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United States Court of Appeals,
Fifth Circuit.
No. 93-5162.
W.C. PHILLIPS and Mary Phillips, d/b/a Ambusher, Inc.,
Plaintiffs-Appellees,
v.
Claude FREY, Jr., et al., Defendants,
Claude Frey, Jr., Gary Arnold, and Buck-Pro, Inc., Defendant-
Appellants.
May 11, 1994.
Appeal from the United States District Court for the Eastern
District of Texas.
Before ALDISERT*, REYNALDO G. GARZA, and DUHÉ Circuit Judges.
REYNALDO G. GARZA, Circuit Judge:
This is an appeal from a jury verdict in a trade secret
misappropriation case. The jury found that the defendants had
misappropriated a trade secret connected with the manufacture
and/or marketing of the plaintiffs' hunting stand. For the
following reasons, we AFFIRM.
STATEMENT OF FACTS
Plaintiffs-appellees, W.C. Phillips and his wife Mary
Phillips, are owners and operators of Ambusher, Inc. Ambusher's
main line of business is the manufacture and distribution of single
pole deer stands to be used by hunters. Ambusher's stand is
collapsible and consists of four main parts: the upper seat
section and three ladder pole sections that enable the seat to be
*Circuit Judge for the Third Circuit, sitting by
designation.
1

elevated approximately fourteen feet above the ground.1 It has a
unique design in that it has a single pole that a hunter can climb
instead of having to climb the tree. For further safety and
security, it locks to the tree from the ground before a hunter
climbs into it.
W.C. Phillips began developing single pole tree stands in
1967. He worked on their design, off and on, for three years. He
has developed a number of different models over the years
culminating in the "V-Lok" tree stand which is the subject of this
suit.2 Ambusher also sold accessories to be used with the deer
stands, including a gun/bow rest, a camo blind, a camo awning, a
security cable, and an ATV "Piggy Back Bar." Ambusher and Buck
Pro, Inc. are the only manufacturers of single pole tree stands in
the United States. Buck Pro's tree stand is an exact copy of
appellees' "V-Lok" tree stand.
Defendant John Collins3 was a customer who had bought products
from appellees for a number of years. The events which form the
basis of this suit began in the summer of 1990, when Collins and
1To assemble a single-pole deer stand, the ladder pole
sections are connected together, the seat section is attached to
the top of the poles, and the stand is secured against a tree
with a rope. There are jaws on the back of the seat that dig
into the tree to help hold the stand securely. The hunter may
then climb steps built into the ladder pole sections to reach the
seat for gun or bow hunting.
2The previous models had double arms that locked around the
tree, while the V-Lok has only one arm which gives the hunter the
advantage of going around the tree twice with a rope making it
even more secure.
3Collins settled on the morning of the second day of trial.
2

Phillips had a telephone conversation wherein Phillips mentioned
his desire to sell the business, including all equipment, jigs,
logos, and the spec book, for $140,000.4 Two weeks after that
initial telephone call, Collins called Phillips back to inform him
that he and two associates, Claude Frey and Gary Arnold, were
interested in purchasing the business and wanted some information
to look at. Collins informed Phillips that coming up with his
asking price would not present a problem since he had $50,000 in
savings, that Arnold already had a metal fabricating ship, and that
Frey owned land. These facts led Phillips to believe that the
defendants were legitimate prospective purchasers of Ambusher, Inc.
A couple of weeks later, on July 6, 1990, Phillips sent some
information for Collins and his two associates to look over. This
package included both a financial statement, and an inventory of
his equipment and tools by make and model. He also included a
video tape. Phillips wrote that he had a specification book that
is referred to each time a component is made that is kept up to
date and put away for safekeeping. He also stated that he had made
a videotape of the component manufacturing the previous year,
adding "[w]ithout the specs this information is no secret, and if
you and your associate would like to view this for a detailed
insight of the manufacturing procedures, I can send a copy to
you.... This tape does not cover recent developments and the V-Lok
stand." Because he felt the tape did not make sense without the
4The sales price included everything but Appellees' building
in Texarkana.
3

"spec. book," Phillips made a different tape on July 7, 1990
demonstrating Ambusher's manufacturing process for tree stands and
accessories. The video tape gave appellants the knowledge
necessary to manufacture tree stands, and was intended to bypass
the spec book. Phillips did this in order to allow appellants to
evaluate the business as prospective purchasers.
In the latter part of July 1990, Collins called to arrange a
tour of appellees' shop in Texarkana. The tour lasted about three
hours. During the tour, Phillips and his employee showed the
defendants first hand how to manufacture the "V-Lok" deer stand.
When Phillips informed appellants that his tree stand and
accessories were not patented, Frey asked him what he would do if
someone started building them. Phillips replied that it would be
cost prohibitive to do so without knowledge of his manufacturing
process.
Two weeks later, some time in August 1990, Collins and
appellants returned to Texarkana for a second visit. Collins
purchased seven V-Lok stands and returned to Louisiana. On
September 10, 1990, Phillips sent a more recent financial statement
and a copy of the current inventory.
Shortly thereafter, Collins informed Phillips that he and
appellants were having problems securing financing. Collins then
made a counteroffer for the business for $30,000 down, a $10
royalty per stand and that Phillips was to help set up shop in
Wisner, Louisiana. On September 14, 1990, Phillips refused this
counteroffer. On September 15, 1990, Phillips offered to sell the
4

business for $45,000 down and $20,000 per year at 107 interest for
seven years. On October 1, 1990, Collins informed Phillips that he
and appellants would be unable to purchase the business.
Collins returned the information Phillips had sent him, except
for the video. However, none of the information Collins sent to
Frey or Arnold was returned. Moreover, it was later discovered
that appellants never attempted to secure a loan for the purchase
of Ambusher, despite having sufficient assets to do so.
By the end of March, 1991, appellants were manufacturing and
marketing a tree stand known as the "BP91" under the name Buck-Pro,
Inc. The tree stand and accessories were identical to plaintiffs'
"V-Lok" tree stand and accessories. The plaintiffs filed an action
against appellants and John Collins in district court alleging
misappropriation of both the design of the product and Ambusher's
manufacturing process; that the appellants deceived the Phillips
into disclosing confidential trade secrets under the guise of
purchasing the business. Appellants denied these allegations,
stating that the BP91 deer stand was designed by permissible
reverse engineering, and counterclaimed against appellees for
malicious prosecution. The jury verdict awarded appellees
$56,500.13 in actual damages, $75,000 in punitive damages, and
$7,000 in attorneys' fees. The jury found against the appellants
on the malicious prosecution claim. On the same day that the
judgment was entered, the trial court signed a permanent injunction
enjoining appellants from manufacturing, selling, or marketing deer
stands and assorted accessories. Appellants have timely appealed.
5

DISCUSSION
The jury returned a verdict finding by a preponderance of the
evidence that the defendants had misappropriated a trade secret of
W.C. Phillips and Mary Phillips connected with the manufacture
and/or marketing of a single pole V-Lok tree stand, T-Bar awning,
or Piggy back bars for all terrain vehicles.5
Trade secret misappropriation under Texas law is established
by showing: (a) a trade secret existed; (b) the trade secret was
acquired through a breach of a confidential relationship or
discovered by improper means; and (c) use of the trade secret
without authorization from the plaintiff. Taco Cabana Intern'l,
Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir.1991),
affirmed, --- U.S. ----, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992);
Hurst v. Hughes Tool Co., 634 F.2d 895, 896 (5th Cir.), cert.
denied, 454 U.S. 829, 102 S.Ct. 123, 70 L.Ed.2d 105 (1981); Avera
v. Clark Moulding, 791 S.W.2d 144, 145 (Tex.App.--Dallas 1990, no
writ).
The decisive component of our review of this case is the fact
that the defendants failed to move for a judgment as a matter of
5The jury was instructed that in order to find that the
defendants misappropriated the plaintiffs' trade secret, they
must find each of the following elements by a preponderance of
the evidence:
1. that a trade secret exists;
2. that it was acquired through a confidential
relationship; and
3. that the defendants used the trade secret without
authorization from the plaintiffs.
6

law at the close of the evidence or after the verdict was returned.
See Fed.R.Civ.P. 50. Consequently, these objections are being
raised for the first time on appeal, and our review is therefore
extremely limited: "It is the unwavering rule in this Circuit that
issues raised for the first time on appeal are reviewed only for
plain error," and we will reverse "only if the judgment complained
of results in a "manifest miscarriage of justice.' " McCann v.
Texas City Refining, Inc., 984 F.2d 667, 673 (5th Cir.1993)
(quoting Coughlin v. Capitol Cement Co., 571 F.2d 290, 297 (5th
Cir.1978)). Therefore, the appellants have waived the right to
appeal the sufficiency of the evidence, and may only complain of
the legality of the verdict, i.e., whether there is any evidence to
support the jury verdict.6 McCann, 984 F.2d at 673. Even if there
is no evidence in the record supporting the verdict, this Court
lacks the power to enter judgment for the appellant. Our appellate
relief is limited to ordering a new trial. Id.
It is the appellants' contention that there was no evidence to
support the jury's verdict or the permanent injunction.
Appellants' first argument is that no "trade secrets" were
disclosed. Appellants assert that they acquired no information
deserving protection under the trade secrets law. Alternatively,
appellants claim that the plaintiffs are barred as a matter of law
6Appellants timely filed a motion for new trial in this case
so this court may inquire whether the trial court abused its
discretion in overruling the motion for new trial. Little v.
Bankers Life & Cas. Co., 426 F.2d 509, 511 (5th Cir.1970). We
hold that the trial court did not abuse its discretion in denying
the motion.
7

because the Buck-Pro BP91 was built exclusively through the use of
permissible reverse engineering, that the Phillips failed in their
affirmative duty to take reasonable steps to protect their secret,
and finally, that no confidential relationship existed between the
parties. Consequently, the jury's finding of misappropriation of
trade secrets amounts to a "miscarriage of justice." We will
examine each of these concerns independently, closely scrutinizing
the record for any evidence to support the jury's verdict.
(1) Did a Trade Secret Exist?
Primarily, appellants assert that the only trade secret
involved in this case was the specification book, and that was
never given to the appellants. Any information other than the spec
book would not rise to the specter of a "trade secret." Appellants
point out that Phillips stated in his letter that "[w]ithout the
specs this information is no secret...." Moreover, appellants
claim that no admonitions against disclosure accompanied the
videotape.
A trade secret is any formula, pattern, device or compilation
of information used in a business, which gives the owner an
opportunity to obtain an advantage over his competitors who do not
know or use it. Taco Cabana Intern'l, Inc. v. Two Pesos, Inc., 932
F.2d 1113, 1123 (5th Cir.1991), affirmed, --- U.S. ----, 112 S.Ct.
2753, 120 L.Ed.2d 615 (1992); Avera v. Clark Moulding, 791 S.W.2d
144, 145 (Tex.App.--Dallas 1990, no writ). "It may be a formula for
a chemical compound, a process of manufacturing, treating or
preserving materials, a pattern for a machine or other device, or
8

a list of customers." Restatement of Torts § 757 comment b (1939)
(emphasis added); Avera v. Clark Moulding Co., 791 S.W.2d 144, 145
(Tex.App.--Dallas 1990, no writ). See Chandler v. Mastercraft
Dental Corp. of Texas Inc., 739 S.W.2d 460, 468 (Tex.App.--Fort
Worth 1987, writ denied) (stating that plaintiff need not prove
substantial element of secrecy, where evidence showed defendant
formed a competing business utilizing processing and manufacturing
system improperly obtained from plaintiff).
Appellees contend, and we find that the evidence supports,
that it was Ambusher's manufacturing process that was the trade
secret misappropriated, not the design of the tree stand.
The method of manufacturing must be a trade secret to be
protected, in other words, it must give the owner a competitive
advantage. See Cataphote Corp. v. Hudson, 444 F.2d 1313, 1318 (5th
Cir.1971) (holding plaintiff failed to establish that glass bead
manufacturing process involved some element above ordinary
mechanical commonality). The trade secret "must possess at least
that modicum of originality which will separate it from everyday
knowledge." Id. at 1315. The record before us indicates that the
Phillips's manufacturing process took years to develop and allowed
Ambusher to manufacture the tree stands in a cost efficient manner,
giving Ambusher a competitive advantage over anyone who would not
know or use this method.7 See Taco Cabana Intern'l, Inc. v. Two
7When Phillips informed the appellants that his tree stand
and accessories were not patented, Frey asked Phillips what he
would do if someone started building them. Phillips replied that
it would be cost prohibitive to do so without knowledge of his
manufacturing process.
9

Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir.1991), affirmed, --- U.S.
----, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). The manufacturing
process itself was divulged in both the video tape and the personal
tours given to appellants during the course of negotiations for
purchase of the business.8
Gary Arnold admitted at trial that prior to seeing the video
tape sent to them by Phillips, he was unaware of how to mass
produce deer stands. Additionally, the manufacturing equipment and
tools used in Buck-Pro's manufacturing process were identical to
those employed by Ambusher. This is some evidence that the
manufacturing process came from improperly acquired trade secrets.
Secondly, appellants contend that the concept of a
single-pole deer stand was not invented by Phillips, but was in
8Phillips trial testimony states that the video disclosed
the manufacturing process to appellants:
Q: Now what was on the tape that you actually sent?
A: Well, first I took a walk through the shop so they
could get an overview of all the equipment. I showed each
individual piece of equipment, and I showed the bender and
told the name. I showed the hydraulic presses. I even
showed how they worked.
I showed the saw, and the drills and the painting
department, the assembly department, and just a tour through
the entire facility. And then I wanted to show them how the
equipment was used, and I went back and edited on some
videotape showing people at work, showing the hydraulic
press extruding or expanding the metal.
I showed them how to put foam on the gun rest. I
showed them how to form the base pole for the flange. I
showed them how to crimp the metal. I showed them how to
cut the foot stand and fold it up. And just--just about
everything that we did in production was included on this
tape.
10

fact the subject of a previous patent, thus rendering the trade
secret public property through general disclosure. Luccous v.
Kinley Co. 376 S.W.2d 336, 340 (Tex.1964) (patent grant
automatically constitutes full disclosure of a patented process and
cannot be protected as a trade secret). Appellants argue that any
property rights in a trade secret cease to exist prospectively once
the matter has become public property through a general disclosure
by the discoverer or by the legitimate discovery of and/or rightful
disclosure to another. Basso Chemicals, Inc. v. Schmidt, 522
F.Supp. 1087, 1092 (E.D.Ark.1981). On October 16, 1984, Lynn
Thomas filed a patent for a "Portable Hunter Tree Stand." That
patent provides:
A pair of spike-equipped jaw members which are pivotally
coupled to the seat frame extended rearwardly therefrom and
are normally biased apart to a fully open, tree-engaging
position. The jaw members include integral, outwardly
diverging locking arm portions which are adapted to be drawn
together by the hunter with a rope during stand installation
to forcibly compress the jaw members in binding, substantially
circumferential engagement with the selected tree.
Whether the patented tree stand and the V-Lok stand are the
same is irrelevant to our inquiry. We find that the jury's verdict
can be supported by the misappropriation of the manufacturing
process itself, which evidence in the record reveals gave Ambusher
a competitive advantage over anyone who does not know or use it.
Nowhere do appellants allege that they used the patent instead of
the plaintiffs' trade secret to formulate their manufacturing
process. The patent referred to merely describes a product,
admittedly similar to the V-Lok Tree Stand, yet is devoid of
detailed information of a manufacturing process or specifications.
11

In the same vein of argument, the appellants assert that they
designed and manufactured their products by reverse engineering.
Under Texas law, it is permissible to use a competitor's secret
process if the process is discovered by reverse engineering applied
to the finished product. E.I. duPont deNemours & Co. v.
Christopher, 431 F.2d 1012, 1015 (5th Cir.1970), cert. denied, 400
U.S. 1024, 91 S.Ct. 581, 27 L.Ed.2d 637 (1971). Since they never
had access to the spec book, it was necessary to compile their own
specification for the deer stands and accessories. Appellants
claim that Phillips admitted that they utilized reverse engineering
to design their products when he testified:
A: They manufactured without my book, yes.
Q: And how did they do that?
A: They laid the stand down and measured it and copied it, and
built some specs to match.
Q: Not from your book but from the stand itself?
A: From the stand itself, yes, sir.
Although it is likely appellants used reverse engineering for the
design of the BP91, there was no evidence that the appellants used
this method to acquire the manufacturing process employed by
Ambusher. A process or device may be a trade secret even where
others can gain knowledge of the process from studying the
manufacturer's marketed product. Ventura Manufacturing Co. v.
Locke, 454 S.W.2d 431, 433 (Tex.Civ.App.--San Antonio 1970, no
writ). Although trade secret law does not offer protection against
discovery by fair and honest means such as independent invention,
accidental disclosure, or "reverse engineering," protection will be
12

awarded to a trade secret holder against the disclosure or
unauthorized use by those to whom the secret has been confided
under either express or implied restriction of nondisclosure or by
one who has gained knowledge by improper means. Kewanee Oil, 416
U.S. at 475, 94 S.Ct. at 1883. See Carson Products Co. v.
Califano, 594 F.2d 453, 461 (5th Cir.1979); Weed Eater, Inc. v.
Dowling, 562 S.W.2d 898, 901 (Tex.Civ.App.--Houston [1st Dist.]
1978, writ ref'd n.r.e.); Brown v. Fowler, 316 S.W.2d 111, 115
(Tex.Civ.App.--Fort Worth 1958, writ ref'd n.r.e.). Therefore, this
argument does not further their position on appeal.
(2) Breach of Confidential Relationship and Improper Discovery
One is liable for disclosure of trade secrets if (a) he
discovers the secret by improper means, or (b) his disclosure or
use constitutes a breach of confidence reposed in one who is in a
confidential relationship with another who discloses protected
information to him. Mercer v. C.A. Roberts Co., 570 F.2d 1232,
1238 (5th Cir.1978); E.I. duPont deNemours & Co. v. Christopher,
431 F.2d 1012, 1014 (5th Cir.1970), cert. denied, 400 U.S. 1024, 91
S.Ct. 581, 27 L.Ed.2d 637 (1971); Murrco Agency, Inc. v. Ryan, 800
S.W.2d 600, 605 (Tex.App.--Dallas 1990, no writ); Elcor Chemical
Corp. v. Agri-Sul, Inc., 494 S.W.2d 204, 211 (Tex.Civ.App.--Dallas
1973, writ ref'd n.r.e.).
The appellants assert that, even if the information disclosed
was a trade secret, the information was not discovered through
improper means. E.I. duPont deNemours & Co. v. Christopher, 431
F.2d 1012, 1014 (5th Cir.1970), cert. denied, 400 U.S. 1024, 91
13

S.Ct. 581, 27 L.Ed.2d 637 (1971), involved trade secret
misappropriation through aerial photography of the construction of
a chemical plant. In condemning this action and explicitly finding
misappropriation of trade secrets through improper means, this
court noted that industrial espionage of this type "has become a
popular sport in some segments of our industrial community.
However, our devotion to free wheeling industrial competition must
not force us into accepting the law of the jungle as the standard
of morality expected in our commercial relations." Id. at 1016.
We find that there is evidence to support the finding that
appellants acquired the confidential information through improper
means.
The facts before us indicate that Collins induced Phillips to
reveal information by assuring him that accumulating the purchase
price would be easy because providing collateral for a business
loan would present no obstacle. Arnold testified that he owned a
home, a business known as Arnold's Service Center which is a metal
fabricating facility, and a 40 acre farm in Wisner, Louisiana.
Frey testified that he owns farm land in both Mississippi and
Louisiana. Frey also stated that they never made any effort to
borrow money or even apply for a loan. In the face of such
evidence, it does not amount to a miscarriage of justice for the
jury to believe that the defendants improperly discovered the trade
secret and breached their confidential relationship.
Appellants' next claim is that Phillips should not recover
since he completely disregarded all prohibitions that would afford
14

his legal protection on any trade secrets by voluntarily disclosing
the manufacturing process through the videotape and the on-cite
tours. At no time did Phillips inform the appellants that the
information was secret or in any way place them under a duty not to
disclose.
It was this court that stated that it is not improper to
obtain knowledge of a process where the holder of the alleged trade
secret voluntarily discloses it or fails to take reasonable
precautions to ensure its secrecy. E.I. duPont deNemours & Co. v.
Christopher, 431 F.2d 1012, 1015 (5th Cir.1970), cert. denied, 400
U.S. 1024, 91 S.Ct. 581, 27 L.Ed.2d 637 (1971). See Interox
America v. PPG Industries, Inc., 736 F.2d 194, 202 (5th Cir.1984)
(one who voluntarily discloses information or fails to take
reasonable precautions to insure its secrecy cannot claim that the
information constituted a trade secret); Furr's Inc. v. United
Specialty Advertising Co., 385 S.W.2d 456, 459 (Tex.Civ.App.--El
Paso 1964, writ ref'd n.r.e.), cert. denied, 382 U.S. 824, 86 S.Ct.
59, 15 L.Ed.2d 71 (1965) (owner of a trade secret must do something
to protect himself or the secret will be lost by its disclosure).
However, an owner of a trade secret will not lose the secret by
disclosure if he creates a duty in some manner and places that duty
upon another not to disclose or use the secret. Kewanee Oil Co. v.
Bicron Corp., 416 U.S. 470, 474, 94 S.Ct. 1879, 1882-83, 40 L.Ed.2d
315 (1974) (holding necessary element of secrecy with respect to
trade secret not lost if holder reveals it to another in confidence
and under implied obligation not to use or disclose it); Rimes v.
15

Club Corp. of America, 542 S.W.2d 909, 913 (Tex.Civ.App.--Dallas
1976, writ ref'd n.r.e.). Therefore, while it is true that outside
any confidential relationship, one who voluntarily discloses secret
information or who fails to take reasonable precautions to secure
its secrecy cannot properly claim that information constitutes a
trade secret, see Interox v. PPG Industries, Inc., 736 F.2d 194,
202 (5th Cir.1984), creating such a duty upon the disclosee is a
reasonable precaution, and a voluntary disclosure made within the
periphery of a confidential relationship eliminates the need to
take further precautions to secure the trade secret. See Sheets v.
Yamaha Motors Corp., U.S.A., 849 F.2d 179, 183 (5th Cir.1988)
(asserting that disclosure of trade secret to one who has no
obligation of confidentiality extinguishes property right in trade
secret).
The record does contain evidence that Phillips did take steps
to protect his secret by not disclosing the process to anyone until
the sales negotiations commenced. By this precaution, Phillips
disclosed within a confidence that placed the appellants under a
duty to keep the secret.
However, appellants deny that there was never any confidential
relationship established that would prevent them from using the
information given to them. Appellants assert that the fact that a
sale of Ambusher was contemplated does not create a per se
confidential relationship between the parties.
They cite to a 1st circuit case which holds that although a
confidential relationship will typically be implied if the
16

disclosure was made in a business relationship between a purchaser
and supplier, the implied confidential relationship may be defeated
if the disclosing party voluntarily conveys a trade secret to
another without limitation upon its use. Burten v. Milton Bradley
Co., 763 F.2d 461, 463 (1st Cir.1985). Appellants find similarity
in the instant case, where Phillips took no steps to protect
himself and never indicated that he was giving confidential
information to Collins or appellants.
In Hyde Corp. v. Huffines, 158 Tex. 566, 314 S.W.2d 763, cert.
denied, 358 U.S. 898, 79 S.Ct. 223, 3 L.Ed.2d 148 (1958), the
Supreme Court of Texas held that an express agreement was not
necessary where the actions of the parties and the nature of their
relationship, taken as a whole, established the existence of a
confidential relationship.
The chief example of a confidential relationship under this
rule is the relationship of a principal and agent (See
Restatement of Agency, Section 395 and 396). Such is also the
relationship between partners or other joint adventurers. But
this confidence may exist also in other situations. For
example, A has a trade secret which he wishes to sell with or
without his business. B is a prospective purchaser. In the
course of negotiations, A discloses the secret to B solely for
the purpose of enabling him to appraise its value.... In
[that] case B is under a duty not to disclose the secret or
use it adversely to A.
Hyde, 314 S.W.2d at 769; Mercer, 570 F.2d at 1238. The injured
party is not required to rely on an express agreement to hold the
trade secret in confidence, nor is he to be denied relief where the
offending party originally entered into the relationship without an
improper motive. Id. at 770.
In Smith v. Snap-On Tools Corp., 833 F.2d 578, 581 (5th
17

Cir.1988), Basil Smith invented a ratchet by combining parts of two
existing tools and submitted a tool suggestion form to Snap-On
Tools' corporate headquarters. A short time later, Snap-On began
manufacturing and selling the ratchet without paying any proceeds
to Smith who brought a diversity action claiming trade secret
misappropriation. Id. at 579. The district court found that Snap-
On had misappropriated the trade secret. This court then reversed,
holding that the record reflected that there was no confidential
relationship existing at the time of disclosure between Smith and
the corporation since Smith never explicitly requested that his
disclosure be held in confidence, he had submitted the trade secret
on his own initiative without any solicitation from Snap-On Tools,
and disclosure was not intended as part of the business
negotiations. Id. at 580. We cited to the Restatement of Torts §
757(b) (1939) which states, "[o]ne who discloses or uses another's
trade secret, without a privilege to do so, is liable to the other
if ... his disclosure or use constitutes a breach of confidence
reposed in him by the other in disclosing the secret to him." The
proprietor of a trade secret may not unilaterally create a
confidential relationship without the knowledge or consent of the
party to whom he discloses the secret. Snap-On Tools, 833 F.2d at
579-80 (citing Restatement of Torts, comment j (1939)). However,
no particular form of notice is needed; the question raised is
whether the recipient of the information knew or should have known
that the information was a trade secret and the disclosure was made
in confidence. Id. at 580 (citing Restatement of Torts § 757
18

comment j (1939)).
The case before us is strikingly distinguishable. Even in
Snap-On we implied that a manufacturer who has actively solicited
disclosure from an inventor, and then used the disclosed material,
would be liable for misappropriation of trade secrets even where
the disclosure was made in the absence of any expressed
understanding about confidentiality. Id. at 580. Although
Phillips never explicitly requested that the secret of his
manufacturing process, which gave him a competitive advantage over
competitors, be held in confidence, both parties mutually came to
the negotiation table, and the disclosure was made within the
course of negotiations for the sale of a business. The jury could
validly accept such evidence that the defendants knew or should
have known that the information was a trade secret and the
disclosure was made in confidence.
CONCLUSION
Although the appellants' evidentiary attacks are couched in
terms of "no evidence," they all appear to be nothing more than a
sufficiency of the evidence assault. As previously mentioned, this
vein of argument is waived by appellants since their trial counsel
failed to move for a directed verdict at the close of the evidence.
The essence of this action is not infringement, but breach of
faith, for it is clear that the plaintiffs could not assert a
property right against one who would acquire the secret of their
manufacturing process through reverse engineering of the
plaintiffs' publicly marketed product, a study of the expired
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Thomas patent, or any variety of permissible means including the
limited access to a company's trade secrets obtained during the
evaluation of a potential purchase. As Judge King points out in
Omnitech Intern., Inc. v. Clorox Co., 11 F.3d 1316, 1325 (5th
Cir.1994),
[t]o hold otherwise would lead to one of two unacceptable
results: (i) every time a company entered into preliminary
negotiations for a possible purchase of another company's
assets in which the acquiring company was given limited access
to the target's trade secrets, the acquiring party would
effectively be precluded from evaluating other potential
targets; or (ii) the acquiring company would, as a practical
matter, be forced to make a purchase decision without the
benefit of examination of the target company's most important
assets--its trade secrets.
The fact is that they did not. Instead, the jury found, they
gained it from the plaintiffs via their confidential relationship,
and in so doing incurred a duty not to use it to plaintiffs'
detriment. This duty they have breached. See Thermotics, Inc. v.
Bat-Jac
Tool Co., Inc.,
541
S.W.2d
255,
260-61
(Tex.Civ.App.--Houston [1st Dist.] 1976, no writ). There was ample
evidence available for the jury to conclude appellants were not
sincere in their decision to buy the business, and procured the
manufacturing process under the guise of purchasing the business.
See Omnitech, 11 F.3d at 1325. Moreover, the record supports the
conclusion that the appellants acquired the manufacturing process
through improper means.
None of the appellants' arguments convince us that plain error
exists that would require reversal. See United States v.
Jacquillon, 469 F.2d 380, 386 (5th Cir.1972) (application of the
plain-error rule "is limited to exceptional situations involving
20

serious deficiencies which affect the fairness, integrity, or
public reputation of the judicial proceedings"), cert. denied, 410
U.S. 938, 93 S.Ct. 1400, 35 L.Ed.2d 604 (1973). We therefore
conclude that the jury's verdict does not constitute a manifest
miscarriage of justice.
AFFIRMED.

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