Southwire Company and Essex Group, Inc., are direct com-
petitors 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, develop-
ment of Southwire’s logistics system also included modifica-
tions based on observation of logistics systems in other
industries and the adaptation of commercially available com-
ponents. 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.
