Takeaway
In short, this case makes Wisconsin’s statutory Uniform Trade Secrets Act the governing framework: wrongful acquisition alone can be misappropriation, reverse engineering affects the length rather than availability of an injunction, and customer or prospect lists may be protected if they satisfy the statute’s economic-value and reasonable-secrecy requirements.
Minuteman and Amity were direct competitors in the furniture-stripping supply business. In March and April 1986, Minuteman executives L.D. Alexander and George Cash left Minuteman and shortly began working for Amity. Minuteman alleged that they removed or obtained its Stripper ’76 chemical formula, its customer and advertising-inquiry lists, and other computer data, then used the information to benefit Amity. Neither employee had signed a confidentiality or noncompetition agreement.
The circuit court found that the Stripper ’76 formula was a trade secret and that Cash had obtained it without permission, but denied an injunction because it found no proof Amity had used the formula and believed the formula could likely be reverse engineered. The court also found that Amity had used the customer and inquiry lists but held that the lists were not trade secrets under the six-factor Restatement test adopted in Corroon & Black. Finally, it denied temporary injunctive relief concerning the alleged computer-data theft, reasoning that Minuteman had not shown likely success, irreparable harm, or the inadequacy of damages.
The court of appeals reversed and remanded the formula issue because the circuit court had relied on an expert report that was never admitted into evidence. It otherwise affirmed. The Wisconsin Supreme Court affirmed in part, reversed in part, and remanded.
Issue #1
Whether the former six-factor Restatement test from Corroon & Black remained Wisconsin’s legal definition of a trade secret after enactment of Wisconsin’s Uniform Trade Secrets Act.
Holding
No. Wisconsin Statutes section 134.90(1)(c), not the Corroon & Black six-factor test, supplies the controlling definition of a trade secret.
Reasoning
The Uniform Trade Secrets Act displaced conflicting Wisconsin tort and restitution law governing civil remedies for trade-secret misappropriation. Thus, the legislature replaced the common-law definition applied in Corroon & Black with the statutory standard in section 134.90.
Under section 134.90(1)(c), information is a trade secret if it has actual or potential independent economic value because it is not generally known or readily ascertainable by proper means to persons able to profit from it, and if it is subject to secrecy efforts reasonable under the circumstances.
The six Restatement factors are no longer mandatory elements, and a claimant need not prove all six. But because the statutory definition substantially draws on the Restatement approach, those factors remain useful guides in applying the statute to particular facts.
A trade-secret claim therefore proceeds in three steps: determine whether the information is a statutory trade secret; determine whether a statutory misappropriation occurred; and, if both are established, select appropriate relief under the Act. The legal meaning and application of the statute are reviewed independently, while factual findings stand unless clearly erroneous.
Issue #2
Whether acquiring a trade secret through improper means constitutes misappropriation even if the taker does not subsequently use or disclose it.
Holding
Yes. Improper acquisition alone is a statutory misappropriation and can support the remedies available under section 134.90.
Reasoning
Section 134.90(2) prohibits a person from misappropriating a trade secret by doing any of the listed acts. Subsection (2)(a) independently defines misappropriation as acquiring another’s trade secret by means known, or reasonably known, to be improper.
The circuit court found that Cash obtained the Stripper ’76 formula without Minuteman’s permission. That finding amounted to acquisition through improper means under the statute’s definition, which includes theft and related wrongful conduct.
The circuit court erred by effectively requiring Minuteman also to prove a separate violation based on use or disclosure under section 134.90(2)(b). Because the statute says that misappropriation may occur through any of the listed alternatives, proof of wrongful acquisition is enough.
Issue #3
Whether the possibility that a trade secret can be reverse engineered bars a temporary injunction against the person who improperly acquired it.
Holding
No. Possible reverse engineering does not itself defeat temporary injunctive relief; it bears on the proper duration of the injunction.
Reasoning
Reverse engineering is a proper means of discovering information from a lawfully available product. But a wrongdoer who acquired the information improperly cannot avoid an injunction merely by showing that someone might have discovered it lawfully.
The central remedial concern is the unfair commercial lead time gained through misappropriation. An injunction should last only as long as necessary to eliminate that advantage, not longer.
If a good-faith competitor could have independently developed or lawfully reverse engineered the information in a measurable period, that period may establish the maximum appropriate duration of the injunction. The circuit court therefore could consider reverse engineering when tailoring relief, but not as an automatic reason to deny relief.
The court of appeals properly remanded the formula-injunction issue because the circuit court had also relied on an expert report that was neither admitted into evidence nor made part of the record.
Issue #4
Whether Minuteman’s customer list and advertising-inquiry list could qualify for trade-secret protection.
Holding
Yes, they may qualify, and the issue had to be reconsidered under the statutory definition in section 134.90(1)(c).
Reasoning
The lower courts rejected the lists because they concluded that Minuteman had not satisfied every factor in the former Restatement test. That analysis was legally incorrect because section 134.90, rather than Corroon & Black, provides the governing definition.
Customer and prospect lists are not automatically trade secrets, but neither are they categorically excluded from protection. A list may have independent economic value where it identifies a valuable and limited market, contains useful purchasing or prospect information, is not readily ascertainable by proper means, and is protected through reasonable secrecy measures.
The record included evidence that Minuteman did not routinely maintain a complete printed inquiry list, gave Alexander access because of his executive role, and took measures to keep the lists from outsiders. There was also evidence that Amity’s solicitation list resembled Minuteman’s lists in sequence and even repeated spelling and addressing errors. Those facts required evaluation under the statutory test on remand.
Issue #5
Whether the circuit court abused its discretion by denying a temporary injunction for the alleged unauthorized taking of Minuteman’s computer data under Wisconsin’s computer-crimes statute.
Holding
No. The circuit court gave permissible reasons for declining temporary injunctive relief.
Reasoning
A decision granting or denying a temporary injunction rests within the circuit court’s discretion. On review, the question is not whether the appellate court would have made the same decision, but whether the circuit court applied a proper standard and reached a reasonable result.
The circuit court found that Minuteman’s proof did not support its broad allegations concerning additional computer data. It also found that Minuteman had not demonstrated a reasonable probability of success, irreparable harm, or the inadequacy of damages as a legal remedy.
Those findings are recognized grounds for denying a temporary injunction under Wisconsin law. Minuteman did not establish that the circuit court abused its discretion, so the denial was affirmed.