Berry v. Glidden Co.

• Citation: 92 F. Supp. 909
• Parties: BERRY v. GLIDDEN CO.
• Decision Date: 21 July 1950
• Court: U.S. District Court — Southern District of New York

92 F. Supp. 909

BERRY v. GLIDDEN CO.

United States District Court S. D. New York.

July 21, 1950.

Stone & Perlman, New York City, Louis Stone, New York City, for plaintiff.

Strange, Myers, Hinds & Wight, New York City, Roger Hinds, New York City, for defendant.

BONDY, District Judge.

This is an action permanently to enjoin defendant from using or disclosing a secret formula which plaintiff alleges he originated and revealed to defendant in confidence. Plaintiff also seeks an accounting for any profits made by defendant as a result of its commercial exploitation of said formula. The action was removed to this court from the State court by reason of the diversity of citizenship of the parties.

Plaintiff, a woodfinisher for forty years, began to experiment in 1937 in search of a practicable composition that would stain and fill wood in one operation and thereby substantially expedite the conventional woodfinishing process. More specifically, he was seeking a combination stain and filler which would possess the non-fading qualities of a water stain and at the same time avoid its grain-raising effect and improve its penetration. After experimenting for six years plaintiff in 1943 filed patent application No. 477,877, covering his formula for such a combination stain and filler. Not satisfied with the product, plaintiff continued his experiments and on September 20, 1945 filed patent application No. 617,671, which set forth an improved formula and constituted an abandonment of his earlier application. This second application is still pending in the Patent Office.

On or about September 26, 1945, following certain preliminary correspondence, plaintiff visited defendant's plant in Cleveland, Ohio, for the purpose of interesting defendant in the commercial exploitation of his product. Upon his arrival he informed Mr. Shurtleff, defendant's manager of Industrial Sales, that he had discovered a lacquer type combination stain and filler which in one operation would stain and fill wood, eliminate the use of a wash coat and, if the wood were well sandpapered, obviate the necessity of sealing. Mr. Shurtleff then offered plaintiff an opportunity to disclose and demonstrate his formula. Thereupon plaintiff proceeded to disclose to Mr. Butler, the head of defendant's wood stain and filler department, and two other employees of defendant, what is conceded to be substantially the formula set forth in plaintiff's second patent application (although he did not have a copy of that application with him at the time). Using defendant's laboratory facilities and materials, and with the assistance and approval of plaintiff, defendant's employees prepared samples of a composition which, with minor additions and variations, was made according to plaintiff's formula for a lacquer-type combination stain and filler. Some preliminary tests were made with these samples and before plaintiff left Cleveland Mr. Shurtleff told him that a proposed license agreement would be forwarded to him.

Thereafter, plaintiff received an unsigned agreement from defendant dated November 1, 1945 which proposed that plaintiff, as sole owner of "an invention relative to a Lacquer Type Combination Stain Filler and Wash Coat covered by United States patent application No. 477,877", grant defendant, among other things, an exclusive license to make, use and sell the process and products covered by that application, in return for the payment of royalties by defendant. After changing the patent application number to 617,677, his second patent application, plaintiff executed the agreement and returned it to defendant. By letter dated December 5, 1945 defendant informed plaintiff that it would be necessary to draft a new contract by reason of the change in patent application numbers, and requested a copy of application No. 617,671. Plaintiff complied with this request on December 18, 1945, but did not hear anything further from defendant until he received a letter dated February 26, 1946, and with it the proposed license agreement unsigned by defendant. The letter stated that defendant did not at that time wish to engage in the manufacture of plaintiff's product. Prior thereto, defendant had distributed free samples of plaintiff's lacquer type combination stain and filler to some of its customers, but aside from an order for 114 gallons obtained by plaintiff from a Florida furniture company, on which plaintiff was paid a commission, defendant did not receive any orders for the product.

Shortly after informing plaintiff that it did not intend to use his product, defendant began to manufacture and sell a combination stain and filler under the registered trade-mark "Filcotone". It is this product that plaintiff claims is made according to the formula disclosed by him to defendant in confidence.

Defendant concedes that a confidential relationship existed between the parties at the time of plaintiff's disclosure and that by reason thereof it impliedly promised that it would not use plaintiff's formula, except upon terms agreed to by plaintiff, if, and to the extent that, such formula was novel or involved any novel feature not already known to defendant. However, defendant denies that "Filcotone" is the same, or substantially the same, product as was disclosed by plaintiff's formula. Furthermore, it contends that plaintiff did not disclose anything novel or not already known to defendant and hence there was no breach of its implied promise even if defendant did use plaintiff's formula.

With respect to the issue of identity, it is conceded by defendant that any differences in the proportions of the ingredients contained in "Filcotone" and plaintiff's formula are not material. The primary distinction urged by defendant is that plaintiff's formula is for a combination stain and filler of the lacquer type, that is, contains nitrocellulose, lacquer thinner and compatible resins, whereas "Filcotone" is of the varnish type and as such does not contain any of those ingredients.

It is true that plaintiff described his composition to Mr. Shurtleff as a "lacquer type" combination stain and filler and that the samples prepared at the Cleveland plant in plaintiff's presence were of that type. Likewise, the proposed license agreement clearly indicates that defendant regarded plaintiff's product as "an invention relative to a Lacquer Type Combination Stain Filler and Wash Coat." Although plaintiff made some effort at the trial to prove that "Filcotone" contains nitrocellulose, the court is convinced that defendant's product is of the varnish, not lacquer, type. However, it is not necessary to determine whether this difference is material, since it is undisputed that plaintiff also informed defendant's employees in confidence that a varnish base could be used as an alternative to a nitrocellulose base in his formula. Not only is there the testimony of Mr. Butler corroborating plaintiff's testimony to that effect, but the same information is contained in plaintiff's patent application No. 617,677, which was forwarded to defendant at its request and retained by it for approximately two months. It follows that defendant's use of a varnish, instead of a nitrocellulose, base in "Filcotone" does not serve to differentiate its product from what was disclosed to it by plaintiff.

As for the other components of the two products, each ingredient of plaintiff's formula has either its precise counterpart or substantial equivalent in "Filcotone". Nor is the court aware of any element in "Filcotone" that distinguishes it significantly from plaintiff's formula. Even if defendant modified or improved upon the details of plaintiff's formula, it can not escape liability if it adopted the salient features of that formula, see Booth v. Stutz Motor Car Co. of America, 7 Cir., 56 F.2d 962, 968; Allen-Qualley Co. v. Shellmar Products Co., D.C., 31 F.2d 293, 296, affirmed, 7 Cir., 36 F.2d 623; Mycalex Corp. v. Pemco Corp., D.C., 64 F.Supp. 420, 425, affirmed, 4 Cir., 159 F.2d 907, provided that such features were novel. Flanigan v. Ditto, Inc., 7 Cir., 84 F.2d 490, 495; Smoley v. New Jersey Zinc Co., 3 Cir., 106 F.2d 314, 315, affirming, D.C., 24 F.Supp. 294.

It is true that plaintiff claimed that his product would avoid the necessity of a sealing coat if the wood were well sandpapered, whereas defendant makes no such claim for "Filcotone". The issue, however, is whether the two products are substantially alike, not whether plaintiff may have been extravagant in describing the merits of his; and that issue, as already has been indicated, must be resolved...