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Federal District of Kansas - Proprietary information constituted trade secrets.

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D Kan - Proprietary information constituted trade secrets.
Universal Engraving, Inc. v. Duarte (10/16/07)
The court granted Universal's motion for a preliminary injunction, noting that Universal had shown both an imminent threat of irreparable harm and that it had, in fact, suffered irreparable harm. The facts showed that Universal's trade secrets regarding the development of its computer numerical control milling machines and programming of those machines were at risk of imminent disclosure. The balance of hardships in this case tipped in favor of Universal. Duarte had knowledge of the functions of Universal's machines and was able to manipulate the programs and functionality to suit the needs of another company. Moreover, the evidence showed that Universal's confidential information constituted trade secrets. Universal had developed formulas that were required to operate some of its software.

Universal is engaged in the business of engraving and embossing. Universal has developed not only software, but has redesigned most of its computer numerical control ("CNC") milling machines to its specific needs. Universal requires confidentiality agreements with all of its employees, requires passwords to access its computers, and restricts access to certain facilities. Duarte began his career with Universal as a research chemist in 1992 and worked for the company for fifteen years in conducting research and revamping software programs and CNC milling machines. Three months prior to his resignation, Duarte received a phone call from Metal Magic, Inc., a competitor of Universal. Duarte made a number of trips to Arizona to meet with the company's owner. Duarte accepted a position within Metal Magic to take over the research and development of its CNC milling machines.

Universal had shown both an imminent threat of irreparable harm and that it had, in fact, suffered irreparable harm. Duarte was slated to conduct research and development on CNC milling machines at Metal Magic, the same type of activities Duarte had performed for Universal. Universal's trade secrets regarding the development of its CNC milling machines and programming of those machines were at risk of imminent disclosure. The balance of hardships in this case tipped in favor of Universal. Duarte had knowledge of the functions and performance of Universal's machines and was able to manipulate the programs and functionality to suit the needs of another company. Harm to Duarte was slight as compared to the harm to Universal and it was clear that the public interest would not be harmed by the issuance of a preliminary injunction. Moreover, Universal's confidential information constituted trade secrets. Universal had developed formulas that were required to operate some of its software. Universal was unique in its development of its machinery. Universal purchased market machinery from specified vendors and then revamped those parts to create its own unique piece of equipment. The process of developing the equipment was a trade secret and Duarte was privy to that information. Indeed, Duarte was a mainstay in the development of much of Universal's technology and software. Universal had clearly expended great effort in keeping its confidential information secret.

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