Harris Manufacturing Company v. Williams

• Decision Date: 31 December 1957
• Docket Number: Civ. A. No. 704.
• Citation: 157 F. Supp. 779
• Parties: HARRIS MANUFACTURING COMPANY, Plaintiff, v. Glenn J. WILLIAMS and J. W. Wilson, Individually and as Partners Trading and Doing Business Under the Firm Name, Arkansas Parquet Flooring Company, and Arkansas Parquet Flooring Company, an Arkansas Corporation, Defendants.
• Court: U.S. District Court — Western District of Arkansas

157 F. Supp. 779

HARRIS MANUFACTURING COMPANY, Plaintiff, v. Glenn J. WILLIAMS and J. W. Wilson, Individually and as Partners Trading and Doing Business Under the Firm Name, Arkansas Parquet Flooring Company, and Arkansas Parquet Flooring Company, an Arkansas Corporation, Defendants.

Civ. A. No. 704.

United States District Court W. D. Arkansas, Hot Springs Division.

December 31, 1957.

COPYRIGHT MATERIAL OMITTED

Owens, McHaney, Lofton & McHaney, Little Rock, Ark., Green & Brandt, Johnson City, Tenn., for plaintiff.

McMath, Leatherman & Woods, Little Rock, Ark., for defendant.

JOHN E. MILLER, District Judge.

This case was tried to the Court without a jury on October 28, 29, and 30, 1957, and at the conclusion of the trial the Court took the case under advisement in order to allow the parties time in which to file briefs in support of their respective contentions.

The briefs have been received, and the Court having considered the pleadings, evidence, and briefs of the parties, now makes and files herein its Findings of Fact and Conclusions of Law, separately stated.

Findings of Fact

1.

The plaintiff is a Tennessee corporation. The defendant, Glenn J. Williams, at the time of the institution of this action was a citizen and resident of the Western District of Arkansas, Hot Springs Division. The defendant, J. W. Wilson, is a citizen and resident of Texas, and is President of the Arkansas Parquet Flooring Company, a corporation.

The defendant, Arkansas Parquet Flooring Company, a partnership, was an Arkansas partnership, having its office and principal place of business in Sheridan, Arkansas, in the Eastern District of Arkansas. This partnership operated during the period from October 1, 1956, until July 1957.

The defendant, Arkansas Parquet Flooring Company, a corporation, is an Arkansas corporation, having its office and principal place of business in Sheridan, Arkansas, in the Eastern District of Arkansas.

The amount in controversy, exclusive of interest and costs, exceeds the sum of $3,000.

2.

The plaintiff is engaged in the business of manufacturing and selling hardwood flooring of all types, and particularly a parquet flooring of distinctive pattern called "BondWood".

The plaintiff acquired the exclusive right and franchise to produce BondWood in the United States and its possessions by contract dated December 11, 1954, with Bauwerk, A. G., a Swiss corporation. Pursuant to said contract, Bauwerk furnished to the plaintiff the necessary machinery to produce BondWood and the formula and method for producing a mastic or adhesive for cementing the flooring to the subfloor. Bauwerk also furnished all other information and "know-how" for producing BondWood flooring and the mastic used in conjunction therewith, which mastic has been marketed by plaintiff as "Harris Mark 10 Adhesive", as made with German ingredients.

BondWood is produced by the use of two principal machines, one called a P-3 machine to cut and shape slats 4¾ inches long and 5/16 inch thick, and the other called a V-3 machine to assemble the slats into blocks of flooring 19 inches by 19 inches. Each block contains 16 squares, 4¾ inches by 4¾ inches. The slats in each square are perpendicular to the slats in the adjoining square, so that each block is a checkerboard design.

The mastic or adhesive called "Harris Mark 10 Adhesive" produced and sold by plaintiff is of a type never before used in the United States for the purpose of cementing parquet flooring, and is claimed to be superior to any other mastic presently available for the purpose of cementing parquet flooring to the subfloor.

3.

The adhesive formula originally furnished by Bauwerk to the plaintiff provided for the use of three resins available only from a supplier in Germany. This formula, for convenience, is called the "original formula". The three resins are compounds of several chemicals. In order to insure a domestic source of supply in emergencies and to lower its costs, if possible, the plaintiff desired to recast the formula in terms of basic ingredients available locally. By the joint efforts of Bauwerk and the plaintiff, and with the assistance of some commercial chemical companies in the United States, a second formula (hereinafter referred to as domestic mastic) was adopted with approval by Bauwerk that provided for the use of one resin commercially available in the United States, plus small amounts of four other ingredients in lieu of the three German resins. The end product of the two formulas was very similar, and in the opinion of Bauwerk and the plaintiff the three German resins, when mixed according to the formula, are the substantial equivalent of the one American resin mixed with the four additional ingredients.

However, the original formula and the domestic formula were not exactly the same. For a limited period of time the domestic mastic was produced and marketed, but after July 1956 plaintiff returned to the use of the original formula containing the German ingredients. Apparently the domestic formula was not quite as satisfactory as the original formula.

4.

The contract between the plaintiff and Bauwerk requires that plaintiff keep all processes, formulas, and methods of producing BondWood and mastic confidential.

The plaintiff has maintained its processes, formulas, and methods for producing BondWood and mastic confidential.

The defendant, Glenn J. Williams, was employed by the plaintiff during the period December 11, 1954, to September 8, 1956. Williams was assigned to the BondWood department and aided and assisted in setting up the machinery for producing BondWood and in installing the equipment for making mastic. Williams was employed in an executive capacity and was a trusted employee. He was furnished all available information pertaining to BondWood and Harris Mark 10 Adhesive and participated in staff meetings relating thereto. The mastic formula was given to him, and he actually mixed or supervised the mixing of the material for several months.

Information concerning the processes, formulas, and methods of producing BondWood and mastic was given to Glenn J. Williams in confidence, and Williams knew that it was given to him in confidence.

5.

In about March of 1956, the plaintiff and the defendant, J. W. Wilson, entered into an agreement whereby the defendant Wilson became the exclusive distributor for BondWood and mastic in the Dallas-Fort Worth, Texas, area.

The plaintiff furnished to the defendant, J. W. Wilson, large quantities of advertising materials to aid him in the distribution of BondWood and cooperated fully with the defendant Wilson in the sale and distribution of BondWood.

In April and May of 1956, at a time when the defendant, Glenn J. Williams, was in Texas to assist the defendant Wilson with a BondWood exhibit at the Dallas Home Show and at the Fort Worth Home Show, the defendant Wilson endeavored to interest the defendant Williams in the formation of a plant to produce a parquet flooring and mastic similar to the Harris products, and during said period the defendant Wilson called upon an independent flooring manufacturer, proposing that he, Wilson, would furnish a man with the know-how of producing BondWood and mastic if said independent flooring manufacturer would undertake the production of it.

During the latter part of May or early part of June, 1956, the defendant, J. W. Wilson, requested and was granted permission to visit the BondWood department at the plaintiff's plant. The defendant, J. W. Wilson knew that the BondWood department was not open for public inspection and that he was permitted to visit it only because of his distributorship for the product.

When the defendant, J. W. Wilson, visited the plaintiff's plant in May or June, 1956, he again discussed with the defendant, Glenn J. Williams, a plan to produce BondWood and mastic in competition with the plaintiff.

The defendant, J. W. Wilson, knew that the plaintiff maintained its processes, formulas, and methods of manufacturing BondWood and mastic as trade secrets, and knew that the defendant, Glenn J. Williams, had acquired his knowledge of said processes, formulas, and methods in confidence as an employee of the plaintiff.

Prior to the time that the defendant, Glenn J. Williams, left the employ of plaintiff, he and the defendant, J. W. Wilson, agreed upon a plan to set up a plant in competition with the plaintiff to produce a flooring and mastic similar to Harris BondWood and Harris domestic mastic, using for that purpose a copy of plaintiff's V-3 assembly machine and the formula for producing Harris domestic mastic.

6.

The defendant, Glenn J. Williams, does not have the necessary training, education, or skill to compound a formula for mastic substantially identical to Harris Mark 10 Adhesive or to design an assembly machine for assembling parquet flooring similar to Harris BondWood.

Without the knowledge and information acquired in confidence as an employee of the plaintiff, the defendant, Glenn J. Williams, could not have designed the assembly machine used by the defendants in their plant at Sheridan, Arkansas.

Without the knowledge and information acquired in confidence as an employee of the plaintiff, the defendant, Glenn J. Williams, could not have compounded the formula for producing the adhesive marketed by the defendants as A. P. No. 7 Mastic.

The assembly machine used by defendants in the plant at Sheridan is substantially identical to the V-3 assembly machine of the plaintiff.

The formula for adhesive used by defendants is substantially identical to that used by the plaintiff for Harris domestic mastic.

The assembly machine used by defendants was not discovered or designed as the result of independent research, but is a simulation of plaintiff's machine.

The formula for adhesive used by the defendants was not compounded by independent research, but was based entirely on the plaintiff's formula for domestic mastic, and is a...