FOR PUBLICATION

ATTORNEYS FOR APPELLANT:    ATTORNEYS FOR APPELLEES:

PAUL J. PERALTA    WILLIAM L. WILSON
D. LUCETTA POPE    BERNARD E. EDWARDS, JR.
Baker & Daniels    Anderson, Agostino & Keller, P.C.
South Bend, Indiana    South Bend, Indiana

     IN THE COURT OF APPEALS OF INDIANA

NORTHERN ELECTRIC COMPANY, INC.,    )

    [§397 cmt. a:]
If however, one is employed to do experimental work for inventive purposes, it is inferred ordinarily, although not so specifically agreed, that patentable ideas arrived at through the experimentation are to be owned by the employer. This is even more clear where one is employed to achieve a particular result which the invention accomplishes. On the other hand, if one is employed merely to do work in a particular line in which he is an expert, there is no inference that inventions which he makes while so working belong to the employer.

Restatement (Third) Unfair Competition § 42 cmt. e (1995) (quoting Restatement (Second) of Agency § 397 cmt. a) (emphasis added). Comment e further clarifies that “[a]lthough the rules governing ownership of valuable information created during an employment relationship are most frequently applied to inventions, the rules are also applicable to information such as customer lists, marketing ideas, and other valuable business information. If an employee collects or develops such information as part of the assigned duties of the employment, the information is owned by the employer.” (emphasis added).
Referencing Restatement § 42, the New York Supreme Court held in Pullman Group, LLC., v. Prudential Insurance Co. of America, 733 N.Y.S.2d 1, 2 (N.Y. App. Div. 2001), that an employer owns alleged trade secrets created by an employee within the scope of his assigned duties. In Pullman Group, LLC., a financial investment firm’s former employee claimed that a certain banking transaction he had created while acting within the scope of his assigned duties belonged to him and not his employer. Id. at 2. The court analyzed that since the former employee was responsible for designing and promoting investment banking transactions, the trade secret was created during the course of his regular duties. Id. Therefore, the court concluded, the employer owned the banking transaction ab initio. Id.
Although decided on a slightly different scenario, but nevertheless instructive, is Merrill Lynch, Pierce, Fenner & Smith, Inc., v. Hagerty, 808 F. Supp. 1555 (S.D.Fla 1992), aff’d, 2 F.3d 405 (11th Cir. 1993). In Merrill Lynch, the brokerage firm brought an action for preliminary injunction against a former account executive for breach of his non-compete agreement. Merrill Lynch, 808 F. Supp. at 1555. The account executive argued that Merrill Lynch did not have a legitimate business interest in the customer lists because he had compiled the entire list in his own time and at his own expense. Id. at 1557-58. He also testified that he used Merrill Lynch’s facilities to solicit and service those customers. Id. at 1558. Specifically, the account executive used Merrill Lynch’s phones, postage, promotional literature, name, and reputation when communicating with prospective and current clients; and further used the brokerage firm’s full service facilities to open client accounts, effectuate transactions, and service clients generally. Id. Based on these facts, the district court found that Merrill Lynch had made a substantial and essential contribution to the list’s development, and thus concluded that the brokerage firm had a legitimate business interest in the customer list. Id.
Clearly building upon the Restatements, the case law factually focuses on an employee’s position and scope of assignment, including all reasonable inferences therefrom, to decide the issue of ownership of information. It is apparent that ‘assigned duties’ is the decisive element, regardless of when the employee actually performs them.
In the instant case, our review of the trial court’s conclusion, that Torma owns the data compilation, leaves us with a firm conviction that a mistake was made. See Infinity Products, Inc., 810 N.E.2d at 1031. Without citing any legal principle or authority for its conclusion, the trial court based its decision on the following findings: (1) Torma started and supervised Northern Electric’s servo motor repair division; (2) during the repair of servo motors, Torma collected data from the servo motor that would aid him in diagnosing future malfunctions and formulating repair strategies; and (3) Torma and the other technicians made the data each collected and maintained individually available to one another for use in actual servo motor repair projects. Thus, by reaching its conclusion that Torma owned the data compilation, the trial court implicitly rejected the notion that data assembly is part and parcel of Torma’s position.
Nonetheless, we are not persuaded. Overwhelming evidence presented at trial, including the trial court’s own findings, establishes that data compilation falls squarely within the scope of a servo motor repair technician’s assigned duties. Testimonial evidence by Torma indicates that virtually all information assembled in the data compilation was obtained during his working hours at Northern Electric. In particular, Torma testified that he gathered data from readings he took or discerned during the actual repair of the motors. He further stated that he would copy information out of manufacturers’ manuals, received and maintained by Northern Electric, by using the company’s copier. If the data was not readily available in the manual, Torma clarified that he would consult the manufacturers’ internet site.
The evidence supports that initially Torma maintained this data collection in spiral notebooks; however, after a while he adopted a daily practice of assembling motor readings and other useful repair information on a photocopied job order. Torma testified that during his own time he entered all this assembled data into a word processing file, organized by manufacturer, and stored it on his home computer. He clarified that he would consult his compilation, which is the result of seven years of data collection for more than 650 servo motors, every day at work. During testimony, he not only admitted that ninety percent of his time dedicated to generating data was performed at work but also conceded that the data information compiled in the notebook belonged to Northern Electric.
Further review of the record shows that, as supervisor of the servo motor repair department, he directed the other employees to similarly collect, record, and maintain data readings. Employee Bill Alerding stated that Torma not only maintained his own data, but also requested a copy of the other employees’ data when they worked on a servo motor unfamiliar to Torma. In sum, every trial witness, including Torma, testified to the importance of collecting servo motor data in the course of performing repairs. Everyone acknowledges that the quality of the maintained data resulted in more efficient and rapid repairs in the future. Moreover, Northern Electric’s Vice President of Operations, Rick Meece, testified that during several conversations with Torma, they investigated the possibility of making the data collection readily accessible to all employees in the servo motor repair department by storing it on the company’s server. The record reflects that Torma refused, pleading lack of time and computer illiteracy.
Nevertheless, Torma now contends that his data compilation should be characterized as an “invention” pursuant to §397 cmt. a of the Restatement. Based on this section of the Restatement, Torma maintains that since he created the valuable compilation without being specifically assigned to do so by Northern Electric, he now owns the entire compilation. We find this argument to be without merit. The issue in the instant case does not revolve around the idea or invention of compiling the information according to the servo motor’s manufacturer; instead, Northern Electric contests the ownership of the underlying raw data used in the compilation. From the evidence before us, it is apparent that this raw data resulted from readings of servo motors taken during repairs at Northern Electric and information collected from manuals and the internet. The record further reflects that collecting repair data is a standard practice in the industry, and compilations are even bought and sold. We find the fact that Torma might have organized the raw data more comprehensively does not amount to the sort of unanticipated invention or intellectual virtuosity that § 397 of the Restatement is intended to protect.
Therefore, mindful of the parties’ respective arguments and the evidence presented at trial, we agree with Northern Electric that Torma’s harvesting of raw data during work hours and the subsequent compilation of harvested data in his home computer during his own time does not make the data his. See, e.g., Merrill Lynch, 808 F. Supp. at 1557-58. It is clear that but for Torma’s employment at Northern Electric, he would not have had access to the wealth of servo motor repair data that he assembled in his compilation. Using his employer’s facilities and opportunities, Torma not only supervised the motor servo repair department but was also instrumental in its success by directing all employees to collect and maintain data generated from the servo motors. This generated data resulted in more efficient diagnoses and formulation of repair strategies. Thus, given the facts before us, along with all reasonable inferences and applicable case law, we come to the opposite conclusion that Torma’s compilation of Northern Electric’s servo motor repair data clearly arose out of his assigned duties as supervisor of the department. See Infinity Products, Inc., 810 N.E.2d at 1031. Accordingly, we find that the trial court’s conclusion is contrary to law and hold that Northern Electric is the owner of the data collected by Torma.

(1) 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

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

I.C. § 24-2-3-2. Thus, a protectable trade secret has four characteristics: (1) information, (2) which derives independent economic value, (3) is not generally known or readily accessible by proper means by other persons who can obtain economic value from its use, and (4) is the subject of efforts reasonable under the circumstances to maintain its secrecy. Hydraulic Exchange and Repair, Inc. v. K.M. Specialty Pumps, Inc., 690 N.E.2d 782, 785-86 (Ind. Ct. App. 1998).
    In Amoco Production Co. v. Laird, 622 N.E.2d 912, 916 (Ind. 1993), our supreme court acknowledged the difficulty of defining trade secrets under the Act. The supreme court noted that no general and invariable rule can be constructed to govern the determination of whether a device, process, or other compilation of information should be classified as a trade secret. Id. at 916. Therefore, because a determination of a trade secret is so fact-specific, “the same information that qualifies as a trade secret under one set of facts may not be afforded protection under a different set of facts.” Id. In its analysis of Amoco, our supreme court relied primarily on out-of-state case law, explaining that in adopting the IUTSA, Indiana legislators sought the uniform application of the definition of trade secret, consistent with the application of the Act in other adopting jurisdictions. Accordingly, our supreme court stated, that case law from other Uniform Trade Secret Act jurisdictions becomes relevant authority for the construction of trade secret law in Indiana. Id. at 917-18.

disclosure or use of a trade secret of another without express or implied consent by a person who . . .

used improper means to acquire the knowledge of the trade secret.
I.C. § 24-2-3-2.
    Here, Meece’s testimony clarifies that when Torma left the company on his last workday, Meece requested him to leave the data compilation behind. According to Meece, Torma refused to comply, absent compensation for the compilation. It is clear that by his refusal to return the data compilation, which is Northern Electric’s property and which Torma had compiled on the company’s behalf, his possession of the data became unauthorized and his acquisition improper. See I.C. § 24-2-3-2. Accordingly, the trial court erred in concluding that Torma did not misappropriate Northern Electric’s trade secret. See Carmichael, 754 N.E.2d at 625.

[TORMA]: Yes.

[NORTHERN ELECTRIC’S COUNSEL]: Okay. That was their information, was it not?

[TORMA]: Yes.

(Transcript p. 225).
    Based on this testimony, it is clear that Torma knew that the data belonged to Northern Electric. Thus, when he refused to return it at the company’s request at the end of his employment, he knowingly exerted unauthorized control over the data. See I.C. § I.C. § 35-43-4-3. Accordingly, we agree with Northern Electric that the trial court erred as matter of law by concluding that the company failed to prove by a preponderance of the evidence its claim for statutory conversion. See Carmichael, 754 N.E.2d at 625. Therefore, we reverse the trial court’s conclusion.

continued to litigate the action or defense after the party’s claim or defense clearly became frivolous, unreasonable, or groundless; or

litigated the action in bad faith.

In Kahn, our supreme court approvingly affirmed our opinion defining the relevant statutory terms. Kahn, 543 N.E.2d at 629. We defined a claim or defense as frivolous (a) if it is taken primarily for the purpose of harassing or maliciously injuring a person, or (b) if the lawyer is unable to make a good faith and rational argument on the merits of the action, or (c) if the lawyer is unable to support the action taken by a good faith and rational argument for an extension, modification, or reversal of existing law. Kahn, 533 N.E.2d at 170. A claim or defense is unreasonable under the statute, if, based on a totality of the circumstances, including the law and the facts known at the time of the filing, no reasonable attorney would consider that the claim or defense was worthy of justification. Id. at 170-71. Finally, we determined a claim or defense to be groundless if no facts exist which support the legal claim relied on and presented by the losing party. Id. Furthermore, we held that a claim or defense is neither groundless nor frivolous merely because a party loses on the merits. Id. at 171.
    Analyzing the purpose of Indiana Code section 34-52-1-1, our supreme court first noted that the statute strikes a balance between respect for an attorney’s duty of zealous advocacy and “the important policy of discouraging unnecessary and unwarranted litigation.” Mitchell v. Mitchell, 695 N.E.2d 920, 924 (Ind. 1998) (quoting Kahn, 533 N.E.2d at 170). The court observed further that the legal process must invite, not inhibit the presentation of new and creative arguments to enable the law to grow and evolve. Therefore, the Mitchell court concluded that application of the statutory authorization for recovery of attorneys’ fees under Indiana Code section 34-52-1-1 must leave breathing room for zealous advocacy and access to the courts to vindicate rights. Id.
Here, after conducting a special hearing on the issue of attorneys’ fees, the trial court ordered, in pertinent part:
[w]hile the [c]ourt recognizes that the question of the ownership of the data compilation in question may be a novel question of law, the question of who owned this compilation was secondary to the question of whether these data or their compilation were trade secrets. In order to qualify as a trade secret, the data compilation must be shown to have been the “subject of efforts that were reasonable under the circumstances to maintain its secrecy.” Based upon the totality of the evidence, including the alleged value of the data compilation and the lack of virtually any efforts to protect its privacy, including the failure to even seek its “return” upon Torma’s departure from [Northern Electric], the evidence fails to support a determination that [Northern Electric] [] undertook reasonable efforts to maintain the secrecy of the data or the data compilation. A dispassionate consideration by [Northern Electric] of the evidence supporting its claim that it took reasonable efforts to maintain the secrecy of the data or their compilation would have resulted in the conclusion that proceeding to trial on its claim was not justified.

(Appellant’s App. pp. 16-7).

Initially, we acknowledge that the trial court, prior to hearing the case on its merits, decided that a temporary injunction was justified. Specifically, on July 15, 2002, the trial court ordered Torma to return all prototypes obtained by him while in Northern Electric’s employment, to provide Northern Electric with a copy of all servo motor specifications developed while employed and to keep complete records as to any use of these specifications by him and any economic advantage he derives from such use. We note that a party seeking a preliminary injunction must demonstrate, inter alia, that there is a reasonable likelihood of success at trial by establishing a prima facie case. See Davis v. Sponhauer, 574 N.E.2d 292, 302 (Ind. Ct. App. 1991). Thus, the trial court, by granting the preliminary injunction, effectively held that Northern Electric had established a prima facie case, with a reasonable likelihood of success at trial. Therefore, by now stating in its Order for Attorneys’ Fees that “a dispassionate consideration [] of the evidence [] would have resulted in the conclusion that proceeding to trial on its claim was not justified,” the trial court contradicts its earlier grant of preliminary injunction. (Appellant’s App. p. 17).
Moreover, we find that the most Northern Electric can be accused of here is zealous advocacy. See Mitchell, 695 N.E.2d at 924. Our review of the trial court’s proceedings and the party’s briefs reveal a well-argued and supported argument on the merits. Even though some issues are new to this jurisdiction, this alone should not preclude a party’s unbridled access to the courts and expose it to sanctions; instead, it should be lauded by the courts as a way for Indiana’s case law to evolve. See id. Thus, as evidenced by our reversal of the trial court’s conclusions on the merits of the case, we disagree with the trial court’s assessment of a complete lack of reasonable efforts on the part of Northern Electric to secure the secrecy of its trade secret. Therefore, considering the totality of the circumstances, including the law and facts known at the time of filing this action, a reasonable attorney could well have found Northern Electric’s claim worthy of defending. See I.C. § 34-52-1-1. Accordingly, we reverse the trial court’s award of attorneys’ fees.