Johns-Manville Corp. v. Guardian Industries Corp.

Decision Date20 December 1983
Docket NumberCiv. No. 81-70248.
Citation221 USPQ 319,586 F. Supp. 1034
PartiesJOHNS-MANVILLE CORPORATION, Plaintiff, v. GUARDIAN INDUSTRIES CORPORATION, Vaughn Chenoweth, Joseph Church, Duane Faulkner, Kenneth Limburg, John Mikulak, Robert Nishwitz, Steven Sanford and James Schairer, Defendants.
CourtU.S. District Court — Western District of Michigan

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Ernie L. Brooks, Southfield, Mich., for plaintiff.

Bernard J. Cantor, Detroit, Mich., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

PHILIP PRATT, District Judge.

Plaintiff Johns-Manville Corporation, a New York corporation1 (hereinafter J-M), which is involved through its operating subsidiaries in the development and production of fiberglass insulation, has sued defendant Guardian Industries Corporation,2 a Delaware corporation, and several former J-M employees3 who have assisted defendant Guardian with its entry into fiberglass production. J-M alleges that defendant has appropriated both patented and unpatented technology developed by J-M for the commercial production of fiberglass insulation that consists of fibers which are less than 7 microns (M) in diameter.

At the heart of plaintiff's development is a process for directly centrifuging fibers 7 M or less in diameter through holes less than 18 mils in diameter4 which eliminates the need for a production process known as hot gas blast attenuation. The elimination of this energy intensive step in the production of insulation-quality staple fibers was a significant technological break-through in the field.

Implementation of this new process of fiberization required many alterations and adaptations to the existing fiberglass insulation production line and techniques used by Johns-Manville. As will be elaborated below, the new process was given the acronym HERM, which represents Horizontal laminar collection of the staple fibers, Electric kettle melting of the glass, Rotary fiberization through a spinner containing holes of less than 18 mils, and Modular line. The research, development, and resulting technology will be referred to generally as HERM, unless the context requires greater specificity. The HERM process has been commercialized and is on line at J-M facilities in Willows, California; Winder, Georgia; Richmond, Indiana; McPherson, Kansas; Innisfail, Alberta, Canada; and St. Avold, France.

I. THE PARTIES
A. The Corporate Parties

Both J-M and Guardian manufacture fiberglass insulation. J-M, the original plaintiff herein, is a holding company which functions through various wholly-owned operating subsidiaries. At the inception of the HERM project, its employees worked for either J-M Fiberglass Inc. or J-M Products Corporation. At some time, unspecified in the record, the corporate structure was reorganized and the HERM development project and its team came under the auspices of J-M Sales Corporation. The personnel records of Church, employed January 1976 by J-M Products, and Limberg, employed March 1977 by J-M Sales, support the inference that the transaction occurred in that interval.

Although the identity of the operating subsidiaries may have changed, the entity for which an employee worked had no bearing on his assignments or his obligations to both the subsidiary and the parent, J-M Corporation. Plaintiff's nonchalance about its corporate structure has made for an untidy and confusing record, but does not deprive the parent of its right to relief because a subsidiary was not joined as a party.

The Court is satisfied that individuals considered themselves to be J-M employees, regardless of the intervening subsidiary's identity, and that any obligations arising from their employment were owed to the parent corporation, and were unaffected by transfer from one subsidiary to another. Thus the Court finds no merit in defendants' claim that J-M has failed to join its subsidiaries as indispensable parties. Plaintiff J-M and its successor, Manville Corporation, to which all of J-M's rights have been assigned, are the only parties necessary to pursue all the claims before the Court.

J-M began research and development (R & D) in fiberglass insulation in 1956 and entered commercial production by purchasing both the facilities and technology, including the patents of a competitor, Libby Owens Ford. Prior to that time, J-M had been involved in both research, development and production of mineral or rock wool insulation. J-M remains commercially active in both fields of insulation production.

Defendant Guardian is primarily a manufacturer of glass plates for automotive and architectural windows, and secondarily is involved in photo finishing. Defendant purchased a factory in Huntington, Indiana, for the production of rock wool insulation in 1977, and in November 1979 acquired a glass plant in Albion, Michigan, where the production line, which is the subject matter of this dispute, is located. Defendant began commercial production of fiberglass at its Albion facility in November 1980. To date, defendant has hired 15 former J-M employees, at least 9 of whom were directly involved with the development of the new fiberglass insulation technology which is the subject matter of this suit.

B. Individual Defendants

The following are former J-M employees who are employed by Guardian at the Albion fiberglass insulation plant, as well as being named individual defendants. They are listed in order of their importance to both J-M and the HERM project and the start-up of Guardian's Albion line.

Duane Faulkner joined J-M's HERM team in June 1972, as an employee of J-M Fiberglass Inc., and was resident manager of the HERM project at the Richmond, Indiana plant. He developed a theoretical model which described the new fiberization process, was a named inventor on the patent in suit, which disclosed that model and claimed the process, and supervised development of the supporting technology necessary to commercialize the production of fiberglassing, the new fiberization process. Faulkner left J-M in October 1977 and, after a brief interval at Midland Glass during October and November 1977, joined Guardian. He was first employed at Guardian's Rock Wool plant in Huntington, Indiana, but became and remains Director of Operations of Guardian's Insulation Division, after defendant had committed to convert the Albion facility for fiberglass production in November 1979.

Defendant James Schairer was employed by J-M Fiberglass Inc. in May 1971, where he designed electronic fiberglass equipment controls, and was responsible for the onsite development work prior to Faulkner's arrival. For his last two years, Schairer reported to Duane Faulkner directly as Senior Process Engineer. He left J-M in January 1978 and began his employment at Guardian's Huntington Rock Wool plant in February 1978, as an engineering manager who assisted in bringing that facility on line by May 1978. He began purchasing equipment for the Albion fiberglass line in mid-February 1980, and is currently responsible for electrical designs.

Defendant Steven Sanford was employed by J-M Products Corporation in October 1969 and transferred to the HERM project in August 1972, where he designed and procured mechanical parts for the pilot line. He left J-M's employ in February 1980, and joined Guardian. He was employed at the Huntington Rock Wool plant for one month and transferred to Albion in April 1980 as a mechanical engineer in charge of the mechanical design for the fiberglass line.

Defendant Vaughn Charles Chenoweth was first employed by J-M Products Corporation in 1971 and transferred to the HERM development project in 1972 where he was involved with operation of the HERM equipment. He left J-M in October 1978 to work at the defendant's Huntington Rock Wool plant and ultimately transferred to the Albion fiberglass insulation plant where he is a manager of process and quality control. These four employees constituted plaintiff's HERM development cadre.

Defendant Kenneth Limberg was employed by J-M Sales Corporation in March 1977 as an hourly worker and advanced to become a research technologist, process technician, and a supervisor of operations on the HERM line. He also acted as a troubleshooter for the start up of commercial HERM lines and trained operating personnel at the Willows, Winder and Innisfail plants. Limberg left J-M in October 1980 and joined Guardian at its Albion facility where he is a production shift manager.

Defendant Robert Nishwitz was first employed by J-M Products Corporation in November 1974 as a draftsman and project engineer for the HERM line. In April 1978, he left J-M and worked as a project expediter for J.C. Beasley, Inc., for a five month interval. In October 1978, Nishwitz joined Guardian at the Huntington plant and transferred to the Albion operation in November 1979 where he is a maintenance supervisor.

Two other individual defendants who were named in the original complaint have since been dismissed from the suit by plaintiff: John Mikulak, an employee of J-M Fiberglass Inc., dismissed October 6, 1981, and Joseph Church, an employee of J-M Products Corporation, dismissed January 28, 1982.

Each individual defendant, regardless of the subsidiary which initially employed him, executed an employee agreement which provided:

That any and all inventions, discoveries or developments, whether sole or joint, relating to, or capable of use in conjunction with, the business of the Company or of Johns-Manville Corporation or of any subsidiary of Johns-Manville Corporation which the undersigned employee may either conceive, complete or first reduce to practice during the period of said employment, together with any and all models, descriptions, drawings and records relating thereto and any and all applications for Letters Patent and Letters Patent based thereon, are to be and become the property of Johns-Manville Corporation or
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