Architectronics, Inc. v. Control Systems, Inc.

OPINION AND ORDER

Architectronics, Inc., a software development firm, has sued two former joint ventur-ers and two related corporations for trade secret misappropriation, breach of contract, tortious interference with contract rights, and copyright infringement. Defendants move for summary judgment on all claims pursuant to Fed.R.Civ.P. 56. For the reasons set forth below, the motion is granted in part and denied in part.

I.

Plaintiff Architectronics is a New York corporation that maintains its principal place of business in Poughkeepsie, New York. (Am. Compl. ¶ 1) Defendants Control Systems, Inc. (“CSI”) and Artist Graphics Corporation are commonly-owned Minnesota corporations operating principally in Rose-ville, Minnesota. (Id. ¶¶ 2-3) Defendants CADSource, Inc. and Access Graphics, Inc. are commonly-owned Delaware corporations operating principally in Boulder, Colorado. (Id. ¶¶ 4-5)

In 1986 and 1987, plaintiff developed prototypes for a new computer software product designed to enhance the capabilities of then-existing computer-aided design (“CAD”) software. The product based on those prototypes would “retrofit” a standard CAD program to enable that program to reproduce on the main computer screen a “virtual” but fully-operational version of a hardware input device known as a “digitizer” or graphics tablet. (Lewis Aff. ¶ 9)

Early versions of CAD software required a separate external digitizer to send commands to a personal computer (“PC”) running the software. A digitizer was a small rectangular tablet with plastic or paper templates displaying available design elements. The CAD user would make “picks” by touching a special probe to the desired design element, and the digitizer would transmit to the computer the coordinates of the pick. From those coordinates, the computer could determine and generate on the screen the appropriate design element. Plaintiffs programmers sought to replace the external digitizer with a less expensive and less cumbersome software equivalent. Plaintiffs new software would perform the same functions as an external tablet, but would use only those physical components common to virtually all PCs running CAD software: a hard drive, a monitor, a video graphics board, a keyboard, and a “mouse” input device. (Id. ¶¶ 10-11) The ultimate goal was to generate a simulated tablet in a “window” on the main computer screen. CAD users would select locations on the simulated tablet with the mouse, and the software would communicate the appropriate data to the CAD program. Plaintiffs software thus would “move the graphics tablet onto the screen” and eliminate the need for a separate external digitizer. (Id. ¶ 12)

Plaintiffs prototypes were engineered to work with AutoCAD, the leading PC CAD software of the 1980’s. AutoCAD demanded high resolution video display capabilities, which were achieved by the video graphics board, a separately installed item of hardware. To make the graphics board work with AutoCAD, an auxiliary piece of software known as a display driver was necessary. A graphics board designed for AutoCAD typically would be shipped from the manufacturer with a floppy disk containing the corresponding AutoCAD display driver. (Id. ¶¶ 13-15)

In March 1987, Architectronics developed a part-software, part-hardware prototype product. That prototype projected a simulated graphics tablet on a custom-built liquid crystal display (“LCD”) screen. In June 1987, at a Washington, D.C. trade show, Ar-, chitectronies President Stephen Lewis demonstrated the LCD prototype in a private hotel suite for Eric Korb, President of CAD-Source, and approximately 20 other people. (Id. ¶ 18, 21) All in attendance signed confidentiality agreements prior to the demonstration. (Id. ¶ 21; Abramson Aff. Ex. 1)

*429 Later that summer, Architectronics developed a more sophisticated prototype implemented entirely in software. The second prototype generated a virtual graphics tablet on the screen of an ordinary, though separate, monitor. The final step in the project was to move the simulated graphics tablet into a window on the main computer screen along with the primary CAD image, and thereby eliminate the need for a second monitor. That technology, which plaintiff called “DynaMenu,” was to be implemented in a new display driver. (Lewis Aff. ¶¶ 16-17, 21-22)

At the time Architectronics was developing DynaMenu, CSI was a leading manufacturer of graphics boards used in PCs to run Auto-CAD, and CADSource was a distributor for CSI. Plaintiff believed that CSI’s graphics boards would provide the best hardware platform from which to launch DynaMenu. Plaintiff hoped to secure CSI’s cooperation in the development of a new DynaMenu display driver that would work with CSI graphics boards and could be sold to CSI’s customers as an add-on product. (Id. ¶ 23-24)

Lewis proposed such a joint venture to CSI Vice President Horace Beale at a meeting held at CSI’s Minnesota headquarters on August 13, 1987. (Id. ¶¶ 24-25) Prior to a presentation of technical specifications and a demonstration of the LCD and dual monitor prototypes, Beale signed a memorandum stating that CSI would keep all disclosures confidential and would not “use or disclose to others any parts of these developments which are not already published, patented or recorded in [CSI’s] files, except with [Lewis’] advance written permission.” (Abramson Aff. Ex. 2) The meeting was attended by Lewis, Korb, Beale, and several other representatives of CSI, including two engineers, Shailendra Jain and Jim Hooker. (Lewis Aff. ¶¶ 25-28)

CSI’s Beale and CADSource’s Korb both expressed interest in the idea, and on September 1, 1987, representatives of Architec-tronies, CSI, and CADSource signed a Software Development and License Agreement (“SDLA”) that had been drafted by CSI. (Abramson Aff. Ex. 4) The SDLA provided that Architectronics would license the source code for its prototypes to CSI to permit CSI to develop a “Derivative Work,” a new Auto-CAD display driver configured for CSI graphics boards. (Id. ¶ 2.1) The new display driver was to perform the following functions:

1. Display upon command from within an application program such as AutoCAD a rasterized[ 1 ] image from a binary file stored on disk or extended memory or expanded RAM.[ 2 ] [Architectronics] will provide the means for creating these rasterized image files and will provide the file structure and simple files.

2. Provide a cursor to indicate the location of pointing device within the logical pointing space corresponding to the menu displays. Mouse will be the primary input pointing device.

3. Provide for menu commands to be sent back to application program preferably using AutoCAD’s own menu command interpreter. Menuing must be designed primarily for mouse input devices. [Architectronics] will provide a mouse driver which uses the ADI[ 3 ] AutoCAD interface to define separate logical areas within the pointing space which can be used to refer to tablet and screen definitions for AutoCAD’s menu interpreter.

(Id. Ex. C)

Under the SDLA, CSI would own the copyright to the Derivative Work, but would grant Architectronics and CADSource jointly an exclusive worldwide license to “use, copy *430 and distribute” the technology. (Id. ¶3.1) Architeetronics and CADSource agreed to pay CSI a $20-per-copy royalty on sales of the display driver. (Id. ¶ 5) In addition, Ar-chiteetronics agreed to pay CSI. a one-time “software development fee” of $2,000. (Id. ¶ 4 & Ex. B) Architeetronics then sent CSI a check for $2,000 along with the source code for its prototypes. (Lewis Aff. ¶ 33)

Shortly after the signing of the SDLA, Autodesk, Inc., the manufacturer of Auto-CAD, introduced Release 9 of the AutoCAD program, which offered, inter alia, an improved graphical user interface. CSI and CADSource believed that Release 9 rendered plaintiffs DynaMenu technology less extraordinary, and sought to abandon the joint venture. (Id. ¶ 36) In November 1987, CSI drafted and circulated to CADSource and Architeetronics an agreement purporting to terminate the SDLA. (Abramson Aff. Ex. 9) Architeetronics refused to sign that document. CSI subsequently drafted an agreement dated April 28, 1988 terminating the SDLA as between CSI and CADSource. That agreement was signed by Beale and Korb. (Id. Ex. 10) CSI retained but never cashed the $2,000 development fee check from Architeetronics. (Lewis Aff. ¶ 37)

In June 1990, CSI released a product called “GT FLEXICON” that plaintiff describes as “a full-blown tablet replacement [program] that implemented a number of advanced features drawn directly from Ar-chiteetronics’ original 1987 prototypes and specifications.” (Id. ¶49) Plaintiff alleges that GT FLEXICON is a “Derivative Work” based on the Architeetronics prototypes, and that CSI has breached the exclusive licensing provision of the SDLA by selling the product. CADSource and Access Graphics, it is alleged, have participated in the distribution and marketing of GT FLEXICON.

Plaintiff filed this lawsuit on December 18, 1992. Plaintiff has since amended its complaint and now alleges that “GT ICON,” a display driver for AutoCAD that CSI released on January 15,1989, also incorporates Architeetronics trade secrets. (Id. ¶ 39) Plaintiff charges all defendants with misappropriation of trade secrets and copyright infringement. A breach of contract claim based on the August 13, 1987 confidentiality agreement is asserted against CSI, and a second contract claim based on the SDLA is asserted against both CSI and CADSource. Artist Graphics and Access Graphics are alleged to be liable on the contract claims as alter egos of CSI and CADSource, respectively. Separately, plaintiff charges that Artist Graphics and Access Graphics tortiously interfered with Architeetronics’ contractual relationships. Defendants move jointly for summary judgment on all claims.

II.

Subject matter jurisdiction for the copyright claims is premised on 28 U.S.C. § 1338(a) (1994). Subject matter jurisdiction for the trade secret misappropriation, breach of contract, and tortious interference claims is premised on diversity of citizenship, 28 U.S.C. § 1332(a)(1) (1994), and principles of supplemental jurisdiction. 28 U.S.C. § 1367(a) (1994). On this motion, the court construes the facts in the light most favorable to the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986). Summary judgment may be granted only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.CivJP. 56(c).

III.

A. Statute of Limitations — Choice of Law

Defendants argue that plaintiffs claims all are barred by the relevant statutes of limitations. All parties have relied on Minnesota statutes of limitations in framing their arguments, presumably because the SDLA specifies that its terms shall be construed according to the law of Minnesota. (Abramson Aff. Ex. 4 ¶ 14)

In fact, New York statutes of limitations apply to all the claims in the complaint. Federal courts sitting in diversity apply the choice of law rules of the forum state, Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 *431 L.Ed. 1477 (1941). On matters of substantive law, New York courts apply the law of “the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.” Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 196, 491 N.Y.S.2d 90, 94, 480 N.E.2d 679, 688 (1985) (quoting Babcock v. Jackson, 12 N.Y.2d 473, 481, 240 N.Y.S.2d 743, 749, 191 N.E.2d 279, 283 (1963)). When the parties have selected the law of a particular jurisdiction by contract, New York courts give “great deference” to that choice and will apply the chosen substantive law unless “the jurisdiction whose law is to be applied has no reasonable relation to the agreement or where enforcement of the provision would violate a fundamental public policy.” American Special Risk Ins. Co. v. Delta America Re Ins. Co., 836 F.Supp. 183, 188 (S.D.N.Y.1993) (citations and quotation marks omitted). However, New York courts treat statutes of limitations as part of the forum’s procedure, and therefore apply New York statutes of limitations even if the underlying claim ultimately will be governed by the substantive law of another jurisdiction. See generally Sun Oil Co. v. Workman, 486 U.S. 717, 722-29, 108 S.Ct. 2117, 2121-26, 100 L.Ed.2d 743 (1988) (application of forum state’s statute of limitations to a claim governed by the substantive law of a different state does not violate the Full Faith and Credit Clause). New York courts apply New York statutes of limitations to claims filed in New York even when, as here, the claims arise out of a contract providing that its terms shall be construed in accordance with the law of another state. Woodling v. Garrett Corp., 813 F.2d 543, 551 (2d Cir.1987); Insurance Co. of North America v. ABB Power Generation, Inc., 925 F.Supp. 1053, 1059 (S.D.N.Y.1996); Sears, Roebuck & Co. v. Eneo Associates, Inc., 43 N.Y.2d 389, 397-98, 401 N.Y.S.2d 767, 772, 372 N.E.2d 555, 559 (1977).

B. Statute of Limitations — Breach of Contract

The general statute of limitations for contract claims in New York is six years. N.Y.Civ.Prac.L. & R. § 213(2) (McKinney 1990). However, if the contract giving rise to the claim involves a “transaction in goods,” the four-year limitations period of Article Two of the Uniform Commercial Code (“UCC”) applies instead. N.Y. U.C.C. Law § 2-725(1) (McKinney 1993). 4 The difference could be material because defendants allege that the contracts were breached, if at all, approximately five years before the filing of the complaint in this action.

The first contract claim, alleged in paragraphs 18-21 of the amended complaint, arises from the August 13,1987 confidentiality agreement signed by CSI. That agreement provided that Arehitectronics would disclose its prototypes to CSI for demonstration purposes, and that CSI would keep the disclosures confidential. The agreement involved no transfer of software or software rights; CSI bargained only for a demonstration, and Arehitectronics received only a promise of confidentiality. Because the agreement involved no transaction in goods, the six-year statute of limitations applies.

It is not clear when the alleged breach of the August 13, 1987 agreement occurred. Nevertheless, it is clear that the first contract claim in the complaint is timely because plaintiff filed this lawsuit within six years of contract formation.

Plaintiff’s second breach of contract claim, alleged in paragraphs 22-30 of the complaint, is based on the SDLA. If the SDLA memorialized a “transaction in goods,” the four-year limitations period applies; if not, the six-year period applies as above.

Under the UCC as adopted in New York, a “transaction” need not involve a sale; “[t]he use of the term ‘transaction’ rather than sale in UCC § 2-102 makes it clear that Article 2 is not to be confined merely to those transactions in which there is ... a transfer of title.” 1 Ronald A. Anderson, Uniform Commercial Code § 2-102:4 (3d ed. 1981) (citing Hertz Commercial Leasing *432 Corp. v. Transportation Credit Clearing House, Inc., 59 Misc.2d 226, 298 N.Y.S.2d 392, 395 (N.Y. City Civ.Ct.1969), rev’d on other grounds, 64 Misc.2d 910, 316 N.Y.S.2d 585 (1st Dep’t 1970)). The applicability of Article Two to a transaction is not defeated by the use of a license in lieu of a sale if the license provides for transfer of some of the incidents of goods ownership. Colonial Life Ins. Co. of America v. Electronic Data Sys. Corp., 817 F.Supp. 235, 239 (D.N.H.1993); Communications Groups, Inc. v. Warner Communications, Inc., 138 Misc.2d 80, 527 N.Y.S.2d 341, 344-45 (N.Y. City Civ.Ct.1988).

Under the UCC, “ ‘[g]oods’ means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities ... and things in action.” Id. § 2-105. Generally, software is considered a “good,” even though a finished software product may reflect a substantial investment of programming services. Communications Groups, 527 N.Y.S.2d at 344; Schroders, Inc. v. Hogan Sys., Inc., 137 Misc.2d 738, 522 N.Y.S.2d 404, 406 (Sup.Ct. New York County 1987); see generally Bonna Lynn Horovitz, Note, Computer Software as a Good Under the Uniform Commercial Code: Taking a Byte Out of the Intangibility Myth, 65 B.U.L.Rev. 129 (1985). However, copyrights, patents, and trademarks are classified as “general intangibles” under the UCC and are distinguished from goods. N.Y. U.C.C. Law § 9-106 & New York Annotations (McKinney 1990); see Grappo v. Alitalia Linee Aeree Italiane, S.p.A., 56 F.3d 427, 431 (2d Cir.1995).

The SDLA provided for two licenses. Under the first license, Architectronics granted CSI the right to use its DynaMenu software prototypes for joint venture-related purposes only. That license gave CSI a tool necessary for the development of the “Derivative Work,” a new display driver. Under the second license, CSI granted Architectronics and CADSouree the right to use, copy, and distribute the “Derivative Work.” That license was the centerpiece of the transaction, because it provided Architectronics and CADSouree with the valuable right to manufacture the new display driver and sell it to the public. Architectronics and CADSouree bargained primarily for the right to mass-market the product, not for the right to install single copies of the display driver onto their own PCs. See generally Andrew Ro-dau, Computer Software: Does Article 2 of the Uniform Commercial Code Apply?, 35 Emory L.J. 853, 874-883 (1986) (distinguishing tangible software use rights from intangible intellectual property rights). CSI’s upside in the deal also was linked to the rights to reproduce and distribute: the parties anticipated thousands of sales of the new product (Lewis Aff. ¶ 32), and Architectronics and CADSouree promised to pay CSI a $20-per-copy royalty on those sales. CSI stood to gain in royalties a sum that would dwarf the $2,000 development fee. Because the predominant feature of the SDLA was a transfer of intellectual property rights, the agreement is not subject to Article Two of the UCC. 5 Plaintiffs second contract claim therefore is timely because plaintiff filed suit within six years of CSI’s first attempt to repudiate the SDLA

C. Statute of Limitations — Trade Secret Misappropriation

New York trade secret misappropriation claims are governed by the three-year statute of limitations for suits based on injury to property. N.Y.Civ.Prac.L. & R. § 214(4) (McKinney 1990); see Galet v. Carolace Embroidery Prods. Co., No. 91 Civ. 7991, 1994 WL 542275, * 4 (S.D.N.Y. Oct. 5, 1994); Construction Technology, Inc. v. *433 Lockformer Co., 704 F.Supp. 1212, 1224 (S.D.N.Y.1989); Lemelson v. Carolina Enterprises, Inc., 541 F.Supp. 645, 658 (S.D.N.Y.1982). Accrual of a claim for trade secret misappropriation occurs as follows:

If a defendant misappropriates and discloses a trade secret, he becomes liable to plaintiff upon disclosure. On the other hand, if the defendant keeps the secret confidential yet makes use of it to his own commercial advantage, each successive use constitutes a new actionable tort for purposes of the Statute of Limitations.

Id. at 659. This rule reflects the principle that “once the information is no longer secret or confidential, there is no property to protect.” Construction Technology, 704 F.Supp. at 1225.

Plaintiffs trade secret claims thus are timely if and only if (1) the alleged unlawful use of plaintiffs trade secrets occurred no earlier than December 18, 1989, and (2) the trade secrets were not extinguished by disclosure before that date. Defendants argue that the trade secrets were publicly disclosed on January 15, 1989 when CSI released GT ICON, a product allegedly incorporating misappropriated trade secrets. Plaintiff claims that misappropriated secrets were not disclosed to the public until the release of GT FLEXICON in June 1990.

It is not clear whether the release of GT ICON amounted to a public disclosure of trade secrets that may have been used by the programmers who created the software. There is no evidence that a user of GT ICON could have discovered such trade secrets by inspecting the product. See id. The technology may have been concealed within impenetrable programming codes, making reverse engineering difficult or impossible. Alternatively, it is possible that CSI used the misappropriated technology to create GT ICON without actually disclosing the secret know-how in the released product. Because neither party has raised or addressed this issue, it would be inappropriate to grant summary judgment on the trade secret claims on limitations grounds.

D. Statute of Limitations — Copyright Infringement

Claims for copyright infringement are governed by a three-year statute of limitations. 17 U.S.C. § 507(b) (1994). The first allegedly infringing product sold by defendants, GT ICON, was released in January 1989, over three years before the filing of this action. (CSI Local Rule 3(g) Statement ¶ 64) However, “every act of infringement is a distinct harm giving rise to an independent claim for relief,” Stone v. Williams, 970 F.2d 1043, 1049-50 (2d Cir.1992), cert. denied, 508 U.S. 906, 113 S.Ct. 2331, 124 L.Ed.2d 243 (1993), and much of the damages plaintiff claims arise from sales of copies of GT FLEXICON beginning in June 1990. Because at least some portion of plaintiff’s copyright claim clearly is not time-barred, summary judgment on that claim on statute of limitations grounds is not warranted.

IV.

Defendants argue that plaintiffs copyright claims must be dismissed because plaintiff failed to record the instrument that transferred copyright rights in the “Derivative Work,” the SDLA, with the United States Copyright Office.

In 1988, pursuant to the Berne Convention for the Protection of Literary and Artistic Works, Congress adopted amendments to the Copyright Act relaxing various formal requirements. See generally Orrin G. Hatch, Better Late Than Never: Implementation of the 1886 Berne Convention, 22 Cornell Int’l L.J. 171, 191-95 (1989). Those amendments took effect on March 15, 1989. Basic Books, Inc. v. Kinko’s Graphics Corp., 758 F.Supp. 1522, 1541 n. 19 (S.D.N.Y.1991). As to claims accruing after that date, recordation of the instrument of transfer is not a jurisdictional prerequisite to the filing of a suit for copyright infringement by an assignee of copyright rights. R & R Recreation Prods., Inc. v. Joan Cook, Inc., No. 91 Civ. 2589, 1992 WL 88171, *4 (S.D.N.Y. Apr. 14, 1992). To the extent plaintiffs copyright claim is based on CSI’s release of GT FLEX-ICON in June 1990, recordation is not necessary.

*434 To the extent plaintiffs copyright claim is based on the release of GT ICON in January 1989, recordation of the instrument of transfer is a prerequisite to suit under former § 205(d) of the Copyright Act, because the 1988 amendments to that provision do not apply retroactively. 17 U.S.C. § 205(d) (1988). However, courts repeatedly held under former § 205(d) that recordation after the filing of the suit cured the defect. See, e.g., Kenbrooke Fabrics, Inc. v. Soho Fashions, Inc., 690 F.Supp. 298, 302 (S.D.N.Y.1988); Wales Indus., Inc. v. Hasbro Bradley, Inc., 612 F.Supp. 510, 514 (S.D.N.Y.1985); Northern Songs, Ltd. v. Distinguished Productions, Inc., 581 F.Supp. 638, 641 (S.D.N.Y.1984). Because plaintiff submitted the SDLA to the Copyright Office for recordation in March 1996 (Abramson Aff. Ex. 32), plaintiffs copyright claims accruing before March 1989 are not subject to dismissal for failure to record. Of course, recovery on those claims will be barred on limitations grounds absent some reason for tolling.

Defendants also challenge plaintiffs standing to sue for copyright infringement, pointing out that the allegedly infringed copyright in the “Artist XJ10 GT protected mode driver with GT Flexicon,” which was registered on December 31, 1990, belongs to CSI. But CSI’s ownership of the copyright does not bar suit by Architectronics here. Plaintiff alleges that the copyright in question is for the “Derivative Work” described in the SDLA, the rights to which were exclusively licensed to Architectronics and CADSource. As an exclusive licensee of copyright rights, plaintiff enjoys “all of the protection and remedies accorded to the owner” under federal copyright law. 17 U.S.C. § 201(d)(2) (1994). CSI, as owner and licensor of the copyright, “may be liable to the exclusive licensee for copyright infringement, if the licensor exercises rights that have theretofore been exclusively licensed.” 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 12.02[b] (1996); see United States Naval Institute v. Charter Communications, Inc., 936 F.2d 692, 695 (2d Cir.1991).

V.

The merits of plaintiffs trade secret claims are governed by Minnesota law for at least three reasons. First, the duty of confidentiality upon which the claim is premised was imposed by a contract executed in Minnesota and specifying that its terms shall be construed according to Minnesota law. Second, the allegedly infringing products were created in Minnesota by a Minnesota defendant. Third, all parties have relied on Minnesota law in their memoranda.

A. Minnesota Trade Secret Law

Under the Uniform Trade Secrets Act (“UTSA”) as enacted in Minnesota, a trade secret is defined as

[^Information, including a formula, pattern, compilation, program, device, method, technique or process that

(i) derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and

(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Minn Stat. § 325C.01(5) (1994).

There appears to be little dispute, at least for purposes of this motion, as to whether plaintiff made reasonable efforts to prevent public disclosure of its technology. Plaintiff revealed its prototypes only to a limited audience of potential co-venturers, and insisted that all in attendance at demonstrations of the prototypes sign specific confidentiality agreements. See Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 901 (Minn.1983) (“This element of trade secret law does not require maintenance of absolute secrecy; only partial or qualified secrecy has been required”); Aries Information Sys., Inc. v. Pacific Management Sys. Corp., 366 N.W.2d 366, 369 (Minn.Ct.App.1985) (employer took reasonable precautions to preserve trade secret by forcing employees to sign confidentiality agreements). Similarly, there is little doubt that unauthorized use of protected Architectronics technology by CSI *435 or CADSource would amount to misappropriation. Misappropriation is defined under Minnesota law as “the acquisition, disclosure, or use of a trade secret through improper means.” Id., 332 N.W.2d at 903. One improper means is through “breach of a duty to maintain secrecy.” Id. CSI promised not to disclose trade secrets in both the SDLA and the August 13, 1987 confidentiality agreement, and CADSource made similar promises in an agreement signed May 25, 1987. (Abramson Aff. Ex. 1)

The dispute here is whether the allegedly misappropriated technology was “generally known” or “readily ascertainable.” Minnesota trade secret protection requires less novelty than federal patent protection. Jostens, Inc. v. National Computer Sys., Inc., 318 N.W.2d 691, 698 (Minn.1982). Although “mere variations on widely used processes cannot be trade secrets,” ElectroCraft, 332 N.W.2d at 899, “generally known computer elements may gain trade secret protection from the nature of their combination.” Jostens, 318 N.W.2d at 698; cf. Integrated Cash Management Servs., Inc. v. Digital Transactions, Inc., 920 F.2d 171, 174 (2d Cir.1990) (under New York law, “a trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage”) (quoting Imperial Chem. Indus. Ltd. v. National Distillers & Chem. Corp., 342 F.2d 737, 742 (2d Cir.1965)); 1 Roger M. Milgrim, Milgrim on Trade Secrets ¶ 1.08[5] (1993) (“Recognition is accorded to a new singular or particularly useful combination of familiar substances or principles, which combination constitutes a new result”).

B. Alleged Trade Secrets

Plaintiff claims CSI wrongfully used the following protected technology in its GT FLEXICON and GT ICON products:

[1]. [V]ideo overlay implementation of the dynamic window concept

[2]. Retrofit of a dynamic graphical user interface onto an existing application program which is “unaware” of the existence of the graphical user interface

[3]. Ability for user of an application program to use that application program to create and modify menu images ... employed by its graphical user interface

[4]. Storing of displayable images on disk and RAM for fast display

[5]. Giving the user the power to program the circumstances in which display windows appear, and to control their positions and contents

[6]. Flexibility of underlying placement and sizes of individual menu elements or icons

[7]. Providing an alternate cursor that the application is not “aware” of, for the user to communicate with the graphical interface overlay

[8]. Providing a mechanism for the graphical user interface to pass a recognized command string[ 6 ] back to the parent application

[9]. The ability to create multiple simultaneous and/or nested display windows for purposes such as nested subme-nus, dialog boxes, etc.

[10]. Dual screen system where second screen is used for menu icons, display windows and the like

[11]. Combinations of the foregoing elements in a unified graphical interface integrated with an existing application program[.]

(Abramson Aff. Ex. 27)

C. Prior Art

Defendants argue that the alleged trade secrets were nothing more than “generally known basic computer graphics principles” that had been understood and implemented in various computer products prior to the signing of the SDLA. (CSI Mem. at 7) *436 Defendants have identified several examples of successful implementation of most of the above-described technology in the years preceding the joint venture giving rise to this lawsuit.

Feature [1]. “Video overlay implementation” simply means the superimposition of a window with the simulated graphics tablet over a window with the primary CAD image. The “dynamic window concept” refers to permitting users to alter the appearance, location, and contents of the windows. According to defendants, those two elements of technology were implemented together in a microprocessor produced in 1986 by Hitachi America, Ltd. that CSI used in the manufacture of graphics boards for CAD programs. (CSI Rule 3(g) Statement ¶ 69) 7 Defendants also contend that those two elements were implemented that same year through alternative technology 8 by Apple Computer, Inc. in its Macintosh computer system. (Id. ¶72)

Feature [2J. In more simple terms, feature [2] refers to the development of a new software product implementing a user-friendly interface for an existing software product with an inferior interface, without disruption of the normal operation of the old software product. Defendants trace the roots of the graphical user interface back to research at Xerox Corporation’s Palo Alto Research Center in the 1970’s. In the early 1980’s, Apple Computer implemented a sophisticated and enormously successful graphical user interface in its Macintosh system. Microsoft followed suit by 1987 with the release of early versions of its now-ubiquitous Windows software. (Id. ¶ 74)

Defendants contend that the British firm Cambridge Computer Graphics, Ltd. also beat Arehitectronics to the punch in the perfection of feature [2]. That company’s Excel-lerator 1024 “graphics adapter,” released in July 1987, is described as incorporating “a retrofit of a [graphical user interface] using a window and icons to interact with AutoCAD.” (Id. ¶ 78) The Excellerator product was “transparent” to the underlying program in that it did not disrupt normal CAD drawing. (Id. ¶ 79)

In October 1987, one widely-circulated CAD industry periodical actually published source code for a custom graphical user interface. (Id. ¶ 81)

Features [S] and [6]. Defendants claim that features [3] and [6] were offered in a product called Personal Designer which was released by Computervision, Inc. in 1986. Personal Designer, according to defendants, permitted users to design and modify menu icons for a CAD graphical user interface. (Id. ¶¶ 77, 83) Defendants also cite the 1985 version of the Amiga computer system, which was manufactured by Commodore International, Ltd., as offering similar technology. (Id. ¶ 84)

Feature [JJ. Defendants portray feature [4], the storage of displayable images on a floppy disk or in the computer’s random access memory, as unremarkable even in 1987. Many PCs of that vintage apparently could store images in those two places. (Id. ¶¶ 87-88)