Smith v. Snap-On Tools Corp.

833 F.2d 578 (1987)

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Smith v. Snap-On Tools Corp.

United States Court of Appeals for the Fifth Circuit
833 F.2d 578 (1987)

  • Written by Meagan Messina, JD

Facts

After making a rachet from parts of two existing tools, Basil Smith (plaintiff) showed the rachet to an independent dealer and submitted a tool suggestion form to Snap-On Tools Corp. (Snap-On) (defendant). Snap-On started manufacturing and selling the rachet but did not give any proceeds to Smith. Smith sued Snap-On, claiming that Smith’s tool was a trade secret, that Smith submitted the tool in confidence, that Snap-On misappropriated the tool, and that Snap-On was liable for misappropriation. The district court held for Smith, awarding Smith damages of 2.5 percent of Snap-On’s gross sales of the tool plus prejudgment interest. Smith appealed the award of damages and sought to recover profits instead of a reasonable royalty. Snap-On cross-appealed.

Rule of Law

Issue

Holding and Reasoning (Rubin, J.)

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Casebooks

Intellectual Property

Key Terms

  • Confidential relationshipA relationship between parties where one party has gained the trust and confidence of the other party and therefore cannot exploit the interests of the other party for personal gain.
  • MisappropriationThe act of dishonestly taking something that belongs to someone else and using it for oneself. Misappropriation is also a type of unfair competition claim in which the defendant appropriates the plaintiff’s intellectual property if the intellectual property at issue is not otherwise protected by copyright, patent, trademark, or as a trade secret.
  • Trade SecretA formula, method, program, device, or other business material that is kept confidential and whose competitive value is enhanced by the maintenance of such confidentiality.
  • Confidential or Fiduciary RelationshipA relationship where one party relies on the advice and judgment of another person to an extent that puts the other party in a dominant position. Reliance is typically based on a combination of factors such as the person’s authority, age, or superior knowledge and training.
  • UnilaterallyThe act of doing something on one’s own without the agreement of others.

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