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CMU ISR 08732 - Liebert V Mazur

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SECOND DIVISIONApril 5, 2005No. 1-04-2794JUSTICE WOLFSON delivered the opinion of the court:Plaintiffs Liebert Corporation (Liebert) and Zonatherm Products, Incorporated (Zonatherm) soughtto enjoin several of Zonatherm's former employees from using alleged trade secrets in their newcompeting business, Aerico Incorporated (Aerico). Plaintiffs alleged defendants misappropriatedconfidential customer lists, historical bids, quotations, sales history, and price books. The trialcourt denied plaintiffs' motion for a preliminary injunction. Plaintiffs appeal. We affirm in part,reverse in part, and reverse and remand in part.FACTSI. History of the PartiesLiebert is an Ohio corporation engaged in the manufacture and sale of computer networkprotection equipment that provides uninterrupted network power and climate control technologies.Ninety percent of Liebert's sales consist of engineered or applied systems for uninterrupted poweror network air conditioning systems.Zonatherm is an Illinois corporation that, among other things, sells products manufactured byLiebert. Zonatherm has been the exclusive Liebert representative in the Chicago area since it wasfounded in 1969. On October 1, 2003, Liebert and Zonatherm entered into a RepresentativeAgreement providing for the confidential treatment of Liebert's confidential, proprietary, and tradesecret information, with restrictions on disclosure, use, and dissemination.Defendants John Mazur (Mazur), Gregory N. Schwabe (Schwabe), Jerome Mazur (Jerome), andMario Belluomini (Belluomini) are former Zonatherm employees and sales representatives forLIEBERT CORPORATION, an Ohio corporation, andZONATHERM PRODUCTS, INC., an Illinois corporation,Plaintiffs-Appellants,v.JOHN MAZUR, an individual, GREGORY N. SCHWABE, anindividual,JEROME MAZUR, an individual, MARIO BELLUOMINI, anindividual,LAURENCE BERGFALK, an individual, AERICO, INC., an Illinoislimitedcorporation, and AMERICAN POWER CONVERSIONCORPORATION,a Massachusetts corporation,Defendants-Appellees.))))))))))))))Appeal from theCircuit Court ofCook County.HonorableSophia H. Hall,Judge Presiding.Page1of18No. 1-04-2794, Liebert Corp. v. Mazur9/17/2007http://www.state.il.us/court/Opinions/AppellateCourt/2005/1stDistrict/April/Html/1042794.htmLiebert. Mazur was a territory sales manager for Zonatherm and was responsible for 25% ofZonatherm's sales of Liebert's products. Mazur and Schwabe resigned from Zonatherm onJanuary 20, 2004, and began to work at Aerico on January 22, 2004. Belluomini and Jeromeresigned from Zonatherm and began work at Aerico on January 26 and 30, 2004, respectively.Defendant Laurence Bergfalk (Bergfalk) became a shareholder in Aerico along with Mazur andSchwabe.Aerico is in the business of marketing and selling products manufactured by American PowerConversion Corporation (APC), a direct competitor of plaintiffs. Mazur and Schwabe incorporatedAerico on November 12, 2003--two months before they resigned from Zonatherm-and signed arepresentative agreement with APC on January 19, 2004. APC, a Massachusetts corporation,designs products similar to Liebert's and is one of Liebert's direct competitors.II. Plaintiffs' Alleged Trade SecretsThe information defendants allegedly misappropriated was stored electronically and could beaccessed through two e-commerce websites maintained by Liebert.A. Liebert's and Zonatherm's electronic storage of the alleged trade secretsPhilip Jan Barnett, Liebert's director of e-commerce, testified regarding the confidential informationand how it was stored. Through the "var.liebert.net" website, Liebert's approximately 800 valueadded resellers could access his or her own electronic work area with price quotes, pricing level,and products information. Each of the 72 offices within Liebert's domestic organization had its ownvirtual space to store and view customer information, quotations, orders, and other information.The second website, "rep.liebert.com" (El.net), also known as El.Net or the Electronic LiebertNetwork, was a "virtual office" for first-channel salespeople, sales representatives, internationaldistributors, and factory direct offices. The El.net site housed confidential customer lists, quotelists, pricing information, customer accounts receivable, order acknowledgments, and shipmentinformation. All of the information was confidential to each exclusive representative office, likeZonatherm, and each representative was assigned a particular sales territory.Barnett described the organization of the El.net website: (1) the quote and order section, whichshows the salesperson's personal quotes and orders as well as those of the sales office; (2) thecompetition section showing information on the strengths and weaknesses of the competition andwhat to do in direct bid situations; (3) the lead time reports showing what inventory is available inthe factories and warehouses; (4) the price books; (5) the reconditioned equipment and surplusequipment sections; (6) the sales information section containing highly confidential customerinformation; (7) the sales reporting wizard which inputs sales information into a spreadsheet; (8)the sales development area; (9) sales application tools; (10) leasing information; (11) a freightcalculator; (12) industrial tools; (13) sales presentations; and (14) sales quotation information.B. The types of information allegedly misappropriatedThree of the above-listed items are at issue in this case--customer information, sales quotationinformation, and the price books.1. Customer contact listsZonatherm's customer list included company names, phone numbers, addresses, customers' e-Page2of18No. 1-04-2794, Liebert Corp. v. Mazur9/17/2007http://www.state.il.us/court/Opinions/AppellateCourt/2005/1stDistrict/April/Html/1042794.htmmail addresses, and the names, telephone numbers, and addresses of individual contacts withineach company. Zonatherm maintained separate lists for each sales territory. The sales teamassigned to a particular territory would have access to that territory's customer list on Zonatherm'sserver. Salespersons were not given access to other territories' customer lists. According toStephen Izzo (Izzo), Zonatherm's president, the contact list was "a valuable reference documentfor [salespeople] to decide how to spend their valuable time in order to create business forZonatherm."Albert Izzo (Albert), who founded Zonatherm in 1969, started his business by making cold calls toengineers, and eventually calling mechanical contractors


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CMU ISR 08732 - Liebert V Mazur

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