JET SPRAY COOLER, INC. & another vs. GIFFORD K. CRAMPTON & others.

ABRAMS, J. Both the plaintiffs and the defendants appeal from a judgment of the Superior Court adopting as modified the report of a master on the issue of damages. [Note 1] The judgment held the defendants jointly and severally liable to the plaintiffs in the amount of $282,100.83, plus interest from the date of the filing of the master's report.

The defendants appeal from the rejection of an earlier master's report (first damage master), and argue that the judge's order of reference to another master (second damage master) was based on incorrect legal principles of damage assessment in cases involving the misappropriation of trade secrets. They also appeal from certain of the judge's modifications of the second master's report.

The plaintiffs maintain that the rejection of the first damage master's report was proper, and contend that the judge's order of reference to the second damage master for the determination of damages was correct. Nevertheless, the plaintiffs also appeal from certain of the judge's modifications of the second damage master's report and

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from the judge's method of computing interest on the award. We agree in substance with the judgment entered. However, the judgment must be modified to correct errors arising from the transposition of certain accounting figures. As recomputed, the damages assessed should be $254,114.79. See note 16, infra. As so modified, we affirm the judgment of the Superior Court.

This action commenced with a bill of complaint in equity filed in the Superior Court in 1964. Three years later, the Superior Court judge severed the issues of liability and damages and committed the case to a master (liability master).

After initially confirming the report of the liability master which found that the defendants had misappropriated certain trade secrets belonging to the plaintiffs, the Superior Court judge ordered the bill dismissed as to all defendants. We reversed the dismissal in Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 845 (1972). [Note 2]

Thereafter, the Superior Court judge referred the issue of damages to the first damage master in 1972. [Note 3] The master held hearings and filed his report in 1975, including both subsidiary and general findings of fact. [Note 4]

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Hearings on the claim for damages began in January, 1973. The hearings were then suspended until February. The docket entries reflect continuance of the order resuming the hearings until March, 1973. The next docket entry relating to the hearings is a motion to enlarge time for filing the master's report filed on April 15, 1975. The report itself was not filed in court until July 24, 1975, more than three years after our opinion in Jet Spray Cooler, Inc. v. Crampton, and two and one-half years after the order of reference.

Hearings before the second damage master were to begin in January, 1976. The docket entries reflect at least five continuances of the master's hearings covering a six-month period. Then there were continuances to enlarge the time for filing the master's report. The report was filed on April 20, 1977, some four years and eleven months after our 1972 opinion, and well over one and one-half years after the second order of reference.

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This case has been pending in the Superior Court since 1964 and has been before three masters. It has been continued indiscriminately by numerous judges, apparently without regard to the effect excessive continuances and extensions have on court delay, as well as on the confidence of the public and litigants in the administration of justice.

The snail's pace of this litigation in our courts makes the comment of Chief Justice Vanderbilt with regard to the effect of references appropriate here. In his work, Cases and Materials on Modern Procedure and Judicial Administration (1952), he states: "There is one special cause of delay in getting cases on for trial that must be singled out for particular condemnation, the all-too-prevalent habit of sending matters to a reference. There is no more effective way of putting a case to sleep for an indefinite period than to permit it to go to a reference with a busy lawyer as referee. Only a drastic administrative rule, [Note 5] rigidly enforced, strictly limiting the matters in which a reference may be had and requiring weekly reports as to the progress of each reference will put to rout this inveterate enemy of dispatch in the trial of cases." Id. at 1240-1241. See O'Brien v. Dwight, 363 Mass. 256, 279-280 (1973). I. The Rejection of the Report of the First Damage Master.

The first damage master found that the defendants had incorporated information contained in the Foster-Miller report [Note 6] into each of the visual display beverage dispensers

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which Crathco, the corporate defendant, sold after 1962. The first damage master also incorporated in his report the finding by the liability master "that it would ordinarily take a year for a competent engineer with the benefit of the Foster-Miller Associates Report to conceive, design and develop the Crathco dispenser, and about three months additional without the benefit of the information contained in the report."

However, the first damage master then found that taken as a whole the recommendations of the Foster-Miller report "involved no creativity, were not novel, new, unobvious or patentable, and were matters of common knowledge to a person of ordinary skill in the field of heat transfer." He further found that the only damage to the plaintiffs was the three-month head start gained by the defendants, which he characterized as having a "negligible" effect on the profits of either the plaintiffs or the defendants. Therefore, the first damage master concluded that the plaintiffs' damages should be limited to the $1,400 which the plaintiffs had originally paid for the Foster-Miller report.

The judge rejected the first damage master's report in its entirety. The defendants challenge the judge's ruling on the ground that the first damage master applied correct legal principles in his assessment of the plaintiffs' damages. [Note 7] Moreover, the defendants contend that the

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first damage master's conclusions were legally correct in light of our opinion in Jet Spray Cooler, Inc. v. Crampton, supra. We disagree.

The essence of an action for the wrongful use of trade secrets is the breach of the duty not to disclose or to use without permission confidential information acquired from another. See Junker v. Plummer, 320 Mass. 76, 80 (1946); E.I. duPont de Nemours Powder Co. v. Masland, 244 U.S. 100, 102 (1917). See generally Restatement of Torts Section 757 (1939); Developments in the Law -- Competitive Torts, 77 Harv. L. Rev. 888, 948-949 (1964). In the context of an employer-employee relationship, we have consistently held that where an employee acquires such confidential information in the course of his employment, he may be prohibited, after the termination of his employment, "from using or disclosing confidential information so acquired." Jet Spray Cooler, Inc. v. Crampton, supra at 839, quoting from New England Overall Co. v. Woltmann, 343 Mass. 69, 75 (1961). See Eastern Marble Prods. Corp. v. Roman Marble, Inc., 372 Mass. 835, 841-842 (1977). Aronson v. Orlov, 228 Mass. 1, 4-5, cert. denied, 245 U.S. 662 (1917).

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The protection which we afford to trade secrets [Note 8] against one who wrongfully uses them is grounded on principles

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of public policy to which we have adhered since Peabody v. Norfolk, 98 Mass. 452, 457 (1868): "It is the policy of the law, for the advantage of the public, to encourage and protect invention and commercial enterprise." [Note 9] This encouragement and protection is afforded trade secrets because the public has a manifest interest not only in commercial innovation and development, but also in "[t]he maintenance of standards of commercial ethics." Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 481 (1974).

Early Federal decisions are remarkably similar. In Fowle v. Park, 131 U.S. 88, 97 (1889), the Supreme Court held that "[t]he policy of the law is to encourage useful discoveries by securing their fruits to those who make them." In Board of Trade of Chicago v. Christie Grain & Stock Co., 198 U.S. 236, 250 (1905), Mr. Justice Holmes said that the board had "the right to keep the work which it has done, or paid for doing, to itself. The fact that others

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might do similar work, if they might, does not authorize them to steal the plaintiff's." Again in Dr. Miles Medical Co. v. John D. Park & Sons, 220 U.S. 373, 402 (1911), the Court held that "[t]he complainant relies upon the ownership of its secret process and its rights are to be determined accordingly. Any one may use it who fairly, by analysis and experiment, discovers it. But the complainant is entitled to be protected against invasion of its right in the [secret] process by fraud or by breach of trust or contract." Further, in E.I. duPont de Nemours Powder Co. v. Masland, 244 U.S. 100, 102 (1917), the Supreme Court said that an employee "shall not fraudulently abuse the trust reposed in him." In Becher v. Contoure Laboratories, Inc., 279 U.S. 388, 391 (1929), the Court recognized a cause of action against an employee for "breach of a contract or wrongful disregard of confidential relations." Finally, in United States v. Dubilier Condenser Corp., 289 U.S. 178, 186 (1933), the Court held that an inventor "may keep his invention secret and reap its fruits indefinitely." See generally Water Servs., Inc. v. Tesco Chems., Inc., 410 F.2d 163, 171 (5th Cir. 1969); Hutter, Trade Secret Misappropriation: A Lawyer's Practical Approach to the Case Law, 1 W. New England L. Rev. 1, 9 (1978).

Consistent with these principles, once information is demonstrated to be "of an appropriate nature to qualify" the information as a trade secret, any inquiry into the misuse of the trade secret must focus on the conduct of the defendant. Jet Spray Cooler, Inc. v. Crampton, supra at 843. If the defendant has acquired the information as a result of a confidential relationship which he enjoyed with the plaintiff, and, if the defendant has used the information without the permission of the plaintiff, then the defendant's use of the information is wrongful, and the defendant is liable to the plaintiff in damages "for the wrongful use of the information." Id. at 845.

The first damage master apparently did not focus on the facts found in the case on liability. The liability master found that "[s]ince their inception the plaintiffs have

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conducted an extensive research and development program in a constant effort to improve their products and have, on occasion, consulted with independent engineering firms to help develop new products as well as to improve their existing products." Jet Spray Cooler, Inc. v. Crampton, supra at 836. Additionally, in Jet Spray Cooler the plaintiffs had maintained sufficient secrecy to protect the confidentiality of the information in the Foster-Miller report. Id. at 844.

The first damage master apparently attached no importance to either of these factors and concentrated on the lack of novelty rather than on the impropriety of the method used to procure the secret. The fact that a process is the combination and adaptation of old principles to new purposes does not prevent the process from being a trade secret if the process as distilled accomplishes a result which gives the holder a competitive advantage due to his own ingenuity, research and development. Moreover, "the fact that the secret was easy to duplicate does not militate against its being a trade secret. The important point is that the owner and those to whom it was necessary to reveal the secret knew of the trade secret." Maruchnics, Industrial Trade Secrets, Their Use and Protection, 4 Clev.-Mar. L. Rev. 69, 71-72 (1955). Thus, the first damage master erred as matter of law in failing to focus on the abuse of the confidential relationship and on the secrecy attached to the report which was designed to improve the plaintiffs' product and give it a competitive advantage. By not focusing on the defendants' conduct and on the secrecy attached to the Foster-Miller report, the first damage master erred in his assessment of damages.

The measure of damages in cases involving business torts such as the misappropriation of trade secrets entitles a plaintiff to recover full compensation for his lost profits and requires a defendant to surrender the profits which he realized from his tortious conduct. See, e.g., National Merchandising Corp. v. Leyden, 370 Mass. 425, 430-433 (1976)

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(interference with contractual relations); Forster Mfg. Co. v. Cutter-Tower Co., 215 Mass. 136, 139-140 (1913) (misuse of trade name); Regis v. H.A. Jaynes & Co., 191 Mass. 245, 249-250 (1906) (infringing trademark). See Restatement of Restitution Section 136, Comment a (1937); Restatement of Torts Section 757, Comment e (1939). "Public policy requires that unfair competitors must not be allowed to profit by their wrongful methods and that those who have been injured by them should receive adequate compensation for the loss or injury they have suffered." 2H. Nims, Unfair Competition and Trade-Marks Section 419, at 1324-1325 (4th ed. 1947).

Of course, a plaintiff is not entitled to both the profits made by the defendant and his own lost profits. See Forster Mfg. Co. v. Cutter-Tower Co., supra at 139. See generally Telex Corp. v. International Business Machs. Corp., 510 F.2d 894, 931 (10th Cir.), cert. dismissed, 423 U.S. 802 (1975); Johnson, Remedies in Trade Secret Litigation, 72 Nw. U. L. Rev. 1004, 1023 (1978); Hutter, Trade Secret Misappropriation: A Lawyer's Practical Approach to the Case Law, 1 W. New England L. Rev. 1, 39 (1978); R.M. Milgrim, Trade Secrets Section 7.08 [3] at 7-155 (1978).

However, while a plaintiff is not entitled to a double recovery, "the plaintiff is entitled to the profit he would have made had his secret not been unlawfully used, but not less than the monetary gain which the defendant reaped from his improper acts" (footnotes omitted). 2 R. Callman, Unfair Competition, Trademarks and Monopolies Section 59.3, at 496 (3d ed. 1968). Clark v. Bunker, 453 F.2d 1006, 1011 (9th Cir. 1972). Cf. Sperry Rand Corp. v. A-T-O, Inc., 447 F. 2d 1387, 1392-1393 (4th Cir. 1971), cert. denied, 409 U.S. 892 (1972). Only in this way can we ensure that an unfair competitor will not be encouraged to proceed with his unfair methods in the hope "that his profits might exceed the injured party's losses." National Merchandising Corp. v. Leyden, supra at 433. Therefore, a plaintiff in an action involving the misappropriation of trade secrets may proceed in the alternative to determine

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whether the defendant's wrongful profits exceed the plaintiff's losses caused by the misuse of the plaintiff's trade secrets. See id. at 433-434 & n.16.

We now consider the first damage master's method of assessing damages in light of traditional principles. The first damage master found that "[t]he plaintiffs introduced detailed evidence in relation to the period from the inception of Crathco ... concerning alleged profits made by the defendants year by year on sale of their units, and concerning alleged plaintiffs' loss year by year of profits on sales by the defendants to plaintiffs' customers to the extent that the plaintiffs' profits would have exceeded the profits made by the defendants thereon." [Note 10] Nonetheless, the first damage master disregarded this information and refused to assess damages based on the defendants' profits or the plaintiffs' lost profits because he found that the only effect of the defendants' wrongful use of the Foster-Miller report was the fact that the defendants were able to enter the market in competition with the plaintiffs three months earlier than they could have done without the benefit of the information contained in the report. [Note 11]

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But the value of the misappropriated trade secrets to the defendants is not the basis of the defendants' liability, and the value of the misappropriated trade secrets should not form the basis of the plaintiffs' recovery. See generally National Merchandising Corp. v. Leyden, supra at 430-433. Accord, G. L. c. 93, Section 42. Therefore, by focusing on the value of the misappropriated trade secrets, and not on the wrongful conduct of the defendants, the first damage master's assessment of damages was legally incorrect. The judge properly rejected the master's report and committed the case to a second damage master. Cf. Wormstead v. Town Manager of Saugus, 366 Mass. 659, 660 (1975).

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II. The Report of the Second Damage Master.

The judge's order of reference to the second damage master instructed the master: "(1) To find the extent of the use made by the defendants of the trade secret (Foster Miller Report); (2) To find the amount of profits made by the defendants on the sale of units incorporating the trade secret; and (3) To find the amount of the plaintiffs' loss of profits due to the defendants' sales of such dispensers to plaintiffs' customers to the extent such loss exceeds the defendants' profits on these same sales." This order of reference is consistent with our traditional principles of damage assessment in cases involving business torts. [Note 12] The second damage master made specific findings with regard to each of the three issues which the judge had instructed him to examine.

First, the second damage master addressed the extent to which the trade secrets had been used by the defendants. He found that each visual display beverage dispenser unit sold by the corporate defendant from 1963 to September 30, 1975 (the accounting period) incorporated the trade secrets contained in the Foster-Miller report. [Note 13] The second damage master also found that during the

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accounting period the defendants sold 27,110 dispensers with gross sales of $6,322,357.18.

Second, the master computed the net profits of the defendants during the accounting period from sales incorporating the trade secrets. Since all the sales of the defendants incorporated the trade secrets, the second damage master computed the total net profits of the defendants. [Note 14] He found that the records submitted by the

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corporate defendent showed total net profits of $67,604.80 during the accounting period. [Note 15] He rejected a claim by the defendants that $15,422.20 in losses incurred during two of the years of the accounting period should be deducted from their total net profits. He also disallowed certain other deductions claimed by the defendants and added them to the defendants' net profits:

(a) $105,553.17 in legal fees and expenses in defending this action.

(b) $19,759.61 in Federal income taxes paid by the corporate defendant during the accounting period.

(c) $21,578.29 in Massachusetts excise taxes paid by the corporate defendant during the accounting period.

(d) $18,698.03 in bad debts incurred on sales by the corporate defendant during the accounting period.

(e) $681,575.80 in salaries and consultant's fees paid to the individual defendants by the corporate defendant during the accounting period.

(f) $22,508.40 for Key Life insurance premiums paid by the corporate defendant on the lives of the individual defendants during the accounting period.

(g) $17,110.52 for group insurance coverage on the lives of the individual defendants at various times during the accounting period.

The net profits of the defendants as recomputed by the second damage master totaled $954,388.62 during the accounting period.

Finally, the second damage master considered the question of the lost profits of the plaintiffs to the extent that they exceeded the profits of the defendants. The plaintiffs claimed that their profits on the sales made by the corporate defendant to the plaintiffs' customers would have totaled nearly $1,500,000 more than Crathco made on the same sales during the accounting period.

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The master rejected this claim, finding the plaintiffs' evidence on this aspect of damages "conjectural, speculative and theoretically unsound."

The second damage master also found that the individual defendants had made no "profits as such." Therefore, he found in favor of the individual defendants.

Both the plaintiffs and the defendants filed objections to the second master's report. On September 23, 1977, the judge modified and then adopted the report of the second damage master. See Mass. R. Civ. P. 53(e)(2). He accompanied his order with a comprehensive, well reasoned memorandum of decision.

The judge allowed the defendants' deductions for bad debts and for salaries and consultant's fees paid to the individual defendants. The judge then computed the total of the defendants' net profits at $282,100.83. [Note 16]

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The judge further modified the second damage master's finding that the plaintiffs' lost profits could not be computed. He concluded that the second damage master's subsidiary findings were sufficient on their face to allow him to find that the plaintiffs' lost profits totaled $257,-068.

Finally, the judge rejected the second damage master's finding in favor of the individual defendants as precluded by our holding in Jet Spray Cooler, Inc. v. Crampton, supra at 844. He held the individual defendants jointly and severally liable with the corporate defendant.

Because the plaintiffs' lost profits were a lesser amount than the defendants' profits as computed by the judge, he awarded damages to the plaintiffs in the amount of the defendants' net profits. Both the plaintiffs and the defendants appeal from certain of the judge's modifications of the second damage master's report.

1. Bad Debts.

The judge allowed as a deduction from gross profits all bad debts incurred by the defendants on sales of the infringing products. See Nelson v. J. H. Winchell & Co., 203 Mass. 75, 91 (1909). The plaintiffs urge us to adopt the approach taken by the Supreme Court of Colorado, expressed in Hyman & Co. v. Velsicol Corp., 123 Colo. 563, 633 (1951), that bad debts may not be deducted from gross profits because a defendant should assume the risk of his extension of credit. This we decline to do. An accounting of the defendants' profits is designed to strip them of their impermissible gains. Where a defendant has suffered bad debts resulting from sales of products which he has manufactured, the defendant has incurred manufacturing expenses and has reaped no profits. He should not be required to pay over as profits funds never received. See Nelson v. J. H. Winchell & Co., supra.

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2. Salaries and Consultant's Fees Paid to Individual Defendants.

The plaintiffs also appeal from the judge's modification of the second damage master's report which allowed the defendants to deduct from their gross profits all salaries and consultant's fees paid to the individual defendants by the corporate defendant. The plaintiffs emphasize that the salaries and fees in question were paid to individuals who were defendants in this action. Therefore, the plaintiffs argue that the master properly refused to deduct their salaries and fees from the gross profits of the corporate defendant. [Note 17]

We think that the judge correctly allowed the defendants to deduct the salaries and fees in question from gross profits on the basis of the judge's conclusion that "there are no findings that the salaries or consultant's fees were excessive or a disguised distribution of earnings or that the corporate defendant to whom the services were rendered was a sham." The question whether corporate officers are named as individual defendants should not determine whether their salaries may be deducted from a corporate defendant's profits. The determinative question should be whether their salaries and fees are reasonable in light of their positions as officers of the corporation "engaged in the conduct of the business and in the production of profits." John B. Stetson Co. v. Stephen L. Stetson Co., 58 F. Supp. 586, 592 (S.D.N.Y. 1944). See Clair v. Kastar, Inc., 70 F. Supp. 484, 487-488 (S.D.N.Y. 1946).

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Since the judge found that the salaries paid to the individual defendants were reasonable in light of their positions in the corporation, he properly allowed their salaries and fees to be deducted from the gross profits of the corporate defendant.

3. Computation of Plaintiffs' Lost Profits.

The second damage master declined to make a finding of the amount of the plaintiffs' lost profits. He concluded that any figure which he arrived at would be too speculative.

The judge, however, modified the second damage master's report and computed the plaintiffs' lost profits at $257,068. To reach this result, the judge relied on the second damage master's subsidiary findings that the defendants had sold dispensers to over sixty of the plaintiffs' customers; that had the defendants sold no dispensers, it was reasonably possible that the plaintiffs would have made the sales to these same customers; that the defendants' sales to these customers totaled $2,856,311.41, and that during the accounting period the plaintiffs' net profits before taxes averaged nine per cent of gross sales.

The judge multiplied the total of the defendants' sales to the plaintiffs' customers ($2,856,311.41) by the plaintiffs' profit margin (nine per cent). He concluded that the resulting total of $257,068 was "a sufficient approximation of the plaintiffs' loss of profits."

The defendants' objection to the judge's computation of the plaintiffs' lost profits rests solely on the defendants' contention that there is no evidence that the plaintiffs would have had the same volume of sales as the defendants. However, "[t]here is nothing unreasonable, in our view, in the judge's taking the gross tainted sales of [the defendants] as not exceeding the sales of which [the plaintiffs were] capable ...." National Merchandising Corp. v. Leyden, 370 Mass. 425, 431 (1976).

The second damage master's subsidiary findings provided sufficient information concerning both the defendants'

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sales to the plaintiffs' customers and the plaintiffs' "established earnings records" to allow the judge to compute the plaintiffs' lost profits. Matsushita Elec. Corp. of America v. Sonus Corp, 362 Mass. 246, 264 (1972), quoting from Rombola v. Cosindas, 351 Mass. 382, 385 (1966).

However, where the master reports his subsidiary findings, we, like the judge below, may draw our own inferences and come to our own conclusions from the master's subsidiary findings. Corrigan v. O'Brien, 353 Mass. 341, 346 (1967). See Peters v. Wallach, 366 Mass. 622, 626 (1975). See generally J.W. Smith & H.B. Zobel, Rules Practice Section 53.11 (1977).

In this action, the second damage master's subsidiary findings also reveal that during the accounting period the plaintiffs never marketed a product incorporating the recommendations contained in the Foster-Miller report. [Note 18] The master further found that the Crathco dispenser offered "serious competition" to the Jet Spray dispenser "because it was superior to the dispensers produced by other manufacturers and also that Crathco's dispenser was comparable to Jet's particularly since it contained the improvements recommended in the Foster-Miller Report."

In light of these findings, we cannot determine whether the plaintiffs' lost profits in this action were "due to" the defendants' sales of products utilizing the trade secrets, or whether the plaintiffs' lost profits were "due to" the plaintiffs' own business decision to refrain from marketing products containing the information in the report. See supra at 173 & n.12. Here, the uncertainty in the assessment of damages arises not from any action of the defendants, but from the inaction of the plaintiffs. Compare

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National Merchandising Corp. v. Leyden, supra at 430. Therefore, we conclude that the plaintiffs have not proved their lost profits "due to" the defendants' sales to the plaintiffs' customers with sufficient certainty to allow the plaintiffs to recover damages based on lost profits.

4. Joint and Several Liability of the Individual Defendants.

The judge modified the second damage master's report to hold the individual defendants jointly and severally liable with the corporate defendant. To reach this result, he relied on Jet Spray Cooler, Inc. v. Crampton, supra, where we held that "[t]he joint involvement of the corporate defendant and the [individual] defendants ... in utilizing the secrets of the Foster-Miller report ... require[s] that the damages, if any, shall be assessed against all of them." Id. at 844.

Our resolution of this issue in 1972 is dispositive of the question of the liability of the individual defendants. The individual defendants actively participated in the misappropriation of the plaintiffs' trade secrets. They may not insulate themselves from the consequences of their actions by choosing the corporate form by which to market their products. Accord, Donsco, Inc. v. Casper Corp., 587 F.2d 602, 605-606 (3d Cir. 1978); Clark v. Bunker, 453 F.2d 1006, 1010-1011 (9th Cir. 1972). III. Interest.

The judge allowed interest on the plaintiffs' recovery from the date on which the master filed his report. See G. L. c. 235, Section 8. [Note 19] The plaintiffs maintain that they are entitled to interest from an earlier date. [Note 20] We think the

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judge correctly allowed interest only from the date of the filing of the master's report.

General Laws c. 235, Section 8, requires the judge to add interest from the time the master files his report to the time judgment is entered in any action where the award is based on the report of a master. Beyond this statutory mandate, [Note 21] "considerations of relative hardship" should govern an addition to the award, which represents interest from an earlier date. Edgar H. Wood Assocs. v. Skene, 347 Mass. 351, 366 (1964). Cf. Watertown Firefighters, Local 1347 v. Watertown, 376 Mass. 706, 718 & n.25 (1978).

An award to a plaintiff of the defendant's net profits is made primarily to ensure that the defendant is not unjustly enriched as a result of his wrongful acts. See, e.g., National Merchandising Corp. v. Leyden, supra at 433. Since the award of a defendant's net profits is made only where the defendant's net profits exceed the plaintiff's demonstrable losses, the plaintiff may actually recover far more than its actual loss. Id. See Sammons v. Colonial Press, Inc., 126 F.2d 341, 345-346 (1st Cir. 1942). Cf. Mishawaka Rubber & Wooden Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 207 (1942) ("There may well be a windfall to the trademark owner where it is impossible to isolate the profits which are attributable to the use of the infringing

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mark. But to hold otherwise would give the windfall to the wrongdoer").

Here, the plaintiffs have been awarded the entirety of the defendants' net corporate profits from 1964 to 1975. [Note 22] This award is made because it is impossible for the defendants to segregate the portion of their profits which is attributable to the misappropriated trade secrets from the portion of their profits which may be attributable to other factors. [Note 23] See, e.g., Carter Prods., Inc. v. Colgate-Palmolive Co., 214 F. Supp. 383, 399 (D. Md. 1963). Thus it is likely that the "plaintiff may recover more than his exact loss." National Merchandising Corp. v. Leyden, supra.

In these circumstances, we do not think that the plaintiffs will be unfairly deprived of compensation or that the defendants will be "unjustly enriched if [they are] not required to pay interest on the total profits so awarded." [Note 24] Carter Prods., Inc. v. Colgate-Palmolive Co., supra at 417.

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The observation of the United States Court of Appeals for the Seventh Circuit in L. P. Larson, Jr., Co. v. William Wrigley, Jr., Co., 20 F.2d 830, 836 (7th Cir. 1927), rev'd on other grounds, 277 U.S. 97 (1928), is particularly apt here: "The award here in issue is so palpably and unquestionably ample to fully compensate [the plaintiff] for any and all invasion of its rights, as to suggest no circumstances which invoke the court's discretion to enlarge it by allowance of interest back of the date of the master's report ...." Therefore, the judge properly awarded interest only from the date on which the second damage master's report was filed. See G. L. c. 235, Section 8. Accord, Tilghman v. Proctor, 125 U.S. 136, 160-161 (1888); Carter Prods., Inc. v. Colgate-Palmolive Co., supra at 418.

The judgment of the Superior Court is to be modified in accordance with this opinion and, as thus modified, is affirmed.

So ordered.

KAPLAN, J. (concurring). I join in the decision of the court, but with the feeling that the damages allowed are excessive. They are made so by being cast over a period of eleven years. The court indicates at note 13 that the "secret" was a simple one, a result of ordinary mechanical skill, and intimates some doubt that it could survive

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as a protectible entity on October 1, 1975. I suspect that it had perished in that sense some time before; that is to say, in the ordinary course of events the secret in substance would have become known and available at an earlier date, even if the defendants had not appropriated it and the plaintiffs had tried to keep it to themselves. This, however, was a matter of proof, and the trouble was, and is, that the record is virtually barren of the relevant facts and inferences.

In adding these remarks, I would like to suggest that if, as we are told, the law of trade secrets does not necessarily conflict with the patent law, [Note Concur-1] there is still excellent reason to apply it with beseeming modesty.