Court Opinion

ID: 9495358
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:01:04.762419+00
Date Added: 2024-06-11T17:56:58.699926
License: Public Domain

DYK, Circuit Judge,
dissenting-in-part.
I join the majority opinion insofar as it holds that the district court properly denied Superior Nonwovens, L.L.C.’s motion for JMOL and a new trial as to infringe*1347ment of BBA Nonwovens Simpsonville, Inc.’s patent, U.S. Patent No. 5,397,413 (“the '413 patent”), properly denied Ree-may, Inc.’s motion for a new trial as to misappropriation of its trade secret, and did not abuse its discretion with respect to the escrow order. However, I respectfully dissent from the majority’s decision upholding the jury determination that Fiber-web France SA (“Fiberweb France”) demonstrated the existence of a protectable trade secret. In my view, JMOL should have been granted because no reasonable jury could properly conclude that Fiber-web France had proven that it had a pro-tectable trade secret.
1. The particular number of zones is not itself a trade secret.
The majority opinion finds that Fiber-web France demonstrated a trade secret with respect to the particular number of zones in the quench chamber in the range of six to fifteen. (I refrain from identifying the particular number because of the majority’s conclusion that the particular number of zones is a trade secret). I disagree that the particular number of zones in the quench chamber is a trade secret. An expired United States patent and a prior art publication plainly disclosed the use of multiple zones in a quench chamber.
United States Patent No. 3,274,644 to Massey et al. (“Massey”) depicts a quench chamber “for quenching molten filaments” with fifteen horizontal zones and describes the use of sliding plate dampers to independently control air flow in each zone in “the melt spinning of filamentary materials of polymeric nature.” Massey, col. 1, 11. 12-17, and Fig. 4. The patent shows two figures illustrating quench chambers with multiple horizontal zones that can be independently controlled. Id. at Figs. 4, 5.
A book entitled Formation of Synthetic Fibers states that “[t]wo systems of cooling the hot filaments after they emerge from the spinnerette are in common use. The older and still more often used method commonly bears the name of cross-flow quench.” Zbigniew K. Wakzak, Formation of Synthetic Fibers 151 (1977). Figure 5.1 of the book depicts a cross-flow quench chamber with six horizontal zones. Id. at 152. It is undisputed that the use of multiple zones in the quench chamber was generally known. Plaintiffs own expert Dr. Smorada acknowledged:
COUNSEL:
Dr. Smorada, do you agree that the materials in expired patents that you reviewed in this case on the quench chamber show independently controlled zones from anywhere to 6 to 15 zones on quenches in the spunbond industry?
DR. SMORADA:
There are a number of claims of multiple zone quenches.
To be sure, there was testimony that the particular number of zones selected by Fiberweb France was “very novel” and “very, very unusual.” To establish a trade secret under South Carolina law, however, one must do more than assert that the information in question is “novel.” Rather, one must show that the information “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other person who can obtain economic value from its disclosure or use.” S.C.Code Ann. § 39 — 8—20(5)(a)(i) (emphasis added).
There was no showing that the particular number chosen had independent eco*1348nomic value that would qualify it as a trade secret.
2. There was no showing that the combination secret “differfs] materially” from other methods revealed in the prior art.
Alternatively the majority concludes that Fiberweb France demonstrated the existence of a combination trade secret consisting of the particular number of quench chamber zones combined with other known elements. Ante at 1340-41. Again I must disagree. The majority recognizes that Lowndes Products, Inc. v. Brower, 259 S.C. 322, 191 S.E.2d 761, 177 USPQ 209 (1972), governs this case. In accordance with Lowndes, a “unique combination of generally known elements or steps can qualify as a trade secret, if it represents a valuable contribution attributable to the independent efforts of the one claiming to have conceived it. The combination must differ materially from other methods revealed by the prior art. ...” 191 S.E.2d at 764, 177 USPQ at 211 (citing 2 Coliman, The Law of Unfair Competition, Trademarks, and Monopolies § 53.3 (3d ed.1968)) (emphases added). This standard also appears in essence in the South Carolina Trade Secrets Act:
A trade secret may consist of a simple fact, item, or procedure, or a series or sequence of items or procedures, which, although individually could be perceived as relatively minor or simple, collectively can make a substantial difference in the efficiency of a process or the production of a product, or may be the basis of a marketing or commercial strategy. The collective effect of the items and procedures must be considered in any analysis of whether a trade secret exists and not the general knowledge of each individual item or procedure.
S.C.Code Ann. § 39-8-20(5)(b) (Law Coop. Supp.2001) (emphasis added). Thus the “material difference” standard requires a showing that the alleged combination secret represents a “valuable contribution,” ie., that it has superior economic value over the prior art. This is in accord with general trade secret law. See Riven-dell Forest Prods., Ltd. v. Georgia-Pacific Corp., 28 F.3d 1042, 1046, 31 USPQ2d 1472, 1476 (10th Cir.1994) (“[A] trade secret can include a system where the elements are in the public domain, but there has been accomplished an effective, successful and valuable integration of the public domain elements .... ” (emphasis added)); Integrated Cash Mgmt. Servs., Inc. v. Digital Transactions, Inc., 920 F.2d 171, 174, 17 USPQ2d 1054, 1056 (2d Cir.1990) (“[A] trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage ....”) (emphasis added) (citation omitted); Water Servs., Inc. v. Tesco Chems., Inc., 410 F.2d 163, 173, 162 USPQ 321, 329 (5th Cir.1969) (finding combination trade secret where the combination of generally known elements was “unique and conferred a substantial competitive advantage ” in that “the company enjoyed unparalleled financial success during the four-years competitors were unsuccessfully trying to duplicate the [trade secret].”) (emphasis added).
The record here shows that there was a complete absence of proof that the use of a particular number of zones within the quench chambers in combination with other elements qualified as a trade secret under the “differ[s] materially” test. There was no testimony here making a comparison between this combination and *1349the prior art to show how they “differ[ed] materially” in terms of economic value. At oral argument plaintiffs counsel admitted that no comparison had been made between the alleged trade secret here and any other quench methods:
THE COURT:
Is there any testimony that this trade secret process, as compared to other technologies, made a substantial difference?
COUNSEL:
I don’t know if they used those words specifically, but Dr. Eschbach said that “this was the best profile,” which suggests a comparison in his mind. We didn’t submit evidence comparing A to B.
(Emphasis added).
The testimony counsel referred to is that of Dr. Eschbach, who testified that:
COUNSEL:
So your contention is the number of zones in the vertical side and the horizontal is also trade secret?
MR. ESCHBACH:
For us, it’s a trade secret. It’s coming outside from our experience and we have defined it that this profile is the best one.
(Emphasis added).
The record evidence relied on by plaintiff is quite inadequate to establish that this alleged combination trade secret “differ[s] materially” from already known technology. Thus I would hold that plaintiff failed to establish the existence of a trade secret under South Carolina law.