Arrow Chemical Corp. v. Anderson

• Decision Date: 08 January 1965
• Docket Number: 16526,Nos. 16494,s. 16494
• Citation: 144 U.S.P.Q. 550,386 S.W.2d 309
• Parties: ARROW CHEMICAL CORPORATION, Appellant, v. William E. ANDERSON et al., Appellees (two cases).
• Court: Texas Court of Appeals

Page 309

386 S.W.2d 309

144 U.S.P.Q. 550

ARROW CHEMICAL CORPORATION, Appellant, v. William E. ANDERSON et al., Appellees (two cases).

Nos. 16494, 16526.

Court of Civil Appeals of Texas, Dallas.

Jan. 8, 1965.

Rehearing Denied Feb. 5, 1965.

Tobolowsky, Hartt, Schlinger & Blalock, Dallas, for appellant.

Goldberg & Alexander, and Palmer & Palmer, Dallas, for appellees.

WILLIAMS, Justice.

These two appeals, closely interrelated, are from two separate judgments, both granting and denying temporary injunctions and flowing from an original cause of action. Arrow Chemical Corporation (hereinafter referred to as 'Arrow') instituted this suit originally in the district court against William E. Anderson (hereinafter referred to as 'Anderson'), Maurice A. Tharp, Jr. (hereinafter referred to as 'Tharp') and Anko Products Company of Texas, Inc. (hereinafter referred to as 'Anko'). Basically Arrow's suit was for a temporary injunction to enforce a non-competitive agreement and to protect what Arrow alleged was a trade secret. Arrow asserted that on September 19, 1962 it entered into a written agreement with Anderson whereby Anderson was employed by Arrow as a salesman for its products: that Anderson agreed that he would not compete with Arrow for a period of one year after he ended his employment; and further agreed that a certain formula for a product known as CS-141, being a concrete stripper manufactured by Arrow, was a trade secret. Arrow alleged that on March 18, 1964 Anderson terminated his employment with Arrow and at that time entered into another written agreement wherein he reaffirmed the September 19, 1962 contract concerning the restrictive covenant and also the validity of the trade secret. Arrow claimed that following the termination of his employment with Arrow, Anderson entered into a conspiracy with Tharp whereby the corporation known as Anko was formed and that Anderson became an employee of Anko. It was further said that Anderson violated the terms of the restrictive covenant by competing with Arrow and further violated the agreement by divulging the trade secret to Anko and Tharp which resulted in Anko manufacturing and selling the same product in competition with Arrow. Arrow asked that Anderson be restrained from violating the non-competitive agreement and further requested that a temporary injunction be issued against Anko and Tharp restraining them from using formula CS-141 and also from employing Anderson to sell or solicit the sale of the products manufactured by Arrow, including CS-141, for the period of the contract between Anderson and Arrow. Defendants, in their answer to Arrow's petition, presented numerous defenses, including the illegality of the noncompetitive agreement because of vagueness and failure to limit the area covered; a denial that a trade secret existed; and further, that Arrow did not come into a court of equity with clean hands. Trial was had before the court, without a jury, which resulted in the rendition of a judgment, enjoining Anderson from personally using the formula known as CS-141 and further enjoining Anderson, during the restrictive period, from calling on, soliciting or selling to anyone who was a customer of Arrow at the time he left the company's employment, such customers being identified in an attached exhibit to the judgment. The court's judgment denied all of Arrow's relief for injunction against Anko and Tharp. All parties gave notice of appeal.

OPINION IN CAUSE NO. 16,494

In this appeal appellant Arrow presents four points of error in when it complains that the court erred (1) in finding that the formula for CS-141 was not a trade secret; (2) in refusing protection for appellant's secret formula; (3) in refusing to find a conspiracy between Anderson, Tharp and Anko to appropriate Arrow's trade secret; and (4) in refusing to impute certain knowledge to Tharp which he had received from his attorney Goldberg in forming the new corporation, Anko. Appellees urge upon us their motion to strike appellant's points for the reason, inter alia, that same fail to present the proper question in an appeal from a temporary injunction, namely, whether the trial court abused its discretion in granting or refusing to grant the injunctive relief. It is true, as contended by appellees, that the Supreme Court of Texas has clearly enunciated the rule that on appeal from interlocutory orders and injunction matters the narrow question is whether the trial court abused its discretion in entering the order appealed from and further, that such order should not be overturned unless the record discloses the clear abuse of such discretion. Texas Foundries, Inc. v. International Moulders & Foundry Workers' Union, 151 Tex. 239, 248 S.W.2d 460; Railroad Commission v. Shell Oil Co., 146 Tex. 286, 206 S.W.2d 235; Southwestern Greyhound Lines, Inc. v. Railroad Commission, 128 Tex. 560, 99 S.W.2d 263, 109 A.L.R. 1235; and Janus Films, Inc. v. City of Ft. Worth, 163 Tex. 616, 358 S.W.2d 589. However, in considering this motion to strike we are mindful of the injunction of Rule 422, Texas Rules of Civil Procedure, which directs us to give liberal construction to briefing rules. We have previously held that where appellant's points on appeal, as presented, were subject to criticism concerning form we would, nevertheless, consider same where the substance of the objection clearly appears in the brief, either under argument or statement. DialTemp Air Conditioning Co. v. Faulhaber, Tex.Civ.App., 340 S.W.2d 82. The liberality of construing briefing rules is especially applicable to appeals from interlocutory injunction orders as evidenced by the provisions of Rule 385, T.R.C.P. In fact, briefs in such appeals are not a necessary prerequisite. Austin v. Consolidated Casting Co., Tex.Civ.App., 246 S.W.2d 273; Dunn v. Patton, Tex.Civ.App., 360 S.W.2d 837. Following the statement and argument under each of its points, appellant does, under the heading of 'Discussion', pursue the proposition that the trial court in this case did abuse its discretion in failing to maintain the status quo and also in failing to apply the undisputed facts to the law applicable thereto. For these reasons we overrule appellees' motion to strike appellant's points.

By its first two points appellant Arrow, in essence, complains that the trial court should have granted injunctive relief to protect its trade secret relating to the concrete stripper known as C.S-141. The judgment rendered in this appeal did grant Arrow injunctive relief as against Anderson, Individually, specifically finding that 'the defendant Anderson is bound contractually with Arrow Chemical Corporation to the effect that CS-141 is determined to be a trade secret as between said Anderson and the Arrow Chemical Corporation.' Arrow makes no complaint against this part of the judgment so the real question presented is whether the implied denial of the trial court to find the existence of the trade secret as between arrow and anko and tharp amounted to an abuse of discretion. An answer to the problem requires a consideration of the evidence relating to the question of trade secret.

From the standpoint of appellant, Leonard Meritz, Vice-President of Arrow, testified that the concrete stripper know as CS-141, being a primary product of Arrow, is a closely guarded secret, never publicized nor revealed and that the company has written contracts between itself and Anderson, Schwiff and others admitting the secrecy of such formula.

However, the evidence is undisputed that the formula for CS-141 concrete stripper was developed by one Robert DeRosier, an experienced chemist and chemical engineer, and being part owner of Research Products Company. Long prior to his employment with Arrow, Anderson, who was at that time a salesman for Paper Supply Company, asked DeRosier to give him a formula for a concrete stripper and DeRosier complied with such request. Anderson gave the formula to Paper Supply Company, who processed and used it. DeRosier had also given the same formula to Crane Chemical Company of Dallas, Scientific Supply Compay of Denver, Colorado, Hunter Industrial Chemicals, Houston, Texas, and Research Products, his employer. DeRosier testified that the formula was simple and could be analyzed by any chemist within an hour's time. He testified further that he knew of some fifteen to twenty different companies manufacturing the same product or one similar to it. He said that the formula which he gave Anderson was generally known in the chemical trade among people who do their own compounding. Anderson testified that when he left Paper Supply Company and went to work for Arrow that he consented to let Arrow use the formula. The witness Brand, a principal stockholder in Paper Supply Company, testified that Paper Supply Company was still using the formula and expressed the belief that the secret relating to CS-141 was not in the product itself but is in the selling of the product.

Our Supreme Court, in Wissman v. Boucher (1951), 150 Tex. 326, 240 S.W.2d 278, at 280, said:

'The subject matter of a trade secret must be secret. Matters of general knowledge in an industry cannot be appropriated by one as his secret. Restatement, Torts, Ch. 36, p. 7.'

The above summary of the evidence relating to trade secret clearly reveals ample evidence to support the trial court's implied finding as to the absence of a genuine trade secret as between Arrow and Tharp and Anko. We must find in support of the trial court's judgment if there is evidence of probative value in the record to sustain the findings. McWilliams v. Muse, 157 Tex. 109, 300 S.W.2d 643; North East Texas Motor Lines v. Dickson, 148 Tex. 35, 219 S.W.2d 795, 11 A.L.R.2d 1065; Wilson v. Teague Ind. School Dist., Tex.Civ.App., 251 S.W.2d 263.

There being evidence to support the court's judgment, can we say that the court abused its discretion in applying the facts to the law and denying to Arrow...