Southwire Company and Essex Group, Inc., are direct competitors
in the cable and wire industry. Southwire’s logistics system is a
warehouse organizational system with components extending
from architectural layout features to customized equipment and
modified computer software. Southwire’s logistics system was
designed primarily over a three-year period, with a development
cost exceeding $2 million, by a project team headed by Richard McMichael. In addition to self-testing and a trial-and-error
learning process, development of Southwire’s logistics system also
included modifications based on observation of logistics systems
in other industries and the adaptation of commercially available
components. The selection and arrangement of components and
equipment in the new logistics system is unique to the Southwire
logistics system. The new logistics system has resulted in substantial
efficiencies to Southwire, with annual savings of $12 million.
Because Southwire and its competitors produce basically identical
goods for sale, the marketing advantage gained by the important
efficiencies that have resulted from the new logistics system has
proved especially valuable for Southwire. Essex hired McMichael,
and Southwire brought suit against its former employee, McMichael, and his new employer, Essex, to enjoin McMichael from
disclosing to Essex any Southwire trade secrets, particularly trade
secrets involving Southwire’s logistics system.
a. What are the arguments in favor of the court not issuing the
injunction?
b. What are the arguments in favor of the court issuing the
injunction?
c. Explain whether the court should issue the injunction.