Southwire Company and Essex Group, Inc., are direct competitors in the cable and wire industry….

Southwire Company and Essex Group, Inc., are direct competitors

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, development of Southwire’s logistics system also

included modifications based on observation of logistics systems

in other industries and the adaptation of commercially available

components. 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.