Citation Edit

Structural Dynamics Research Corp. v. Engineering Mechanics Research Corp., 401 F. Supp. 1102 (E.D. Mich. 1975) (full-text).

Factual Background Edit

Plaintiff corporation sued three former employees for, inter alia, misappropriation of trade secrets in a program for solving structural analysis problems. One of the employees had suggested that the corporation develop such a program at a time when no other employee in the corporation had any significant knowledge of the mathematical theories necessary to such development. That employee and the other two employees named as defendants subsequently developed the program without other assistance from plaintiff.

Trial Court Proceedings Edit

The trial court cited societal concerns in preserving the job mobility of technically skilled employees who might be "less attractive to new employers so far as their acquired skills and knowledge are regarded as trade secrets" and then, held that the employees here did not obtain trade secrets through "improper" means, since in substantial measure they were the "developers and innovators" of the trade secret program:

[I]f the subject matter of the trade secret is brought into being because of the initiative of the employee in its creation, innovation or development even though the relationship is one of confidence, no duty arises since the employee may then have an interest in the subject matter at least equal to that of his employer or in any event, such knowledge is a part of the employee's skill and experience. In such a case, absent an express contractual obligation by the employee not to use or disclose such confidential information acquired during his employment adverse to his employer's interest, he is free to use or disclose it in subsequent employment activity. . . . Where the employer assigns the employee to a specific development task and commits considerable resources and supervision to the project, a confidential relationship arises that prevents the employee from using or disclosing the fruits of his research. When, on he other hand, the developments are the product of the application of the employee's own skill, "without any appreciable assistance by way of information or great expense or supervision by [the employer], outside of the normal expenses of his job," he has "an unqualified privilege" to use and disclose the trade secrets so developed.[1]

The court did, however, find that the employees were nonetheless liable for breach of specific contractual provisions preventing them from disclosing the trade secrets.

References Edit

  1. Id. at 1117.

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