## Facts

- Electro-Craft Corporation (ECC), a Minnesota manufacturer of high-performance DC “servo” motors, developed moving-coil and brushless motors used in products such as computer disk drives and printers.
- John Mahoney served as ECC’s national sales manager and managed relationships with major customers; he later founded Controlled Motion, Inc. (CMI), a competing Minnesota motor manufacturer.
- ECC alleged that CMI and Mahoney used ECC’s confidential design and manufacturing information relating to one moving-coil motor and one brushless motor.
- ECC sued for trade secret misappropriation under Minnesota’s version of the Uniform Trade Secrets Act and sought injunctive relief.
- The trial court found misappropriation and entered relief against CMI and Mahoney; it also found them in contempt for violating a temporary restraining order (TRO) issued during the litigation.
- CMI and Mahoney appealed both the misappropriation judgment and the contempt order.

## Issues

1. Whether ECC proved the motor design and manufacturing information qualified as a “trade secret” under Minnesota law, including secrecy and reasonable efforts to maintain secrecy.
2. Whether ECC proved CMI and Mahoney misappropriated any protectable trade secret, as opposed to using general skill, knowledge, or readily ascertainable information.
3. Whether contempt sanctions were proper for violating the TRO, even if the underlying injunctive relief was later found to be erroneous.

## Decision

- The Minnesota Supreme Court reversed the judgment for trade secret misappropriation.
- The court held ECC failed to establish that the asserted information was protectable as a trade secret and failed to prove misappropriation.
- The court affirmed the contempt order, concluding the record supported that appellants violated the TRO while it remained in force.
- The court stated that court orders must be obeyed unless and until modified or reversed; later reversal does not excuse disobedience occurring while the order was effective.

## Legal Principles

- A trade secret must (1) derive independent economic value from not being generally known or readily ascertainable and (2) be subject to reasonable efforts to maintain secrecy.
- Information consisting of general industry knowledge, standard engineering techniques, or public-domain elements is not a trade secret; a combination of public elements requires proof that the particular combination is secret and valuable.
- Product design information generally cannot be protected as a “trade secret” to prevent lawful examination and duplication after sale, absent proof the asserted information is not readily ascertainable through lawful means such as reverse engineering.
- A claimant’s failure to use reasonable secrecy measures (e.g., lack of confidentiality agreements, broad internal access, absence of confidentiality treatment) weighs strongly against trade secret status.
- Employees may use general skills, knowledge, and experience acquired during employment; trade secret law restricts only the use of secret, particularized information.
- A party may be punished for contempt for violating an injunctive order in effect at the time of disobedience, even if the order is later determined to have been improperly granted.

## Conclusion

The court rejected ECC’s trade secret claim because the asserted motor-design information largely reflected readily ascertainable engineering knowledge and ECC failed to show reasonable secrecy protections or actual use of protectable secrets, but it upheld contempt sanctions because CMI and Mahoney were required to comply with the TRO while it remained in force.


Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890 (Minn. 1983)