Eastern Marble Products Corp. v. Roman Marble, Inc.

• Decision Date: 23 June 1977
• Citation: 364 N.E.2d 799,372 Mass. 835
• Parties: , 204 U.S.P.Q. 229 EASTERN MARBLE PRODUCTS CORP. v. ROMAN MARBLE, INC., et al. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 799

364 N.E.2d 799

372 Mass. 835, 204 U.S.P.Q. 229

EASTERN MARBLE PRODUCTS CORP. v. ROMAN MARBLE, INC., et al. ¹

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Nov. 3, 1976.

Decided June 23, 1977.

Philip X. Murray, Milton, for Irving Cann.

Camille F. Sarrouf, Boston (Howard J. Alperin, Boston, with him), for the plaintiff.

Before QUIRICO, BRAUCHER, WILKINS and LIACOS, JJ.

QUIRICO, Justice.

The plaintiff Eastern Marble Products Corp. (Eastern Marble) brought a bill in equity to enjoin Irving Cann and Robert E. McEachern, Jr., former employees of Eastern Marble, from using or disclosing Eastern Marble's trade secrets involved in the manufacture of synthetic ("cultured") marble sinks.

A judge of the Superior Court ruled that the process of manufacturing cultured marble sinks was not a trade secret. He also ruled that the process of manufacturing two-tone one-piece sinks, with the top one color and the bowl another color, was a trade secret. Based on the finding of an "express employee agreement for nondisclosure" between Eastern Marble and McEachern the judge enjoined McEachern from disclosing or making use of Eastern's trade secrets. Based on a finding that Cann "wrongfully obtained the process for the manufacture of a two-tone cultured marble top and bowl," the judge enjoined Cann from manufacturing two-tone one-piece cultured marble tops and bowls.

From the record before us, it appears that McEachern has not appealed from the final decree. ² Cann, the only defendant presently before the court, appealed to the Appeals Court, and we transferred the case here. G.L. c. 211A, § 10(A). For reasons hereafter stated, we affirm the final decree.

We summarize the facts found by the trial judge. Eastern Marble is a Massachusetts corporation organized in 1970. It entered into a franchise agreement with Marble- Crete Products, Inc. (Marble-Crete), permitting manufacture of simulated marble sinks according to a formula and process furnished by Marble-Crete.

Sometime thereafter Eastern Marble and Marble-Crete developed a method of manufacturing a one-piece molded sink with the flat surface top of one color and the washbowl of another color. Peter Kevorkian, the president of Eastern Marble, experimented for several months to develop the process. Formulae for the manufacture of cultured marble are available to the public. Yet, of the approximately 100 manufacturers of cultured marble in the United States, twenty-one of whom are licensed by Marble-Crete, Eastern Marble and Marble-Crete alone have manufactured one-piece two-tone sinks.

The employees of Eastern Marble were instructed to keep the public out of the manufacturing area where various formulae and notes regarding production were posted. Further, all the employees who were involved in manufacturing were obliged to sign agreements to the effect that they had learned the methods, procedures, and formulae of Eastern Marble and Marble-Crete for "the sole purpose of assisting in manufacturing said products," that they would not disclose these methods to anyone, and that they would "not . . . enter any business of this nature" except as a franchisee.

McEachern began work for Eastern Marble as a college student in September, 1970, and, except for short intervals, remained until April 1973. He signed a nondisclosure and noncompetition agreement on September 28, 1970, which was before the two-tone process had been developed.

Cann, who had been a manufacturer's representative in the plumbing industry for about sixteen years, became a factory representative for Eastern Marble in 1972. He did not sign a nondisclosure and noncompetition agreement. On June 19, 1973, while still an employee of Eastern Marble, Cann incorporated Roman Marble, Inc. (Roman Marble), as a Massachusetts corporation, for the purpose of manufacturing cultured marble sinks. Cann quit Eastern Marble on July 1, 1973. Roman Marble soon hired two former employees of Eastern Marble, including McEachern, who had left Eastern Marble in April 1973.

With the aid of a handbook published by Gruber Systems, Inc., a California corporation, and telephone advice from them, Roman Marble obtained the information necessary to manufacture cultured marble. Roman Marble was able to develop a finished product for sale sometime between July 28, 1973, and August 3, 1973.

Cann had not witnessed the manufacture of cultured marble sinks at Eastern Marble, and had not obtained copies of Eastern Marble's formulae. He had obtained the special expertise and knowledge required to make two-tone one-piece cultured marble tops and bowls from McEachern. It is this special knowledge which the trial judge ruled was a trade secret. He further ruled that this knowledge had been unlawfully obtained through the hiring of McEachern.

1. Cann challenges on several grounds the finding that the manufacture of two-tone cultured marble sinks involves a trade secret.

A persistent theme of the defendant's attack is that the process of manufacturing two-tone sinks cannot be distinguished from that used to make sinks of one color. The defendant argues that, since the judge found the method of producing sinks of one color to be generally available to the public and not a trade secret, the process of making two-tone sinks cannot be a trade secret. A corollary to this argument is that an injunction prohibiting the manufacture of an end product two-tone sinks rather than the use of a particular process is too broad. We disagree with these contentions.

In J. T. Healy & Son v. James A. Murphy & Son, 357 Mass. 728, 736, 260 N.E.2d 723, 729 (1970), we cited the comprehensive definition of trade secret adopted by the Restatement of Torts § 757, comment b: "A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be . . . a process of manufacturing . . . . A trade secret is a process or device for continuous use in the operation of the business. Generally it relates to the production of goods, as, for example, a machine or formula for the production of an article."

Our prior cases establish that manufacturing processes are entitled to protection as trade secrets. J. T. Healy & Son v. James A. Murphy & Son, 357 Mass. 728, 736, 260 N.E.2d 723 (1970). Junker v. Plummer, 320 Mass. 76, 79-80, 67 N.E.2d 667 (1946). Wireless Specialty Apparatus Co. v. Mica Condenser Co., 239 Mass. 158, 165, 131 N.E. 307 (1921). What is a trade secret depends in each case "on the conduct of the parties and the nature of the information." Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 840, 282 N.E.2d 921, 925 (1972).

While the evidence in this case does not permit a crisp distinction between the proces of manufacturing two-tone and one-tone sinks, the judge found that the defendant misappropriated the information necessary to create two-tone sinks. He apparently relied on the fact that no manufacturer other than Eastern Marble produced two-tone sinks. ³ His injunction against the manufacture of the product itself, rather than against the use of a particular process, appears to reflect his judgment that, at the very least, the process and the product are inextricably connected. We see no reason to disturb his judgment.

The nebulous distinctions between process and product urged by the defendant cannot be sustained on the facts of this case. It appears clear from the evidence and the judge's findings that the defendant was able to produce two-tone sinks only because he hired McEachern to use the techniques developed by Eastern Marble. Although technical information about the general process of manufacturing cultured marble was available from Gruber Systems, Roman Marble could not have produced the two-tone product without McEachern's knowledge. Thus, to permit the defendant to prevail because of the analytical difficulties in distinguishing the manufacture of two-tone and one-tone sinks would be to ignore the factual context in which the case arises. ⁴

Thus, in so far as the defendant's argument is based on this distinction, we find it without merit.

The next claim is that the plaintiff did not treat the process of manufacture as a secret and should not be extended legal protection after the fact. "The essential characteristic of a trade secret being secrecy," J. T. Healy & Son v. James A. Murphy & Son, supra 357 Mass. at 737, 260 N.E.2d at 730, we must examine the plaintiff's behavior to determine the extent of measures taken to guard the secrecy of the information.

Each manufacturing employee of Eastern Marble was required to sign an agreement not to disclose the methods and procedures involved in the manufacturing processes of Eastern Marble and Marble-Crete. While McEachern's signing of this agreement preceded the development of the two-tone process, and while the agreement may have been specifically directed to protect formulae purchased by Eastern Marble from the franchisor Marble-Crete, this agreement by its terms included all the proprietary and secret information involved in the manufacturing process. Such an agreement cannot be disregarded as an empty formality. At the very least it put the employees on notice that secrets were involved. Cf. New Method Die & Cut-Out Co. v. Milton Bradley Co., 289 Mass. 277, 281-283, 194 N.E. 80 (1935). Moreover, the manufacturing area was separated from those business activities involving contact with the public; manufacturing employees were told to keep the public out of the area. These various measures support the judge's finding that the necessary secrecy was preserved.

2. Cann next argues that the judge erred in finding that he unlawfully obtained information from McEachern. He argues that this finding must mean that McEachern violated his contract with Eastern Marble. He further argues that the contract was not violated...