Corning Incorporated, Plaintiff-Counter-Defendant-Appellee v. Picvue Electronics, Ltd and Picvue Optoelectronics International, Inc., Defendants-Counter-Claimants-Third-Party-Plaintiffs-Appellants, Eglasstrek Gmbh v. Saint-Gobian Advanced Ceramics Corporation, Third-Party-Defendant

Citations: 365 F.3d 156; 70 U.S.P.Q. 2d (BNA) 1636; 58 Fed. R. Serv. 3d 895; 2004 U.S. App. LEXIS 7947Docket: 03-7731

Court: Court of Appeals for the Second Circuit; April 22, 2004; Federal Appellate Court

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Corning Incorporated filed a lawsuit against Picvue Electronics, Ltd., Picvue Optoelectronics International, Inc., and Eglasstrek GmbH, alleging misappropriation of trade secrets and copyright infringement related to glass manufacturing for liquid crystal displays. PicVue sought to dismiss Corning's amended complaint or obtain summary judgment on the claims, while Corning requested a preliminary injunction against PicVue and Eglasstrek to prevent further misuse of its trade secrets and infringement of its copyrighted materials. The district court denied PicVue's dismissal and summary judgment motions, granting Corning's request for a preliminary injunction instead.

On appeal, the focus is on PicVue's claims that the preliminary injunction is vague and fails to comply with Federal Rule of Civil Procedure 65(c) and (d). The appellate court reviews the district court's ruling for abuse of discretion. The injunction prohibits PicVue and Eglasstrek, along with their associates, from misappropriating Corning's trade secrets and reaping benefits from any past misappropriation, as well as from infringing Corning's copyrighted works.

Federal Rule of Civil Procedure 65(d) mandates that any order granting an injunction or restraining order must clearly articulate the reasons for its issuance, specify the terms, and detail the acts to be restrained without referencing other documents. This requirement aims to prevent contempt citations due to vague orders, ensuring that enjoined parties are fully aware of prohibited conduct. The district court's preliminary injunction against PicVue failed to specify the trade secrets and copyrighted works it barred, rendering it unclear what acts were forbidden, thereby not meeting Rule 65(d)'s specificity requirements.

Additionally, under Rule 65(c), a preliminary injunction can only be issued if the applicant posts a security bond, determined by the court, to cover potential costs and damages incurred by a wrongly enjoined party. The district court did not require Corning to post such a bond, which was a necessary step before issuing the injunction. Consequently, the court's failure to follow these procedural requirements led to a partial vacating of the district court's decision and a remand for further proceedings, while affirming part of the decision as outlined in a summary order.

Judge Jon O. Newman recused himself before the oral argument, leading to a decision by the remaining two panel members, in accordance with the Rules of the United States Court of Appeals for the Second Circuit. The case was argued on April 14, 2004, and decided on April 22, 2004. Corning Inc. initiated the action against defendants Picvue Electronics, Ltd., Picvue Optoelectronics International, Inc. (collectively PicVue), and Eglasstrek GmbH, alleging misappropriation of trade secrets and copyright infringement related to glass manufacturing for liquid crystal displays. 

In April 2003, PicVue moved to dismiss Corning's Amended Complaint or sought summary judgment on the trade secret and copyright claims. Corning subsequently requested a preliminary injunction to prevent the defendants from misappropriating its trade secrets and infringing on its copyrighted works. The district court, presided by Judge Telesca, denied PicVue's motion to dismiss and for summary judgment, while granting Corning's request for a preliminary injunction on July 2, 2003. 

This appeal addresses PicVue's arguments regarding the alleged vagueness of the preliminary injunction under Federal Rule of Civil Procedure 65(c) and (d). The appellate court reviews the district court's decision for abuse of discretion, which occurs if the court misapplies legal standards or relies on erroneous findings of fact. PicVue contends that the injunction is vague as it does not clearly specify the prohibited conduct, citing that it enjoins them from misappropriating Corning's trade secrets and further infringing Corning's copyrighted works.

Every injunction and restraining order must articulate the reasons for its issuance, specify terms clearly, and detail the prohibited acts without referencing other documents. This requirement addresses concerns that vague orders may lead to unintentional contempt violations. Basic fairness dictates that those subject to injunctions receive clear notice of what conduct is restricted. Orders lacking specificity will not survive appellate review. In this case, the preliminary injunction did not identify the specific trade secrets and copyrighted works that PicVue was prohibited from misappropriating or infringing, making compliance unclear without referring to external documents. Consequently, the injunction failed to meet the specificity requirements of Rule 65(d).

Additionally, PicVue argued that the district court abused its discretion by not requiring Corning to post a security bond before issuing the preliminary injunction, as mandated by Federal Rule of Civil Procedure 65(c). This rule states that a restraining order or preliminary injunction can only be issued upon the applicant providing security to cover potential costs and damages for any party wrongfully enjoined. While the district court has discretion in determining the bond amount, it must make this determination prior to issuing an injunction. The court's failure to do so indicates noncompliance with Rule 65(c). Thus, the court's decision is partially vacated and remanded for further proceedings consistent with these findings, while also affirming part of the district court's ruling. Judge Jon O. Newman recused himself prior to oral argument, leading to a decision by the remaining panel members.