Delta Filter Corp. v. Morin

• Decision Date: 14 February 1985
• Citation: 108 A.D.2d 991,485 N.Y.S.2d 143
• Parties: DELTA FILTER CORPORATION, Appellant-Respondent, v. Gilles A. MORIN et al., Respondents-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 143

485 N.Y.S.2d 143

108 A.D.2d 991

DELTA FILTER CORPORATION, Appellant-Respondent, v. Gilles A. MORIN et al., Respondents-Appellants.

Supreme Court, Appellate Division Third Department.

Feb. 14, 1985.

Nolan & Heller, Albany (Mark L. Heller, Albany, of counsel), for appellant-respondent.

Miller & Williams, Clifton Park (G. Kimball Williams, Clifton Park, of counsel), for respondents-appellants.

Before MAHONEY, P.J., and KANE, CASEY and WEISS, JJ.

PER CURIAM.

Cross appeals from a judgment of the Supreme Court, entered January 18, 1984 in Saratoga County, upon a decision of the court at Trial Term, without a jury.

In 1975, plaintiff, Delta Filter Corporation (Delta), purchased the filtration division of a Schenectady-based environmental research and development company known as Environment One Corporation, including its machinery and equipment for producing high efficiency particulate air (HEPA) filters. Simultaneously, various Environment One Corporation personnel transferred their employment to Delta, among whom was defendant Gilles Morin, who was put in charge of Delta's HEPA filter production. Morin, defendant Thomas Pratt (another Delta employee) and Harry Grounds incorporated defendant Northland Filter Systems, Inc. (Northland) in April 1981; two months later, Morin resigned from Delta.

When Northland then went into competition with Delta in the production and sale of HEPA filters, Delta commenced the instant action for an injunction and damages. The action was based on allegations that Northland had misappropriated Delta's trade secrets by using identical machine components and processes in producing HEPA filters and by taking over its customer lists. The latter claim was subsequently abandoned, however. Northland counterclaimed for damages, based upon allegations of Delta's trade defamation and interference with Northland's business relationships with its suppliers and customers. After a nonjury trial, Trial Term dismissed the complaint at the close of plaintiff's case and the counterclaims of the close of all the proof. These cross appeals ensued.

In dismissing the complaint, Trial Term found that the three principal manufacturing components of Northland's production of HEPA filters were substantially identical to those of Delta's, namely, the pleater which folds the filter or media paper into accordion pleats, a corrugator which imparts an image into aluminum separators between the pleats, and a dual saw used to cut and trim the filter's particle board frame. Trial Term nevertheless ruled against Delta on the ground that neither Delta's equipment nor its production process was of such a nature as to attain the status of a trade secret. Our review of the record leads us to conclude that Trial Term was correct in its assessment.

New York has substantially adopted the approach of the original Restatement of Torts (1939) to the law of trade secrets (Eagle Comtronics v. Pico, Inc., 89 A.D.2d 803, 804, 453 N.Y.S.2d 470, lv. denied 58 N.Y.2d 601, 458 N.Y.S.2d 1025, 444 N.E.2d 1012; Ferranti Elec. v. Harwood, 43 Misc.2d 533, 539, 251 N.Y.S.2d 612; Minnesota Min. & Mfg. Co. v. Technical Tape Corp., 23 Misc.2d 671, 678-679, 192 N.Y.S.2d 102, affd. 15 A.D.2d 960, 226 N.Y.S.2d 1021, affd. 18 A.D.2d 679, 235 N.Y.S.2d 830). Under the rationale of the Restatement, a trade secret is generally defined as a formula, process, device or compilation of information used in one's business which confers a competitive advantage over those in similar businesses who do not know or use it (Restatement of Torts § 757 comment b ). An essential requisite to legal protection against misappropriation of such a formula, process, device or compilation of information is the element of secrecy. Secrecy is used in the Restatement in two related senses: (1) as...