Opinion
No. CV96 0151800
January 21, 2000
MEMORANDUM OF DECISION RE: MOTION FOR SUMMARY JUDGMENT
The plaintiff, Mafcote Industries, Inc. filed a verified complaint seeking injunctive relief and alleging breach of contract, misappropriation of trade secrets, and violation of the Connecticut Unfair Trade Practices Act (CUTPA). The defendant, James River Paper Co., Inc. has filed a motion for summary judgment as to all three counts of the verified complaint.
"The judgment sought shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Practice Book § 17-49. "A genuine issue has been variously described as a triable, substantial or real issue of fact . . . and has been defined as one which can be maintained by substantial evidence." (Citation omitted; internal quotation marks omitted.) United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 378, 260 A.2d 596 (1969). "In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Hertz Corp. v. Federal Ins. Co., 245 Conn. 374, 381, 713 A.2d 820 (1998).
The court denies the defendant's motion for summary judgment on the first count of breach of contract because a genuine issue of material fact remains as to whether the defendant breached its confidentiality/nondisclosure agreements with the plaintiff. The plaintiff has submitted two confidentiality/nondisclosure agreements signed by defendant's employees. Furthermore, the defendant admitted that it inadvertently transferred information received from the plaintiff to one of the plaintiff's competitors. See (Memorandum in Support of Motion for Summary Judgment Exhibit A ¶¶ 54, 55 p. 15). Consequently, an issue of fact remains as to whether the information transferred constitutes confidential information pursuant to the confidentiality/nondisclosure agreements. See Foley v. Huntington Co., 42 Conn. App. 712, 730, 682 A.2d 1026, cert. denied, 239 Conn. 931, 683 A.2d 397 (1996) ("The construction of a contract is usually a question of fact because the interpretation of its language is a search for the intent of the parties, making contractual intent a classic question of fact."); Four D's, Inc. v. Mattera, 25 Conn. App. 308, 312, 594 A.2d 484 (1991) ("What the parties intended to include in their contract is a question of fact.") Accordingly, the court denies the defendant's motion for summary judgment on the first count of breach of contract.
The defendant argues that University of Colorado Foundation, Inc. v. American Cyanamid, 880 F. Sup. 1387, 1404 (D. Colo. 1995) held that a "breach of confidentiality obligation does not exist apart from allegation that some type of `trade secret misappropriation' has occurred." (Defendant's Memorandum p. 37). The case in University of Colorado Foundation, Inc. v. American Cyanamid, supra, 880 F. Sup. 1404, however, involved a tort claim for breach of a confidential relationship when the parties failed to sign a formal confidentiality agreement. As a result, the aforementioned case lacks applicability to the present matter.
The defendant denies that its employees signed the confidentiality/nondisclosure agreements. See (Answer dated June 13, 1996 ¶ 10 p. 3). The mere existence of the signed confidentiality/nondisclosure agreements, however, suffices to raise a genuine issue of material fact as to whether the defendant's employees signed the agreements.
In accordance with the Amended Confidentiality Stipulation and Protective Order filed July 16, 1998, both the plaintiff and the defendant filed their memoranda under seal.
The court denies the defendant's motion for summary judgment on the second count of misappropriation of trade secrets. "The Connecticut Uniform Trade Secrets Act, Connecticut General Statutes § 35-50 et seq., codify the basic principals of common law trade secret protection. In order to establish liability under the Connecticut Uniform Trade Secrets Act, the plaintiff must prove the existence of a trade secret by § 35-51(d) and a misappropriation of the trade secret by the defendant as defined by § 35-51(b)." Air Support, Inc. v. Acuna, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. 148386 (May 29, 1996, Karazin, J.).
General Statutes § 35-51(b) provides: "`Misappropriation' means: (1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (2) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of the disclosure or use, knew or had reason to know that his knowledge of the trade secret was (i) derived from or through a person who had utilized improper means to acquire it; (ii) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, including but not limited to disclosures made under section 1-210, sections 31-40j to 31-40p, inclusive, or subsection (c) of section 12-62; or (iii) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use, or (C) before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake." General Statutes § 35-51(d) further provides in relevant part: "`trade secrets' means information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."
The plaintiff raised a genuine issue of material fact as to whether the defendant's transfer of information to the plaintiff's competitor constituted a violation of the Connecticut Uniform Trade Secret Act. The plaintiff's method for packaging its doilies could qualify as a trade secret. See Elm City Cheese Co. v. Federico, 251 Conn. 59, 75, ___ A.2d ___ (1999) ("[t]he fact that every ingredient is known to the industry is not controlling for the secret may consist of the method of combining them which produces a product superior to that of competitors.") (Internal quotation marks omitted.) Requiring the defendant's employees to sign confidentiality/nondisclosure agreements constitutes sufficient evidence that the plaintiff sought to maintain secrecy concerning its packaging. See id. at 86 ("[r]easonable precautionary measures for maintaining the secrecy of the [information] were all that were required.") (Internal quotation marks omitted.) Furthermore, the very fact that both parties sought protective orders in this matter demonstrates the economic importance of the plaintiff's alleged trade secret. Finally, disclosing information to the plaintiff's competitors after signing a confidentiality agreement with the plaintiff raises a material issue of fact as to whether the disclosure of information qualifies as a misappropriation. See General Statutes § 35-51(b). Accordingly, the court denies the defendant's motion for summary judgment on the second count of misappropriation of trade secrets because a genuine issue of material fact exists.
Contrary to the defendant's arguments, the definition of misappropriation fails to include evidence of an economic benefit from the disclosure of information. See General Statutes § 35-51(b).
The court denies the plaintiff's motion for summary judgment on the third count alleging a violation of CUTPA. "A simple breach of contract, even if intentional, does not amount to a violation of [CUTPA]; a [claimant] must show substantial aggravating circumstances to recover under the Act." (Internal quotation marks omitted.) Petro v. K-Mart Corp. , Superior Court, judicial district of Waterbury at Waterbury, Docket No. 123768 (February 24, 1998, West, J.) Here, as previously stated the plaintiff sufficiently raised genuine issues of material fact concerning the defendant's alleged breach of contract and misappropriation of trade secrets. Consequently, the evidence of an alleged misappropriation of trade secrets qualifies as an aggravating circumstance to sustain a CUTPA claim. See Lester v. Resort Camplands International, Inc., 27 Conn. App. 59, 71-72, 605 A.2d 550 (1992) (holding jury could reasonably infer that breach of contract constituted an unfair trade practice); United Technologies Corp., Pratt Whitney Division v. Turbine Kinetics, Inc., Superior Court, judicial district of Hartford/New Britain at Hartford (March 18, 1996, Corradino, J.) ( 16 Conn. L. Rptr. 344) (holding recovery permissible under both CUTPA and Uniform Trade Secret Act.) Accordingly, the court denies the defendant's motion for summary judgment on the third count because a genuine issue of material fact exists concerning whether a violation of CUTPA occurred.
The following criteria determines if a practice violates CUTPA: "(1) [Whether the practice, without necessarily having been previously considered unlawful offends, public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [(competitors or other businessmen).]" (Internal quotation marks omitted.) Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 591, 657 A.2d 212 (1995).
Contrary to the defendant's argument, scienter is not a required element for a CUTPA claim. See Eamiello v. Liberty Mobile Home Sales, Inc., 208 Conn. 620, 653, 546 A.2d 805 (1988).
In summary, the court denies the defendant's motion for summary judgment on all three counts.
D'ANDREA, J.