Winston Research Corp. v. 3M Corp.
146 USPQ 422 (1965)
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Rule of Law:
In a trade secret misappropriation case, the appropriate duration for an injunction is the time it would take a legitimate competitor to independently develop the product after the public disclosure of the trade secret, thereby neutralizing the unfair competitive advantage or "head start" gained by the misappropriator.
Facts:
- The Mincom Division of 3M spent four years of research and development to create a precision tape recorder with an unusually low time-displacement error.
- The innovation involved eliminating a flywheel, reducing the mass of rotating parts, and using a wide-band servo system to permit rapid adjustments in tape speed.
- In May 1962, as Mincom was finalizing its production prototype, Norman Johnson, the manager of the project, left the company.
- Johnson joined with Robert Tobias, a former Mincom sales manager, to form Winston Research Corporation.
- Winston hired numerous technicians who had previously worked on the development of the Mincom machine.
- Using confidential information and specifications from Mincom, Winston developed a competing machine with the same low time-displacement error in approximately fourteen months.
Procedural Posture:
- Mincom sued Winston Research Corporation, Johnson, and Tobias in U.S. District Court, seeking an injunction and damages for trade secret misappropriation.
- The district court granted a two-year injunction against Winston but denied Mincom's request for money damages.
- Both Mincom, the plaintiff, and Winston, the defendant, appealed the district court's judgment to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Is an injunction limited to the time it would take a legitimate competitor to develop a product an appropriate remedy for trade secret misappropriation where the secret will eventually be publicly disclosed?
Opinions:
Majority - Browning, Circuit Judge
Yes, an injunction limited to the time it would have taken a legitimate competitor to develop the product after public disclosure is an appropriate remedy. The court rejected both a permanent injunction and no injunction at all, opting for a middle-ground approach. A permanent injunction would subvert the public interest in employee mobility and competition, while no injunction would allow the faithless employee to retain the benefit of their breach. The proper remedy is to enjoin the use of the trade secrets for the approximate period it would require a competitor to develop the product legitimately post-disclosure. This approach denies the misappropriator the unjust enrichment of a "head start," places the original employer in the position it would have been in absent the breach, and imposes the minimum necessary restraint on competition. The court determined that the fourteen months Winston took to develop its machine was a fair measure for the injunction's duration.
Analysis:
This case is significant for establishing the "head start" or "lead time" injunction as a standard remedy in trade secret law. It provides a flexible and equitable alternative to the all-or-nothing choice between a permanent injunction (the Shellmar rule) and no injunction once the secret is public (the Conmar rule). By focusing on neutralizing the unjust enrichment gained by the defendant, the court balances the competing policy goals of protecting intellectual property, encouraging employee mobility, and fostering fair competition. This nuanced approach has become influential, shaping how courts calculate damages and equitable relief in trade secret misappropriation cases across the country.
