLZ, INC. d/b/a TOOLZ, and
TOOLZ LIMITED,

Defendants.

weve

DOCKETED

MEMORANDUM OPINION AND ORDER
JAN - 9 2003

NAN R. NOLAN, Magistrate Judge:

On October 4, 2002, plaintiff David White Instruments LLC, formerly known as David
White Formation, LLC filed a complaint and a motion for a temporary restraining order (“TRO”)
to prevent defendants TLZ, Inc. d/b/a Toolz and Toolz Limited’ (“Toolz”) from continuing to
make, use, sell or offer for sale certain optical surveying instruments that allegedly infringe
plaintiff's design patent and trade dress. On November 12, 2002, this Court denied the TRO.
See Memorandum Opinion and Order of 11/12/02. Plaintiff now seeks a TRO to prevent Toolz
from continuing to use Manufacturer X to make its allegedly infringing products. For the reasons

OCI
set forth below, the supplemental motion for a TRO is also denied.
JAN © 9 fore

' For purposes of plaintiff's motions for TRO only, plaintiff does not seek relief

against Toolz Limited of Hong Kong. Tr. 203, 254.



of legal remedies and the threat of irreparable harm are inherent in cases such as th[is] when the
destruction of customer goodwill and trade secrets are at issue”).
CONCLUSION
For the reasons stated above, plaintiff's supplemental motion for a TRO (Docket Entry
#8-2) is denied. Toolz’ Motion to Strike Exhibit B to Plaintiff's Additional Memorandum in

Support of TRO (Docket Entry #41-4) is denied as moot.

Now Rs Aen

NAN R. NOLAN
United States Magistrate Judge
Dated: January 6, 2003

12