New Method Die & Cut-Out Co., Inc. v. Milton Bradley Co.

• Decision Date: 04 February 1935
• Citation: 289 Mass. 277,194 N.E. 80
• Parties: NEW METHOD DIE & CUT-OUT CO., Inc., v. MILTON BRADLEY CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

289 Mass. 277

194 N.E. 80

NEW METHOD DIE & CUT-OUT CO., Inc., v. MILTON BRADLEY CO. et al.

Supreme Judicial Court of Massachusetts, Middlesex.

February 4, 1935

Suit in equity by the New Method Die & Cut-Out Company Incorporated, against the Milton Bradley Company and others. From decrees entered by order of the judge and from the order for decrees, plaintiff appeals.

Affirmed.

Appeal from Superior Court, Middlesex County; Gray, Judge.

J. B Abrams and M. Palais, both of Boston, for appellant.

R. W. Crowell and D. M. Macauley, both of Springfield, for appellees.

FIELD Justice.

The plaintiff and the defendant Milton Bradley Company are corporations engaged in manufacturing toys from cardboard. The defendant Church was employed by the plaintiff prior to April 27, 1929, and some time thereafter entered the employment of the defendant corporation.

This suit in equity was brought to establish the plaintiff's right, as to a trade secret, to a process of manufacturing toys from cardboard, to enjoin the defendants from further disclosure of this trade secret, to compel the return to the plaintiff of data relating thereto, to enjoin unfair competition in the sale of toys and for an accounting for damages and profits. The case was referred to a master who made a report. He was not required to report the evidence and did not do so. A ‘ Stipulation as to Modification of Master's Report and Concerning Certain Evidence’ was filed by the parties.

Thereafter a motion, as amended, to recommit the report was denied and an order was made for an interlocutory decree overruling the plaintiff's exceptions to the master's report and confirming the report, and for a decree dismissing the bill. Decrees were entered as ordered and the plaintiff appealed from the order for decrees, the interlocutory decree overruling the plaintiff's exceptions and confirming the report, and the final decree dismissing the bill.

The basic contentions of the plaintiff are (a) that the plaintiff had a trade secret in a process of manufacturing toys from cardboard which the defendant Church wrongfully disclosed to the defendant corporation, (b) that the plaintiff is entitled to relief not only against the defendant Church but also against the defendant corporation, and (c) that the defendant corporation is competing unfairly with the plaintiff in the sale of toys. The plaintiff also makes the subsidiary contentions that it was error to overrule the plaintiff's exceptions to the master's report, and to deny the plaintiff's motion, as amended, to recommit that report.

Findings of the master include the following: The toys made by the plaintiff and the defendant corporation ‘ are animal and cart designs, made of five or six layers of light cardboard, of a grade called news board or chipboard, laminated together with glue to a thickness of about 1/4" . They are dipped in a coating substance and decorated in bright colors.’ In ‘ general appearance to a casual observer the whole line of toys made by * * * [the defendant corporation] taken together, is similar to the line made by the * * * [plaintiff].’ The plaintiff and the defendant corporation use ‘ very much the same process' of manufacture, though some of the machines used are different.

The defendant Church was employed by the plaintiff from some time in 1924 until April 27, 1929, when he was discharged. During this time the plaintiff ‘ developed its process' of manufacturing toys ‘ by continual experiment, trial and improvement’ and ‘ the officers of plaintiff and the defendant Church have worked hard to develop the process.’ The defendant Church first called on the defendant corporation about May 9, 1929. On May 16, 1929, he was asked by the defendant corporation to submit trial designs and was advanced money for services pending decision on his employment, and on June 16, 1929, he was employed to design a line of toys.‘ His duties included giving any information which might be helpful in the manufacture of the toys.’ The defendant corporation ‘ at once set to work on a line of paper toys, which they put out to the trade for the first time on January 6, 1930.’

The defendant ‘ Church has described in detail most of this process' of manufacturing toys used by the plaintiff, and the defendant corporation ‘ now uses substantially the same process.’ The defendant corporation ‘ although familiar with the elements of the process, never considered combining them in the manner and order * * * [in which they are combined] for the purpose of making toys of the construction and thickness of the toys referred to in this case, until Church persuaded them to make toys of his designing.’ The defendant corporation ‘ had undoubtedly been aided in economy of design and in avoiding expensive experiments by Church's experience with * * * [the plaintiff].’

The defendant Church, when he left the employment of the plaintiff, ‘ took no documentary manufacturing data, cost figures, or customers' lists' and no drawings which were a part of the plaintiff's files or were ‘ final drawings which had been used by the * * * [plaintiff] for the manufacture of toys.’ He kept certain ‘ preliminary sketches of Church's ideas made as he developed them,’ which were at his home but which if they were the property of the plaintiff were ‘ entirely inconsequential.’

1. The plaintiff had no trade secret in a process of manufacturing toys from cardboard which the defendant Church wrongfully disclosed to the defendant corporation.

The question on this branch of the case is whether the knowledge possessed by the defendant Church of the process of manufacturing toys used by the plaintiff, considered in its entirety, was information secured by him solely through his employment by the plaintiff, which, though he did not take away any documents or drawings of consequence relating to the process (see Di Angeles v. Scauzillo [Mass.] 191 N.E. 426, 93 A.L.R. 1318), he could not rightfully disclose to a later employer or use for its benefit (see Aronson v. Orlov, 228 Mass. 1, 116 N.E. 951).

There was no express contract that the defendant Church would maintain secrecy in regard to the process. Compare Peabody v. Norfolk, 98 Mass. 452, 96 Am.Dec. 664. The master found that this defendant ‘ did not agree that he would maintain secrecy if his employment should cease,’ and that neither he nor the plaintiff ‘ made continued secrecy a condition of his employment.’ And no duty on the part of this defendant to maintain secrecy can be implied, in the absence of other facts creating such a duty, from his knowledge that the plaintiff's officers wished the process to be kept secret or from the fact, as found by the master, ‘ that he agreed that secrecy was desirable for the welfare of the company on which his earnings depended, and in fact urged while he was employed by the * * * [plaintiff] that secrecy be maintained.’ Furthermore, this defendant ‘ made no agreement whereby any inventions or improvements in the processes, tools, formulas, machinery or apparatus used for the manufacture of the plaintiff's products, or otherwise relating in any manner to the plaintiff's business, which defendant Church might make or assist in making while in the employ of plaintiff, should belong to and be the property of the plaintiff.’ See Wireless Specialty Apparatus Co. v. Mica Condenser Co., Ltd., 239 Mass. 158, 162, 131 N.E. 307, 16 A.L.R. 1170.

The process, considered in its entirety, had not been developed when the defendant Church entered the employment of the plaintiff. He did not learn about it from the plaintiff or solely by reason of his employment, apart from his own knowledge gained through previous experience and the use, in the course of his employment, of his faculties, skill and experience in developing the process. Cases like Essex Trust Co. v. Enwright, 214 Mass. 507, 102 N.E. 441,47 L.R.A. (N. S.) 567, and Aronson v. Orlov, 228 Mass. 1, 116 N.E. 951, differ in this respect from the present case. The master found that ‘ Many elements of the process were well known factory operations before the toys were thought of by anyone. Much of the process was familiar to Church from his experience previous to * * * [the plaintiff]. * * * Practically all of the designs and several of the more novel features of the process were brought to the * * * [plaintiff] by Church or were worked out by him in conjunction with the * * * [officers of the plaintiff].’ From these and other findings it appears that the defendant Church took part to a substantial extent in developing the process. But he was not employed specifically for this purpose. The master found that this defendant ‘ was at first employed as a designer, but as time went on he gave suggestions about improving the processes and cutting costs of production, and his suggestions were in some cases used and in others were not’ -a finding which is not overcome by the evidence set forth in the stipulation. The case in this respect is distinguishable from Wireless Specialty Apparatus Co. v. Mica Condenser Co., Ltd., 239 Mass. 158, 131 N.E. 307, 16 A.L.R. 1170, and Hoyt v. Corporan, 268 Mass. 544, 168 N.E. 94, relied on by the plaintiff.

The substance of the plaintiff's contention is that the essential feature of its alleged trade secret is a novel combination of the elements of the process of manufacturing toys from cardboard in the process considered in its entirety. The plaintiff, however, does not suggest that it has a trade secret in any of the elements of the process unless in the ingredients of the paint used or in production costs. But it does not appear that the plaintiff's paint formula is an essential element in the process or that it has been disclosed or used by the defendant Church. Nor does it...