Opinion ID: 715056
Heading Depth: 2
Heading Rank: 3

Heading: Roton's Trade Secrets

Text: 15 The first step in any trade secret analysis is a determination of whether any trade secrets exist.
Section 2 of ITSA provides that: 16 (d) 'Trade secret' means information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that: 17 (1) is 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 18 (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. 19 765 ILCS § 1065/2(d) (West 1995). 20 The focus of both the common law and [ITSA] is on the secrecy of the information sought to be protected. Service Ctrs. of Chicago, Inc. v. Minogue, 180 Ill.App.3d 447, 129 Ill.Dec. 367, 371, 535 N.E.2d 1132, 1136, 11 USPQ2d 1062, 1065 (1989). [T]he key to 'secrecy' is the ease with which information can be developed through proper means: if the information can be readily duplicated without involving considerable time, effort or expense, then it is not secret. Hamer Holding Group, Inc. v. Elmore, 202 Ill.App.3d 994, 148 Ill.Dec. 310, 321, 560 N.E.2d 907, 918 (1990) (appeal denied). 21 Section 2(d)(2) of ITSA essentially parallels the common law factors used in determining whether information is a trade secret, which include: 22 (1) the extent to which the information is known outside the employer's business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the employer to guard the secrecy of the information; (4) the value of the information to the employer and his or her competitors; (5) the amount of effort or money expended by the employer in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. 23 Stampede Tool Warehouse, Inc. v. May, 272 Ill.App.3d 580, 209 Ill.Dec. 281, 287-88, 651 N.E.2d 209, 215-16, 35 USPQ2d 1134, 1138 (1995) (appeal denied).
24 The trial court found nine areas of trade secrets: Roton's gross margins, sales data, market analysis information, hinge profile sales data, customer lists, milling process, lubrication information, machine and hinge fixturing methods, and capitalization requirements. 25 Regarding the economic value of the information, a requirement of section 2(d)(1), the trial court opined that: 26 [the trade secret] information would have been of great value to Mr. Baer's competitors in the hinge business. Mr. Baer expended very significant effort, time and money to develop this information. It was of a nature that could not easily be acquired or correctly duplicated by others. 27 As to the maintenance of secrecy of the trade secrets, under section 2(d)(2), the trial court stated that: 28 this information was not known outside of Roton, and was to a large extent known within Roton only by Mr. Baer. Mr. Baer did not otherwise share this information with others.
29 On appeal, Stanley contends that Roton was unable directly to prove misappropriation of any specific trade secret and instead improperly relied on a head start theory in which unspecified trade secret information was given to Stanley affording it a head start in developing a continuous pinless hinge. It is true that [i]t is not enough to point to broad areas of technology and assert that something there must have been secret and misappropriated. Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1265, 22 USPQ2d 1568, 1570 (7th Cir.1992). Contrary to Stanley's assertion, however, we agree with the trial court's finding that Roton had specific trade secret information. 30 For instance, Baer testified that during the course of developing continuous pinless hinges, he developed a proprietary milling process using a horizontal milling cutter in which small cutouts can be made, thereby allowing construction of small hinges and in which a single machine can be used to machine hundreds of hinge profiles. The horizontal milling cutter was designed and built by Baer himself, who had upwards of 30 years experience in the business. 31 Baer also testified that Roton had a proprietary lubrication mixture formulated over the years. Specifically, Roton used a dry lubricant, the use of which wasn't obvious and can't be obvious from examination of the hinge. Additionally, Baer testified that Roton designed its own dies and maintained their confidentiality. 32 As for financial information, Baer testified that Roton had balance sheets, income statements, and financial statements ... and income tax returns of the Roton Corporation for several years which were considered confidential. Additionally, Roton's gross margins were confidential. 33 We agree with the trial court that Roton's specific trade secrets were maintained in confidence. The information was not known outside of Roton's business and much of it was only known by Baer. Baer took reasonable measures to guard the secrecy of the information. In this regard, the trial court specifically found that though others may have visited the Roton facility, these visits were cursory and casual, and these persons were not shown and did not see confidential or trade secret information. This finding is not clearly erroneous. 34 Additionally, Roton's trade secret information was quite valuable. Indeed, it was the cumulative knowledge of 30 years in the business as the pioneer of continuous pinless hinges. We accordingly affirm the trial court's finding that under ITSA, Roton had protectable trade secrets. 35