Irving Iron Works v. Kerlow Steel, C., Co. , 96 N.J. Eq. 702 ( 1924 )

In the general finding of facts by the learned vice chancellor we fully concur. Indeed, the correctness of that finding is not definitely drawn into question on this appeal, except in one particular, viz., the finding "as a fact that the type `M' grating was designed for and is the property of the complainant." (We quote the language of the brief.) As to this, our examination of the case satisfies us that the court below properly found that the design in question was originally conceived and executed for the complainant corporation by its own agents, was its private property and retained as such, came to the knowledge of defendants Bunker and Lown through their confidential relations with complainant, and was filched by them for the purposes of competitive exploitation. The vice-chancellor properly held that this was a proper subject of injunctive relief.

It is argued, however, that the defendants, before bill filed, had applied for a patent on this design, and that pending the litigation this patent had been granted; and that these facts turn the controversy into a patent litigation, cognizable only in the federal courts. No such issue appears to have been raised on the pleadings, and we agree with the vice-chancellor in holding it irrelevant to the theory of the bill. That theory we understand to be, in substance, that the defendants, through their confidential relations with complainant, secured a design, its private property withheld presently from the public, and have undertaken to patent it as their own; that in so doing they are trustees ex maleficio, and, as such, accountable for illicit profits, and to be restrained by injunction from further use of complainant's property. No patent rights as such are here involved. What is involved is a trust arising by operation of law.

We think, however, that the appellants are right in claiming that the injunction is in some respects broader than is warranted. For example, it forbids "doing business with any customer or prospective customer," c., of complainant. This is doubtless intended to be confined to business connected with the subject-matter of the suit, but is broad enough to include any business of whatever nature. A suitable modification should be made.

The restraint on employing or continuing to employ any agent or employe who left the employ of complainant, we think cannot be supported in its full scope. There seems to be nothing illegal or inequitable in giving employment to any former employe of complainant who left its service voluntarily and not as a result of enticement by the defendants. And even as to those that were enticed, and were at the time of the decree in the employ of the defendant company, it is difficult to see how complainant will be benefited by a requirement that they be discharged, especially as they are not parties to the suit. We think this part of the injunction should be restricted to an inhibition on enticing any present employe of complainant; as to the others, the complainant may be left to its remedy at law.

An attack is also made on the clauses requiring an accounting of profits and reports from time to time of the business done by defendants. The argument seems to be that this is the rule of patent cases instead of that applicable in an ordinary equity suit. We do not understand that there is any distinction; on the contrary, we take it that the general equitable rule is to require the wrong-doer to account for and pay over the profits of his wrong-doing.

With the minor modifications indicated above, the decree will be affirmed, with costs.

For affirmance — THE CHIEF-JUSTICE, TRENCHARD, PARKER, MINTURN, KALISCH, BLACK, KATZENBACH, CAMPBELL, LLOYD, WHITE, GARDNER, VAN BUSKIRK, CLARK, McGLENNON, KAYS — 15.

For reversal — None.