Allen Mfg. Co. v. Loika

• Citation: 145 Conn. 509,144 A.2d 306
• Court: Connecticut Supreme Court
• Decision Date: 30 July 1958
• Parties: , 118 U.S.P.Q. 557 ALLEN MANUFACTURING COMPANY v. Edward S. LOIKA et al. Supreme Court of Errors of Connecticut

Page 306

144 A.2d 306

145 Conn. 509, 118 U.S.P.Q. 557

ALLEN MANUFACTURING COMPANY v. Edward S. LOIKA et al.

Supreme Court of Errors of Connecticut.

July 30, 1958.

William P. Aspell, Hartford, with whom were Stephen M. Riley, Hartford, and, on the brief, James T. Healey, Waterbury, for the appellants (defendants).

Bruce W. Manternach, Hartford, with whom was Lee C. Fielden, Hartford, for the appellee (plaintiff).

Before DALY, C. J., KING, MURPHY and MELLITZ, JJ., and SHEA, Superior Court Judge.

MELLITZ, Associate Justice.

This is an appeal taken by the defendants from a decree enjoining them from disclosing a trade secret, knowledge of which they acquired while in the employ of the plaintiff. The secret involved the use of a process, known as warm heading, in the manufacture of screws.

The plaintiff has been manufacturing screws and similar products for many years. The defendant Edward Loika was hired by it in 1936 as a drill press operator and worked in various capacities in the plant until 1954, when he became chief of the production engineering department. The defendant James Fiorino entered the plaintiff's employ in 1953 as an electronics engineer. In 1949 or 1950 Loika had suggested to his superiors the installation of the warm heading process for shaping wire into blanks for screws. It is not a new process, having been patented by others in 1920. Its advantages are faster production, longer tool and die life, lesser cost and reduction of plant equipment and space. Except for the purchase of a small induction heating unit, the plaintiff did nothing concerning the introduction of warm heading until late in 1954, when Loika and others participated in further discussions about it. Early in 1955, preliminary to installing warm heading, the plaintiff ordered a single die, two blow, heading machine for the process. Loika was in charge of the tooling, setting up and operation of this new header, and Fiorino worked on the induction heating phase under Loika's direction. After the header was delivered in May, 1955, a Westinghouse induction heating unit was tied in with it through the co-operation of the plaintiff's engineers and the Westinghouse representatives. Production of screws on the new machine began in November, 1955.

The heating unit proved unsatisfactory, and in early 1956 the plaintiff consulted with the New Rochelle Tool Corporation and ordered from it a generator type of induction heating unit, which the New Rochelle representatives installed on the plaintiff's heading machine. The New Rochelle representatives worked in close proximity to the heading machine and were considered by the plaintiff to be free to reveal the idea of this tie-up to others. The New Rochelle Company advertises its equipment for use in warm heading and that it will give advice on installing a warm heading process. The plaintiff encountered difficulties with its warm heading process, and the defendants assisted in overcoming them. The plaintiff expended a sum estimated to be $180,000 in developing the process. The process was installed in the plaintiff's plant in an ordinary production department, visible from the street, without being specially segregated or guarded in any way. The diagrams and tool and die drawings in connection with the process were not marked secret or confidential. Plant tours for customers, suppliers and salesmen often included the warm heading department. Observation of the process in operation would not, however, enable anyone to learn sufficient details to duplicate it, and, furthermore, no competitor of the plaintiff was permitted to view the process in operation.

In late August, 1957, while on their vacation, the defendants called at the Chicago Screw Company, a competitor of the plaintiff, inquiring if it would be interested in hiring them as engineering consultants on warm heading production of screws. Loika gave the assistant chief engineer of the Chicago Screw Company a sample of the plaintiff's production from warm heading, explained the advantages of two blow screw machines, and indicated that he could solve the lubrication problem involved in the warm heading process. Although asked, the defendants did not tell what lubricant, wire coating and temperature were used by the plaintiff in the process. On September 4, 1957, the defendants resigned their employment with the plaintiff. At no time prior to that date did the plaintiff request any of its employees to keep secret or confidential the details of its warm heading process. Of the plaintiff's many competitors, only one has developed a warm heading process, and that varies from the plaintiff's process. The plaintiff's warm heading process gives it a competitive advantage. It would take a competitor about two years to develop a process like that of the plaintiff, and if the defendants revealed their knowledge, the plaintiff would lose its competitive advantage in a matter of weeks. The court concluded that the warm heading process as used by the plaintiff was a trade secret which the defendants learned while employed by the plaintiff in a position of confidence and that the plaintiff was entitled to protection by injunction against its disclosure by the defendants. An injunction for one year was granted.

The defendants attack the finding in numerous particulars, seeking the elimination of twenty paragraphs and the addition of a like number. No corrections which will advantage the defendants are warranted. The facts essential to a disposition of the ultimate issue are not in dispute. The defendants, as employees of the plaintiff, participated over a period of years in the development of a warm heading process for the manufacture of screws in the plaintiff's plant. The process is not generally known in the trade and gives the plaintiff a substantial advantage over its competitors. The position of the defendants is that they may take the knowledge they acquired while participating in the perfection of the process as employees of the plaintiff and freely use it for their own advantage by imparting that knowledge to the plaintiff's competitors, to the harm of the plaintiff. They assert that the plaintiff has no property interest in the process which a court will protect since warm heading is not a secret process and the materials and methods by which the plaintiff developed it are well known and generally available, and further that the plaintiff did not take steps...