BIEC Intern., Inc. v. Global Steel Services, Ltd.

• Decision Date: 05 May 1992
• Docket Number: No. 92-0108.,92-0108.
• Citation: 791 F. Supp. 489
• Parties: BIEC INTERNATIONAL, INC., Plaintiff, v. GLOBAL STEEL SERVICES, LTD., James L. Forand, Jr., Angelo R. Borzillo, James J. Connolly, and Paik W. Shin, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

791 F. Supp. 489

BIEC INTERNATIONAL, INC., Plaintiff, v. GLOBAL STEEL SERVICES, LTD., James L. Forand, Jr., Angelo R. Borzillo, James J. Connolly, and Paik W. Shin, Defendants.

No. 92-0108.

United States District Court, E.D. Pennsylvania.

May 5, 1992.

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Gregory B. Jordan, Reed, Smith, Shaw & McClay, Pittsburgh, Pa., for plaintiff.

Joseph Wolfson, Stevens & Lee, Reading, Pa., for defendants.

DECISION AND ORDER

VAN ANTWERPEN, District Judge.

This major non-jury matter is before us on a motion for a preliminary injunction pursuant to Fed.R.Civ.P. 65. At issue in this case is each parties' right to provide world steel-makers with information and services related to 55% aluminum-zinc coated sheet steel. The coating is undertaken to protect the steel. For more than a decade, Plaintiff BIEC International, Inc. has successfully licensed technology related to 55% aluminum-zinc coatings to sophisticated steel companies throughout the world. BIEC International, Inc. and its licensees have invested millions of dollars in the technology and the licensing program, and BIEC licensees to date are the only producers of 55% aluminum-zinc coated sheet steel in the world.

The individual Defendants — Forand, Borzillo, Shin, and Connolly — were longtime executives at BIEC International, Inc. until July 28, 1991 when they were terminated without cause. Forand, Borzillo, and Shin, together with Connolly on a part-time consulting basis, have started their own company, Defendant Global Steel Services, Ltd., to provide technical services in the area of 55% aluminum-zinc coatings. BIEC International, Inc. seeks to enjoin the Defendants from competing against it in this area. More specifically, BIEC International, Inc. seeks to enjoin the Defendants from using BIEC International's trade secrets, trademark, and logo and from conspiring to interfere with Plaintiff's contractual relations and corporate opportunities.

In response to this motion, Defendants have filed a Motion to Dismiss Plaintiff's trademark claim for failure to state a claim under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). While we agree that the gravamen of the present action lies in Plaintiff's state law claims for trade secret protection, we find, none-the-less, that Plaintiff has plead sufficient facts to withstand a motion to dismiss, and we proceed with Plaintiff's Motion for a Preliminary Injunction.

This Court has original jurisdiction over the federal trademark claims pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and supplemental jurisdiction over the state law claims for trade secret protection, tortious interference with contractual relations, diversion of corporate opportunity, and civil conspiracy pursuant to 28 U.S.C. §§ 1338 and 1367.

In light of the highly sensitive nature of much of the evidence in this case, this Court entered a Protective Order on January 15, 1992 requiring that all sensitive testimony be presented in camera and that all sensitive filings be made under seal. Never-the-less, because of the numerous and novel issues presented in this case, this Court feels compelled to publish its Decision and Order. Accordingly, all information which this Court finds to be particularly sensitive to the parties involved has been included in an unpublished Confidential Appendix and filed under seal.¹

Extensive hearings on Plaintiff's Motion for a Preliminary Injunction were held in Easton, Pennsylvania from February 12, 1992 through February 27, 1992. In light of the highly technical and voluminous nature of these proceedings (the record in this case is comprised of three-weeks of highly technical testimony and approximately 500, equally voluminous, exhibits for a total of approximately 30,000 pages), this Court ordered, on February 27, 1992, that the parties submit exhaustive post-trial submissions to be fully annotated to the record in lieu of closing arguments. The Court further ordered that the parties would be limited at this stage to the issues and facts put forth in these submissions. Over the course of one month, each party was given an opportunity to submit proposed findings of fact, answers to his opponent's proposed findings of fact, and rebuttal to his opponent's answers, as well as one brief in support of its position and one rebuttal brief.² Having fully considered the voluminous testimony and exhibits presented at this three-week hearing, the post-trial submissions, and the arguments of counsel, we make the following findings of fact and state the following conclusions of law, pursuant to Fed.R.Civ.P. 52(a).

FINDINGS OF FACT

I. THE PARTIES AND KEY WITNESSES.

1. Plaintiff BIEC International, Inc. ("BIEC") is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 3400 Bath Pike, Bethlehem, Pennsylvania 10817. (Joint Stipulation — Pl.'s Proposed Finding number 1.³) BIEC licenses information and services related to a corrosion resistant aluminum-zinc coating for sheet steel that is applied by a hot-dip process ("55% aluminum-zinc coating"). GALVALUME is the trademark used by BIEC and its licensees for sheet steel coated with 55% aluminum-zinc. (2/12/92 Tr. at 39-40, 45, Wechsler Direct; 2/20/92 Tr. at 77, Borzillo Direct; Pl.'s Ex. 91 at 1; Defs.' Exs. 147, 151.)

2. BIEC is owned by Australian steel conglomerate Broken Hill Proprietary Company, Limited ("Broken Hill Proprietary"). (2/12/92 Tr. at 88-89, Wechsler, Direct.) Broken Hill Proprietary acquired the business of licensing technical information and services relating to 55% aluminum-zinc coating in 1986 when it purchased Bethlehem International Engineering Corporation ("Bethlehem International"), a wholly-owned subsidiary of Bethlehem Steel Corporation ("Bethlehem Steel"). (2/12/92 Tr. at 88-89, Wechsler Direct.) Bethlehem International's name was then changed to BIEC International, Inc. (Joint Stipulation—Pl.'s Proposed Finding number 29.) As part of the purchase, Broken Hill Proprietary and its subsidiary also acquired certain assets from Bethlehem Steel. (Pl.'s Ex. 89.) Bethlehem Steel began licensing technical information and services relating to 55% aluminum-zinc coating in 1974. (2/26/92 Tr. at 40, Forand Direct.)

3. Defendant Global Steel Services, Ltd. ("Global Steel Services") was incorporated in July, 1991 by three former BIEC senior employees, James L. Forand, Jr., Angelo R. Borzillo, and Paik W. Shin who received letters of termination from BIEC on June 28, 1991. (Pl.'s Ex. 2; Defs.' Exs. 83, 84, 85, 86.) Global Steel Services was formed primarily to provide technical information and services relating to 55% aluminum-zinc coating. (2/25/92 Tr. at 122, Shin Direct; 2/26/92 Tr. at 67, Forand Direct.)

4. Defendant James L. Forand, Jr. ("Forand") is a Pennsylvania citizen residing at 4450 Phillip Street, Whitehall, Pennsylvania 18052. Forand was a Director of BIEC and was its President from August 1986 through July 28, 1991 when he was terminated without cause. (2/26/92 Tr. at 111, 124-125, Forand Cross; Pl.'s Ex. 164 at 327-28.) Forand is currently a shareholder, director, employee and the President of Global Steel Services. (2/27/92 Tr. at 10, Forand Cross; Pl.'s Ex. 164 at 78.) Forand became involved with 55% aluminum-zinc coatings in the late 1960's as a research engineer with Bethlehem Steel. (2/26/92 Tr. at 35, Forand Direct.) In the early 1970's, Forand was responsible for the technical development of a 55% aluminum-zinc product called DURASKIN which was a derivative of GALVALUME. (2/26/92 Tr. at 36, Forand Direct.) Forand headed the GALVALUME project team from 1975-77 which was responsible for marketing 55% aluminum-zinc coated sheet steel in the United States. (2/26/92 Tr. at 38, Forand Direct.) While at Bethlehem Steel, Bethlehem International and later BIEC, Forand was primarily responsible for managing the worldwide 55% aluminum-zinc coating licensing program. (2/25/92 Tr. at 124, Shin Direct; 2/26/92 Tr. at 38-45, Forand Direct.)

5. Defendant Angelo R. Borzillo ("Borzillo") is a Pennsylvania citizen residing at 3014 Taft Road, Norristown, Pennsylvania 19403. Borzillo was the Vice President in charge of technology of BIEC from August 1986 through July 28, 1991 when he was terminated without cause. (2/14/92 Tr. at 80, Borzillo Direct; Pl.'s Ex. 175 at 349-50.) Borzillo is currently a shareholder, director, employee and the Chairman of Global Steel Services. (2/14/92 Tr. at 80, Borzillo Direct; Pl.'s Ex. 175 at 11.) In the early 1960's at Bethlehem Steel, Borzillo directed the research effort of applying an alloy-coating combination of aluminum and zinc on sheet steel. (2/19/92 Tr. at 11, Borzillo Direct.) Borzillo co-invented and co-patented the process for aluminum-zinc coating of sheet steel and the product that results from that process. (Defs.' Exs. 147, 151.) Borzillo has been intimately involved in the development, marketing and production of 55% aluminum-zinc coated sheet steel and consequent worldwide licensing effort for the past thirty years. (2/19/92 Tr. at 39, Borzillo Direct.) Borzillo is commonly referred to as the "Godfather of GALVALUME." (2/25/92 Tr. at 124, Shin Direct.) From 1962 to the present, other than a two-year period of 1967 and 1968, Borzillo has worked exclusively with aluminum-zinc coatings. (2/19/92 Tr. at 39, Borzillo Direct.)

6. Defendant Paik W. Shin ("Shin") is a Pennsylvania citizen residing at 2626 Heckmans Lane, Coopersburg, Pennsylvania 18036. Shin was in charge of sales and servicing of the Far East and Asia for BIEC from August 1986 through July 28, 1991 when he was terminated without cause. (2/25/92 Tr. at 69-70, Shin Direct; Pl.'s Ex. 165 at 283-87.) Shin is currently a shareholder, director, employee and the Treasurer of Global Steel Services. (2/25/92 Tr. at 182, Shin Direct; Pl.'s Ex. 165 at 46.) Shin began working with 55% aluminum-zinc coating in the early 1970's....