De Long Corporation v. Lucas

• Decision Date: 30 July 1959
• Citation: 176 F. Supp. 104
• Parties: DE LONG CORPORATION, Plaintiff, v. Joseph E. LUCAS, Defendant.
• Court: U.S. District Court — Southern District of New York

176 F. Supp. 104

DE LONG CORPORATION, Plaintiff, v. Joseph E. LUCAS, Defendant.

United States District Court S. D. New York.

July 30, 1959.

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COPYRIGHT MATERIAL OMITTED

Edward J. Ennis, New York City, and John L. Ingoldsby, Jr., Washington, D. C. (Clifford Forster, John W. Malley, David E. Varner, of Cushman, Darby & Cushman, Washington, D. C., of counsel), for plaintiff.

Watters & Donovan, New York City (James B. Donovan, John P. Walsh, Esq., Patrick J. Hughes, Thomas A. Harnett, New York City, Harry W. F. Glemser, Washington, D. C., of counsel), for defendant.

FREDERICK van PELT BRYAN, District Judge.

This action is based upon alleged breaches of an agreement between plaintiff and a former employee which was entered into in settlement of prior litigation between them arising out of this relationship.

Plaintiff claims that, in violation of the terms of such agreement, defendant engaged in competition with the plaintiff and assisted others to compete with it, disclosed plaintiff's trade secrets and confidential information to its competitors, and failed to assign to plaintiff certain patent applications covering inventions which the defendant was bound so to assign. Plaintiff also claims that defendant misappropriated to his own use ideas, developments and inventions which were plaintiff's property and with which defendant became familiar by reason of his employment.

Plaintiff seeks an injunction against alleged continuing violations of the agreement, specific performance of its provisions relating to the assignment of patent applications, a direction that the defendant assign to it the ideas, developments and inventions claimed to have been misappropriated, and damages.

Plaintiff DeLong Corporation (referred to as DeLong) is a Delaware corporation engaged in the design, engineering, sale, construction and installation of self-elevating docks, barges, platforms and other over-water structures. These structures are used, among other things, in offshore oil drilling and in the construction of the first "Texas Tower", one of the advance warning radar stations erected by the Navy in the Atlantic off the northeastern coast of the United States. Defendant Lucas, a citizen and resident of New York, had been one of plaintiff's key employees. This court has jurisdiction by virtue of diversity of citizenship.

A prior action in this court between these parties, commenced in April 1953, about the time when Lucas left DeLong's employ, was settled by the agreement in suit dated June 10, 1953. That action was based primarily on an employment contract between the parties dated May 29, 1952. DeLong sought to restrain Lucas from accepting employment with competitors in alleged violation of the employment agreement, and from revealing trade secrets and confidential information imparted to him in the course of his employment, and damages. The action was settled at an early juncture.

By the terms of the settlement agreement DeLong agreed to pay Lucas the sum of $184,547.50 representing the balance due him on account of services rendered to DeLong while he was in DeLong's employ, the amount of which had been in dispute.

Lucas in turn agreed, in substance, (1) to assign to DeLong all of his rights in a patent application then pending covering a slip jack for use on self-elevating over-water platforms and all improvements thereon, and warranted that the patent application and the drawings, sketches, and written matter concerning it to be turned over to DeLong, contained a "complete description of any and all inventions discovered or invented" by him during the term of his employment in respect of the structures and equipment which DeLong designed and produced; (2) for a period of two years after the signing of the agreement "not to compete or assist anyone to compete" with plaintiff "in any business" relating to his former employment "consisting of engineering and sales of docks, barges, platforms and similar equipment for marine and/or oil field use, including equipment making use of self-elevating mechanisms, pneumatic, mechanical, manual or otherwise, any place in the world"; (3) for such two year period "not to divulge to anyone any trade secrets or confidential information" concerning plaintiff's business learned by him during his employment.

It was agreed that the failure of either party to carry its obligations under the agreement would "constitute immediate and irreparable damage to the other party not compensable in money damages" and would "warrant preliminary and other injunctive and equitable relief" upon a proper showing to the court.

The monies due to Lucas under the agreement were paid him. Lucas executed an assignment to DeLong of his patent application for the slip jack and the inventions covered thereby, and a quitclaim assignment of his right, title and interest "to any invention discovered by me during the term of my employment in respect of docks, barges, platforms and similar equipment for marine and/or oil field use, including equipment making use of self-elevating mechanisms, pneumatic, mechanical, manual or otherwise". The parties exchanged general releases covering "all claims except those arising under this agreement" and the pending action was discontinued by stipulation.

The instant action was commenced on November 11, 1955, two years and five months after the settlement agreement was entered into.

The complaint contains three counts.

The first alleges in substance that during the two year period covered by the agreement Lucas, in violation of its terms, competed and assisted others to compete with plaintiff, and divulged "trade secrets and confidential information" by (a) forming a corporation to construct and use self-elevating mechanisms in drilling for oil in the Gulf of Mexico, and (b) developing and manufacturing a jacking mechanism for use in connection with bidding by DeLong's competitors on Navy contracts for offshore advance radar warning stations in the Atlantic Ocean and in assisting such competitors in their plans and program to obtain such contracts.

The second count alleges that Lucas filed a patent application for a jacking device which was included within the patent applications assigned to DeLong by the two assignments executed by him pursuant to the settlement agreement, and that he was about to conclude arrangements for supplying this device to DeLong's competitors for the advance warning radar station contracts with the Navy. DeLong amended its complaint at the trial so as to include within the second count two patent applications for drill barges filed by Lucas alleged also to have been included in the terms of the settlement agreement and the quitclaim assignment executed pursuant thereto, and to have been DeLong's property which was misappropriated by Lucas.

The third count alleges that Lucas was entrusted with trade secrets and confidential information in the course of his employment by DeLong which, in violation of his agreement, he divulged and continued to divulge to competitors, including the successful bidder on Navy contracts for the advance warning radar stations.

Each count alleges that DeLong will suffer irreparable damage if it is not given injunctive relief against the continued violations of the agreement complained of.

DeLong seeks an injunction restraining Lucas from (a) taking any action alone or in concert with others to further the construction or use of the jacking devices he allegedly developed, in violation of the agreement, for use in the installation of advance warning radar stations in the Atlantic, or otherwise, (b) carrying out any arrangements for competing or assisting others to compete with DeLong, and (c) disclosing trade secrets or confidential information acquired in the course of his employment by DeLong. DeLong also asks that the decree require Lucas to assign to it the United States patent applications on the slip jack and drill barges referred to in the second count, and any and all foreign patents and patent applications based thereon. DeLong further seeks damages of $5,000,000.

The answer, in substance, denies that Lucas either was the recipient of or disclosed any trade secrets or confidential information, or that he competed or assisted others to compete with DeLong in violation of his agreement. It is alleged, in substance, that the slip jack and drill barges which Lucas developed were essentially different from those used by DeLong, were newly invented by Lucas, and were not included in the assignments which he executed pursuant to the agreement. In any event, it is claimed that these inventions were completed only after the two year no-competition period had expired and that any negotiations for their sale or use were not in any way subject to or covered by the agreement.

A motion for a temporary injunction was denied (D.C., 139 F.Supp. 127). Thereafter the case came on for trial before me without a jury. By that time the two year period during which Lucas had agreed not to compete or to disclose trade secrets or confidential information had long since expired. A number of the claims for injunctive relief therefore had become academic.

However, questions of DeLong's right to the assignment of Lucas' jack and drill barge patent applications remained very much alive, as did DeLong's claim for damages.

The trial was protracted and was made more lengthy and complicated because of the claims of both sides that a large part of the relevant documentary material contained trade secrets. This had blocked much of the normal pre-trial deposition and discovery. Therefore, a great deal of the ground which would normally have been covered by such proceedings was left for the trial itself.

From the evidence adduced at the trial I find the facts to be as follows:

DeLong's business and background.

DeLong Corporation was the successor to Decco Construction Company, a corporation which had been in...