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Sperry Rand Corp. v. A-T-O, Inc.

447 F.2d 1387, 171 U.S.P.Q. 775 (1971)

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Sperry Rand Corp. v. A-T-O, Inc.

United States Court of Appeals for the Fourth Circuit
447 F.2d 1387, 171 U.S.P.Q. 775 (1971)

Facts

Sperry Rand Corporation (plaintiff) brought a trade-secret-misappropriation action against Electronic Concepts, Inc. (ECI) (defendant), which was later purchased by A-T-O, Inc.; John Zentmeyer, Jr. (defendant), a former Sperry Rand employee who became ECI’s president; and Gus Tebell (defendant), another former Sperry Rand employee who went to work for ECI. The suit was brought under diversity jurisdiction in federal district court, with Virginia law controlling. Sperry Rand alleged that ECI had misappropriated (1) confidential manufacturing information with which to compete with Sperry Rand and (2) confidential pricing information in connection with Sperry Rand’s bid on a U.S. Coast Guard contract, allowing ECI to successfully underbid Sperry Rand on the contract. The court found in favor of Sperry Rand. The court awarded $631,012 in compensatory damages, $175,000 in punitive damages against Zentmeyer and ECI, and $10,000 in punitive damages against Tebell. Of the $631,012 compensatory amount, $175,000 was the value to ECI of the misappropriated trade secrets, $231,012 was the profit that Sperry Rand lost on the Coast Guard contract, and the remainder—$225,000—consisted of attorney fees. The judgment was appealed to the United States Court of Appeals for the Fourth Circuit.

Rule of Law

Issue

Holding and Reasoning (Winter, J.)

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