Science Accessories Corporation v. Summagraphics Corporation

Supreme Court of Delaware · 1980 · Corporations

425 A.2d 957 (1980)

Updated August 22, 2026

Corporationscorporate opportunityfiduciary dutyagency lawduty to discloseduty of loyaltypreparations to competeoutside opportunity

Facts

SAC manufactured and sold computer-graphics instruments, including a sonic-wave digitizer called a grafpen. Three key SAC employees left to form Summagraphics and develop a competing magnetostrictive or magwire digitizer based on a concept conceived by Dr. Alfred Brenner, who was not employed by or associated with SAC. SAC claimed the employees learned of Brenner's concept while at SAC, kept it from SAC, built a working model, and diverted it to their new company in breach of fiduciary duties and employment technology disclosure agreements. The trial court found Brenner alone invented the concept, that SAC had no available corporate opportunity because Brenner would not allow disclosure or use by SAC and SAC was not financially interested in or able to develop it, and that no equitable relief was warranted.

Issue

Whether key corporate employees breached fiduciary or contractual duties to their employer by failing to disclose and by taking for themselves a business opportunity that the trial court found was not available to the employer. Also, whether building a working model of another person's invention triggered an employee technology disclosure agreement requiring disclosure and transfer to the employer.

Rule

When a business opportunity is not available to the corporation because the corporation has no actual or expectant interest in it, is not financially able or inclined to pursue it, or the outsider owning the concept will not permit the corporation to use it, employees may treat that outside opportunity as their own so long as they have not wrongfully embarked corporate resources to acquire it. In that setting, the corporate opportunity determination defines the scope of any fiduciary duty of disclosure and nondiversion, and an employee invention-disclosure agreement covering inventions the employee makes or conceives does not give the employer rights in a third party's invention merely because the employee physically builds a model of it.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Priya Desai is head of engineering at Lakeview Drafting Systems, a Chicago maker of mapping tablets. While employed there, she learns under a confidentiality promise that an outside inventor in Phoenix has designed a rival sensing method, but the inventor refuses to let Lakeview see or license it. Lakeview has recently frozen all new-product spending and rejected similar development proposals because of cash shortages.

If Priya resigns, forms a new company, and commercializes the inventor's design without using Lakeview's resources, which is the strongest conclusion?

Explanation. When an outside opportunity is not available to the corporation because the outsider will not permit disclosure or use and the corporation is not financially able or inclined to pursue it, the employee may treat the opportunity as her own so long as corporate resources were not wrongfully used to acquire it. In that setting, the corporate-opportunity determination also defeats a supposed independent duty to disclose or refrain from taking the opportunity. (Derived from Science Accessories Corporation v. Summagraphics Corporation (1980).)