Professional Documents
Culture Documents
No. 97-1924
v.
JON S. WILSON; WILTEK MEDICAL,
INCORPORATED,
Defendants-Appellees.
In Re: JON S. WILSON,
Debtor.
COOK GROUP, INCORPORATED;
WILSON-COOK MEDICAL,
INCORPORATED; COOK, INC.; VANCE
PRODUCTS, INCORPORATED; SABIN
CORPORATION,
Plaintiffs-Appellees,
v.
JON S. WILSON; WILTEK MEDICAL,
INCORPORATED,
Defendants-Appellants.
No. 97-1983
damages award for the found trade secret violations, the lower court's
denial of its request for attorney's fees and its rejection of Cook's
breach of contract claim. Cook also challenges an order of the lower
court allowing Cook only one post-judgment inspection of Wiltek's
facilities. Defendants cross-appeal, challenging the punitive damages
award for the found trade secret violations. In the second appeal,
Cook challenges a ruling of the bankruptcy court modifying an existing protective order and allowing a third-party to inspect Wiltek's
plant. We affirm.
I
In 1990, Wilson-Cook Medical, Inc. ("Wilson-Cook") sued Wiltek
alleging, among other things, misappropriation of trade secrets. Subsequently, the case was consolidated with a lawsuit filed by Cook
against Wilson, the founder of Wiltek and former president of
Wilson-Cook, and an adversary proceeding filed in connection with
Wilson's personal bankruptcy action.
The consolidated action was tried without a jury before the United
States Bankruptcy Court for the Middle District of North Carolina.
On May 22, 1995, the court issued a 194-page Memorandum Opinion, Findings of Fact and Conclusions of Law ("Memorandum"),
rejecting eighteen of Cook's trade secret claims but finding in its
favor on nine such claims. The court permanently enjoined defendants
from using, licensing, marketing or otherwise displaying or disclosing
any of the found trade secrets, awarded Cook compensatory damages
of $183,341 and punitive damages of $300,000, but declined to award
attorney's fees. Additionally, the court awarded Cook $90,664.38 on
its claims for financial misappropriations and rejected Cook's claims
for trademark, trade dress, and copyright infringement, unfair business practices, and breach of contract. The district court affirmed. In
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trade secret no. 4 (snarehead forming machine);
trade secret no. 9 (apparatus to abrade);
trade secret no. 10 (3M grinding disks);
trade secret no. 11 (hard-packed buffing wheel);
trade secret no. 12 (soft-packed buffing wheel);
trade secret no. 13 (polishing rouge);
trade secret no. 17 (swedging); and
trade secret nos. 19 & 20 (hot iron tapering).
4
the interim, Cook filed a motion with the bankruptcy court to amend
its Memorandum and allow Cook to inspect Wiltek's facilities. On
November 7, 1995, the bankruptcy court granted Cook's motion in
part, allowing Cook the right to make one surprise inspection of
Wiltek's facilities.
On October 17, 1997, pursuant to defendants' motion, the bankruptcy court modified an existing protective order, allowing thirdparty Ballard Medical Products to inspect Wiltek's plant and conduct
due diligence in preparation for a possible purchase of Wiltek. The
district court affirmed.
II
A
Cook contends that the bankruptcy court erred in rejecting trade
secrets nos. 1-2, 4, 9-13, 17, and 19-20. "Although we review the
[lower] court's determination that a trade secret does not exist for
clear error, we independently review the [lower] court's conclusions
of law and the court's application of the law to the facts."
Comprehensive Technologies Int'l, Inc. v. Software Artisans, Inc., 3
F.3d 730, 736 (4th Cir. 1993) (citation omitted).
Under the North Carolina Trade Secrets Protection Act, a trade
secret is
business or technical information, including but not limited
to a formula, pattern, program, device, compilation of information, method, technique, or process that:
a. Derives independent actual or potential commercial
value from not being generally known or readily ascertainable through independent development or reverse
engineering by persons who can obtain economic value
from its disclosure or use; and
b. Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
5
F.2d 160, 163 (4th Cir. 1992) (en banc), cert. denied, 508 U.S. 972
(1993).
Our rejection of the eleven claimed trade secrets in the first appeal
disposes of Cook's second appeal: since the eleven claimed trade
secrets were properly found not to be trade secrets, they are not entitled to Rule 26(c)(7) protection.
V
For the reasons discussed above, the judgment of the district court
is
AFFIRMED.
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