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Gen. No. 01 2345
















 PLAINTIFF, ALPHA Optical, Inc. (ALPHA) asks this court to award damages because, ALPHA claims, DEFENDENTS, BETA Technology Corp. et al (BETA) misappropriated its trade secrets, thereby violating the Illinois Trade Secret Act  (ITSA).  765 ILCS 1065/1 et seq. (2000).





ALPHA is an Illinois corporation that develops and manufactures thin film optical interference filters.  R. at 3 - 4.  ALPHA filters are used for florescence microscopy, astronomy, Raman spectroscopy, measuring moisture in grain, absorption spectroscopy, body fat reading, forensic analysis and other “high tech” uses.  R. at 12.  ALPHA’S motto is “There is no end in light.”  R. at 4.


ALPHA applies thin layers of materials onto a glass or glass-like substrate.  R. at 11.  The layers are made of chemicals that have divergent refractive indices.  R. at 11.  With an arrangement of layers on the substrate, the resulting filter has distinct properties.  R. at 11.  High performance interference filters transmit a high percentage of the desired light within a narrow bandwidth of frequencies, and, at the same time, reflects away the light of unwanted frequencies.  R. at 13.  The more layers applied to the substrate, the higher the performance of the filter.  R. at 13.


In 1991 industry literature described filter designs with up to 50 layers.  R. at 14.  ALPHA was making filters with as many as 120 layers.  R. at 14.  No other manufacturer in the industry knew how ALPHA was able to make its filters.  R. at 315  Because ALPHA’S filters were the highest performing filters on the market, the company carved out a niche market that was extremely profitable.  R. at 14.


Dr. John Q. Starlight Jr.  (Dr. Starlight) is the founder of the company, and he is the chief architect of ALPHA’S success.  R. at 4.  He started ALPHA in 1968, after a long time interest and some very practical experience in the thin film optical filter industry.  R. at 4. 


Through a long (more than 30 years) and arduous process, ALPHA developed complex procedures in research, development, formulation, design, manufacturing processes, manufacturing equipment, pricing information, quality control, customer development, designs, supplier and raw materials information and other proprietary business information.  R. at 21.  These pieces of information, combined, provided ALPHA a competitive advantage because they were unknown to others in the industry.  R. at 15.


BETA is an Illinois corporation that develops and manufactures thin film optical interference filters.  R. at 4.  Six of the ten individual defendants in this action own BETA, and each of the ten defendants is a former employee of ALPHA.  R. at 5 - 9.  Not one of these former employees had ANY experience with or knowledge about thin film optical interference filters prior to their employment with ALPHA.  R. at 5 -9.  The defendants performed a variety of functions at ALPHA.  R. at 5 - 9.  Together, their experience encompassed all of tasks necessary for ALPHA to function.  R. at 5 – 9.


Individually, it was impossible for each defendant to put ALPHA’S technology puzzle together.  In forming BETA, the defendants combined their knowledge and information about ALPHA’S technology, processes and procedures to replicate ALPHA’S success in the thin film optical interference filters industry.







“[I]t is not enough to point to broad areas of technology and assert that something there must have been secret and misappropriated."  Thermodyne Food Serv. Prods. v. McDonald's Corp., 940 F. Supp. 1300, n.4 (N.D. Ill. 1996)  (quoting   Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1265 (7th Cir. 1992)).  However, a trade secret may consist of a “specific area of technology” composed of a unique process design and operation which together result in a competitive advantage.  Id. at 1305 & n.4.


In Thermodyne, the plaintiff manufactured food service ovens designed “to cook and hold food items at lower temperatures through conduction processes.” Id. at 1302.  The ovens were made of component parts, each of which was generally known in the industry.  The Thermodyne Court, however, held that the plaintiff’s “trade secret is the interrelationship of component parts and technologies which comprise the broader [plaintiff] technology.”  Id. at 1305.


 Similarly, ALPHA has identified about one hundred-fifty (150) pieces of information, in eight (8) different categories:

(1)   Research and development,

(2)   Formula and Design,

(3)   Manufacturing Process,

(4)   Pricing Information,

(5)   Quality Control,

(6)   Customer Development Cycle,

(7)   Proprietary Supplier and Raw Materials Information,

(8)   Proprietary Business Information.


See, Plaintiff’s Exhibit 545.  Some of this information is known in the industry, most of the information is NOT known.  R. at 33.  Collectively, these pieces of information fit together to complete ALPHA’S proprietary technologies, processes and procedures.


The Illinois Trade Secret Act (ITSA) defines a trade secret as "information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that:"

(1)               is sufficiently secret to derive economic value, actual or potential, from not being generally known to 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.


765 ILCS 1065/2(d).  


Additionally, in order to prove that BETA violated the ITSA, once ALPHA establishes that they have a protected trade secret, they must show that BETA “misappropriated” it.  765 ILCS 1065/2(b).  Under the ITSA misappropriation means:

(2)               disclosure or use of a trade secret of a person without express or implied consent by another person who:


(B)              at the time of disclosure or use, knew or had reason to know that knowledge of the trade secret was:


                                                           (I)      derived from or through a person who utilized improper means to acquire it;


                                                        (II)      acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; 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;


765 ILCS 1065/2(b)(2)(B)(I)(II)(III).



ALPHA will address each statutory requirement individually.  First, ALPHA will establish that its information is sufficiently secret to derive economic value from not being generally known.  Second, ALPHA will establish that it took reasonable measures to maintain the information’s secrecy.  Finally, ALPHA will establish that BETA misappropriated its protected trade secrets.






“The key to secrecy is the ease with which information can be readily duplicated without involving considerable time, effort or expense.”  Stampede Tool Warehouse v. May, 272 Ill. App. 3d 580, 587(1st Dist. 1995).   The analysis focuses on whether information is generally known within an industry, rather than known to the general public.  See, Mangren Research and Development Corp. v. National Chemical Co., 87 F.3d 937, 942 (7th Cir. 1996); ILG Indus., Inc. v. Scott, 49 Ill. 2d 88, 93 (Ill. 1971);


In Stampede the plaintiff was “a national distributor of automotive tools and equipment.” Id. at 581.  The plaintiff sold tools to “jobbers,” who, in turn, sold the tools to end-users.  Id.  A list of jobbers was not available through any one source.  Id. at 587.    In order to locate the jobbers, the plaintiff spent “a substantial amount of time, effort, and expense.”  Id. at 589.  Because the information could not be easily ascertained, the court concluded that the customer list afforded the plaintiff economic value from not being generally known.  Id.  Therefore, the customer list at issue was “sufficiently secret” as required by the ITSA.  Id.


Here, the information at issue was the cumulative knowledge of more than 30 years.  R. at 4.  ALPHA is a pioneer in developing and manufacturing thin film optical interference filters.  R. at 11.  Prior to 1991, at least one of ALPHA’S primary competitors spent considerable amounts of time and money trying to duplicate ALPHA’S products, to no avail.  R. at 15.  Furthermore, ALPHA’S products are not susceptible to reverse engineering, even should a competitor wish to spend the time and energy attempting to do so.    R. at 15. 


Finally, ALPHA is a highly profitable company, as is BETA once they instituted ALPHA’S technologies, processes and procedures. R. at 70-2.  Clearly, parties processing the information at issue have a competitive advantage.  Accordingly, ALPHA satisfies the first prong of the ITSA requirements.





“The law of Trade Secrets requires a plaintiff to show that he took reasonable precautions to keep the secret a secret.”  Rockwell Graphic Sys., Inc. v. DEV Indus., Inc., 925 F.2d 174, 179 (7th Cir. 1991).  The ITSA requires “efforts to maintain secrecy” that are “reasonable under the circumstances.” 765 ILCS 1065/2(d)(2).   BETA will point to two areas that it says should disqualify ALPHA’S proprietary information from trade secret status.  First, BETA will assert that ALPHA’S security policies were inadequate.  Next, BETA will assert that ALPHA shared its information among its employees, therefore ALPHA forfeited the information’s trade secret status. ALPHA will address each assertion separately. 




When the trade secret at issue is a customer list or a specific document (See, Televation Telecommunication Systems, Inc. v. Saindon, 169 Ill. App. 3d 8, (2d Dist. 1988)(where the document at issue was a schematic drawing of the electronic circuitry for an automatic wake up system used primarily in the hotel and motel business.)), determining the “reasonableness” is a straightforward exercise. 


For example, in Gillis Associated Indus., Inc. v. Cari-All, Inc. the court reviewed the security measures the plaintiff took to keep its customer list secret.  Gillis Associated Indus., Inc. v. Cari-All, Inc., 206 Ill. App. 3d 184,190 (1st  Dist. 1990).  The plaintiff maintained its customer list on a single computer and “only three key employees had access to this computer.”  Id.  The plaintiff, however, failed to place ANY restrictions on the computer-generated hard copies. Id.  The Gillis Court found that the customer list was not the “subject of reasonable efforts designed to protect its secrecy.”  Id. at 192.  Therefore, the court held that the customer list did not qualify as a trade secret under the ITSA.  Id.


Another case involving a customer list is Stampede Tool Warehouse v. May.  Stampede, 272 Ill. App. 3d.  In Stampede, the plaintiff took steps to protect the secrecy of its customer list.  Id. at 589.  For instance, the plaintiff locked their offices, checked their garbage daily, used special computer access codes, supplied customer information only on a need-to-know basis, kept hard copies of customer lists and salesmen’s call books locked up or out of the office, and used security cameras.  Id.  Moreover, the plaintiff required employees to sign confidentiality agreements that stated that the customer’s names could not be used or disclosed.  Id.  Because of these measures, the court concluded that the customer list was the subject of reasonable efforts to maintain its secrecy.  Id. 


When, however, the trade secrets at issue involve a technology as a whole or a compilation of information, courts have used a fact intensive analysis to determine if the measures taken to protect the information were “reasonable.”  See, Rockwell Graphic Sys., Inc. v. DEV Indus., Inc., 925 F.2d 174, 179 (7th Cir. 1991); Thermodyne Food Serv. Prods. v. McDonald's Corp., 940 F. Supp. 1300, n.4 (N.D. Ill. 1996); Roton Barrier, Inc. v. Stanley Works, 79 F.3d 1112 (Fed. Cir. 1996). 


Here, ALPHA took a multitude of measures to maintain its proprietary information’s secrecy.  For example, ALPHA:

(1)               Built its facilities away from high-tech corridors;


(2)               uses cryptic classifications, which are meaningless without explanation, to record data concerning its filter designs;


(3)               intentionally hired employees without existing or previous experience working with interference filters;


(4)               operated as an “isolated island” without significant interaction with other filter manufacturers;


(5)               maintained low profile facilities which do not suggest that they contain high-tech manufacturing operations;


(6)               divided its operations into different departments, located on different floors in different buildings;


(7)               concentrated employee training in specific areas of technology;


(8)               stored its technical records in a secure room, and limited access to that room;


(9)               insisted that employees lock office and department doors after hours;


(10)           did not permit visitors to view its documents;


(11)           required that visitors be escorted throughout the facilities, in order to control what each visitor saw;


(12)           required employees to sign keys in and out;


(13)           required all employees to sign Confidentiality, Disclosure, and Noncompetition Agreements (after 1991);


(14)           held weekly employee meetings at which the propriety nature of its Intellectual Property was discussed. 


(15)           barred employees from revealing any information about the company’s technologies, processes or procedures beyond which was revealed in ALPHA’S product catalog.


R. at 25, 28.



In addition to the measures listed here, ALPHA used another, more counterintuitive method of maintaining its proprietary information secret.  R. at 24.  ALPHA intentionally de-emphasized security concerns.  R. at 24.  Because ALPHA was located out of the high-tech corridors and hired only inexperienced workers, it was beneficial not to point out the economic value of the technology to others.  R. at 24.  From ALPHA’S inception until at least 1990 that policy was extremely successful.  ALPHA’S competitors did not uncover its secrets.  R. at 24.


In about 1990, however, ALPHA, perhaps anticipating the coming “information superhighway” which would destroy its self-created “island,” decided to begin emphasizing security.  R. at 28-9.  In that year ALPHA hired Mr. James McStructure to help restructure the company.    R. at 29.  One of Mr. McStructure’s early recommendations was for ALPHA to require all employees to sign nondisclosure, noncompetition agreements.  R. at 29.  ALPHA’S previous policy of not emphasizing security must have been effective, because soon after changing that policy the individual defendants in this case left ALPHA and set up BETA, using ALPHA’S valuable technologies, processes and procedures.  R. at 29-31.





The question that the ITSA definition of “trade secret” raises is, “secret from whom?”  Colson Co. v. Wittel, 210 Ill. App. 3d 1030, 1040 (4th Dist. 1991).  An employer need not keep its proprietary information secret from its own employees, if sharing that information is for a legitimate business reason.  See, ILG Industries, Inc. v. Scott, 49 Ill. 2d 88, 94 (1971); See also, Quality Lighting, Inc. v. Benjamin, 227 Ill. App. 3d 880, 890 (1st Dist. 1992); But see, Colson Co. v. Wittel, 210 Ill. App. 3d 1030, 1040 (4th Dist. 1991).


In Quality Lighting, the defendants were granted summary judgment on a complaint alleging trade secret misappropriation.  Quality Lighting, 210 Ill. App. 3d at 882.  On appeal, the defendants alleged that the “information plaintiff claim[ed] to be confidential was widely known by plaintiff's employees.”  Id. at 890.  Therefore, the defendant said, the plaintiff abandoned its trade secrets.  Id.  The Quality Lighting Court, however, held that an owner of a trade secret may share that information with its employees if there were legitimate “business reasons.”  Id.


Here, ALPHA does not contest the fact that there was a free flow of information among its employees.  R. at 26.  The free flow of information fostered a creative atmosphere within the company, which, in turn, led to the trade secrets they are now seeking to protect.  R. at 26.  Remove the sharing of information among ALPHA’S employees, and you remove the ideas that led ALPHA to its revolutionary innovations.  Fostering this creative process certainly qualifies as a “legitimate business reason.”


In every case, a plaintiff could use additional precautions to guard the information’s secrecy.  See, Rockwell, 925 F.2d at 180.  “If trade secrets are protected only if their owners take extravagant, productivity-impairing measures to maintain their secrecy, the incentive to invest resources in discovering more efficient methods of production will be reduced, and with it the amount of invention.”  Id. 


The question, then, is whether the precautions are adequate to guard the information from its competitors in order for the plaintiff to maintain its economic advantage.  Here, at all times, ALPHA used reasonable efforts to maintain the secrecy of its technology.  If, however, ALPHA had implemented more stringent security measures before it became necessary in 1991, it would have hurt productivity, stifled the creative process and increased costs.   Additional measures were not necessary, AND NOT REQUIRED.





“[A]n employee may take general knowledge or information he or she has developed during their employment.” Stampede, 272 Ill. App. 3d. at 590.  However, an employee may not take “confidential particularized plans or processes developed by his employer and disclosed to him while the employer-employee relationship exists, which are unknown to others in the industry and which give the employer advantage over his competitors.”  Schulenburg v. Signatrol, Inc., 33 Ill. 2d 379, 387 (1965). 


The defendants in this case will assert three reasons why they did not misappropriate ALPHA’S trade secrets.  First, the individual defendants will claim that they took only their general skills and knowledge and, therefore, they had every right to use their general skills and knowledge to recreate ALPHA’S products.  Next, BETA Technology Corp. will claim that, because the individual defendants did not have a duty to keep ALPHA’S trade secrets secret, they too did not “derive” a trade secret as required under the ITSA.  Finally, BETA will contend that their products are not identical to ALPHA’S, therefore they did not misappropriate ALPHA’S technologies, processes or procedures.  ALPHA will address each claim in turn.


“A trade secret can be misappropriated by physical copying or by memorization.”  Stampede, 272 Ill. App. 3d. at 590.  In Stampede, former employees contacted the plaintiff’s customers from a list they remembered from their employment.  Id.  The former employees maintained that the did not misappropriate the customer list because “there was no physical taking of the list.” Id.  The plaintiff’s customer list, the former employees claimed, was part of their general knowledge and skills learned while employed with plaintiff.  Id.


The Stampede court held that “[u]sing memorization to rebuild a trade secret does not transform that trade secret from confidential information into non-confidential information.”  Id.  The court said, “[T]he general knowledge in this case is the method defendants used in finding prospective customers, not the actual customer information.”  Id. at 589


Similarly here, each individual defendant acquired general knowledge and skills concerning their respective jobs.  R. at 5 – 9.  This general knowledge, however, does not extend to the complete process.  The individual defendants memorized where each piece of the puzzle fit in ALPHA’S overall technology, processes and procedures.  Then, through their collective memories, they combined each piece of the puzzle.  R. 48.  The result was a near perfect copy of ALPHA’S technology, processes and procedures.  R. at 48.  For instance the similarities include the:

(1)               use of computer programs to design the filters,

(2)               classification of the formulas,

(3)               information contained in the part numbers,

(4)               forms for recording design information,

(5)               the sources of supplies,

(6)               preparation of the optical surfaces, and

(7)               quality control procedures 


R. at 48.  Taken together, these similarities amount to misappropriation of ALPHA’S trade secrets. 


Because BETA Technology Corp. is a creation of the individual defendants, if the individual defendants have a duty to keep ALPHA’S technologies, processes and procedures secret, then BETA Technology Corp. derived these trade secrets through persons who owed a duty to ALPHA to maintain its secrecy and limit its use and, therefore, BETA Technology Corp. violated the ITSA.


Finally, BETA may claim that their products are different than ALPHA’S and, therefore, are not derived from ALPHA’S trade secrets.  It is black letter law that "the user of another's trade secret is liable even if he uses it with modifications or improvements upon it effected by his own efforts, so long as the substance of the process used by the actor is derived from the other's secret."  Mangren Research and Development Corp. v. National Chemical Co., 87 F.3d 937, 944 (7th Cir. 1996).


In Mangren, the plaintiff manufactured a release agent used to prevent plastic and rubber products from sticking to molds.  Id.  at 939.  The formula used one especially critical chemical not generally known in the industry.  Id.  The defendants were former employees of the plaintiff and knew the critical chemical used in the formula.  Id. at 940.  After leaving the plaintiff’s employ, the defendants went to work for a competitor of the plaintiff and set about producing a release agent to be used in the rubber industry.  Id.   The release agent they produced improved upon plaintiff’s product, but essentially used the same critical chemical compound.  Id. at 941.


The Mangren Court held that, although the defendants did not copy plaintiff’s product identically, “[o]nce the [plaintiff] let defendants in on the secret and defendants then used that secret to develop their own product, there plainly was a misappropriation even if defendants' product was not identical to [plaintiff's].”  Id. at 945.  The court said that because the defendant developed its product using the plaintiff’s trade secret, and not through independent research and testing, “there was a misappropriation for which the law provides a remedy.”  Id. at 945, n.4.


Here, it is uncontested that the defendant’s learned everything they know about developing and manufacturing thin film optical interference filters from ALPHA.  R. at 5 – 9.  In addition, there are substantial similarities between every aspect of BETA’S technology, processes and procedures and ALPHA’s.  R. at 48.  BETA incorporated its business in May of 1991.  R. at 38.  By the fall of 1991, BETA had already produced filters that were comparable to ALPHA’S, something it to ALPHA 30 years to produce.  R. 53. 


BETA admitted that its early designs were derived from ALPHA’S designs.  R. at 50.  Just because later improvements of BETA’S filters deviated from those designs and are not “exact duplicates” does not relieve BETA of liability for misappropriating ALPHA’S trade secrets.





As Judge Posner said in Rockwell, “The future of the nation depends in no small part on the efficiency of industry, and the efficiency of industry depends in no small part on the protection of intellectual property.”  ALPHA asks this court to find that BETA misappropriated ALPHA’S trade secrets and award the appropriate remedy.


This court should award ALPHA damages as provided in the Illinois Trade Secret Act 765 ILCS 1065/4(a):

1)      Lost profits in the amount of $19,468,324.00. 


2)      Unjust Enrichment in the amount of $14,217,175.00, or


3)      Alternatively, A “reasonable royalty” in the amount of $5,294,765.00



In addition, because BETA’S misappropriation was willful and malicious, this court should double any damages awarded to ALPHA as exemplary damages, as provided for in the Illinois Trade Secret Act 765 ILCS 1065/4(b)


                                                          Dated this 13th day of April, 2001




                                                          Steven A. Leahy

                                                          Attorney for ALPHA Optical, Inc.,





Steven A. Leahy

57 West Erie Street, Suite 100

Chicago, Illinois 60610


Attorney No: 000000

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