Plastic & Metal Fabricators, Inc. v. Roy

• Citation: 303 A.2d 725,163 Conn. 257
• Court: Connecticut Supreme Court
• Decision Date: 06 June 1972
• Parties: , 58 A.L.R.3d 1305, 175 U.S.P.Q. 49 PLASTIC AND METAL FABRICATORS, INC. v. Clarence H. ROY.

Page 725

303 A.2d 725

163 Conn. 257, 58 A.L.R.3d 1305, 175

U.S.P.Q. 49

PLASTIC AND METAL FABRICATORS, INC. v. Clarence H. ROY.

Supreme Court of Connecticut.

June 6, 1972.

David L. Belt, New Haven, with whom was Ira B. Grudberg, New Haven, for appellant (defendant).

Donald G. Walsh, New Haven, with whom was William M. Mack, Guilford, for appellee (plaintiff).

Before HOUSE, C.J., and RYAN, SHAPIRO, LOISELLE and MacDONALD, JJ.

SHAPIRO, Associate Justice.

On October 16, 1967, the plaintiff, Plastic and Metal Fabricators, Inc., instituted this action seeking damages and injunctive relief restraining the defendant, Clarence H. Roy, from using or disclosing its trade secret disclosed in confidence to the defendant. On December 1, 1967, the trial court, on motion of the plaintiff, issued an order that all proceedings be held in camera and that all testimony concerning the trade secret be sealed and withheld from the general public. On September 27, 1968, the case was referred to a state referee for hearing and judgment. See General Statutes § 52-434.

Judgment for the plaintiff was rendered February 6, 1970, by the referee, sitting as a court, and an injunction was issued enjoining and restraining the defendant from using or disclosing the trade secret. ¹ The defendant has appealed to this court from that judgment.

The court's finding of fact, which is not subject to material correction, is reproduced as follows in sufficient measure to allow the disposition of this appeal while maintaining the secrecy of the plaintiff's trade secret: In 1964, the plaintiff, a corporation engaged in the manufacture of metal finishing and plating equipment and sundry products, expanded its activities into the area of air and water pollution control products. In that year it discovered a new, compact and fairly inexpensive process which dramatically increased the efficiency with which metal contaminates could be removed from waste water.

Through a mutual acquaintance, the defendant met the plaintiff's representatives, and on several occasions they discussed the defendant's possible role as a consultant to the plaintiff in connection with its various air and water pollution control processes and devices. The defendant, who had received his Ph.D degree in chemistry from Auburn University in 1960, since that time had experience in chemical research for several large companies and research organizations, with specific experience in the electrochemical field. The plaintiff informed the defendant in general terms about its water pollution control process that it had discovered in 1964. The defendant expressed his interest and told of his immediate plans to set up a laboratory in the town of Seymour. In September, 1966, the defendant established his laboratories with help from the plaintiff in the form of materials and labor, and the defendant undertook to render technical assistance to the plaintiff in connection with the 1964 waste-water process. Although the parties never arrived at a definite agreement about how the defendant was to be paid for these services, the parties mutually understood that the defendant would undertake these services with help from the plaintiff and that a reasonable arrangement for payment would be worked out later.

By February, 1967, the plaintiff had given the defendant reports on its waste-water process and had explained the process to him, advising him that it was disclosing the process in confidence. The defendant, in that month, first saw a test of the plaintiff's process at its plant. At this time, the process was unknown to anyone except the plaintiff's employees and consultants. It is undisputed that the defendant occupied a confidential relationship to the plaintiff and that he understood that the process was being disclosed to him in confidence.

During the following weeks the defendant tested the plaintiff's process in his own laboratory, although his laboratory journal has a significant hiatus in it for the period from February 22, 1967, to March 28, 1967. In March, 1967, the plaintiff's representative met with the defendant and jointly arrived at the name 'Rasar' as a commercial name for the process. The parties continued to cooperate during the spring and summer of 1967 in further testing of the Rasar process. The defendant never received any money from the plaintiff for the purpose of developing the plaintiff's waste-water process. In the course of the various experiments on the Rasar process, however, the plaintiff furnished to the defendant materials, services and supplies in an amount of substantial value, for which the plaintiff made no charge and for which the defendant never offered or asked to pay. The plaintiff's representative visited the defendant's laboratory on a number of occasions during the period to witness the defendant's progress and to confer with him about it.

The September 25, 1967, issue of Air and Water News, a publication circulated to those interested in the pollution control field, contained an article reporting that the defendant claimed to have discovered the Rasar process. This article was the first notice that the plaintiff had that the defendant was claiming to own the process. An immediate confrontation and fallingout resulted between the parties and the instant suit was commenced on October 16, 1967.

In September, 1967, Roy filed a patent application on the Rasar process as claimed by him to be his own. On October 1, 1968, the plaintiff also filed a patent application on its Rasar process. Thus, when trial hearings started on October 28, 1968, before the court, both applications for patents had already been made to the United States Patent Office.

The plaintiff's process incorporated a unique feature vital to its performance which was not disclosed in the prior art, and the plaintiff took reasonably prudent steps to maintain the secrecy of its process by disclosing it only to its key employees, and in confidence to its patent attorney and technical consultants. It did not keep the units used in the Rasar process in a part of its plant accessible to the public. As of February, 1967, when the defendant saw the process, it was unknown to anyone except the plaintiff's employees and consultants.

An exhibit relating to the plaintiff's process was attached to the writ, summons and complaint which was served on the defendant. This exhibit, together with the writ, summons, complaint and other pleadings and motions was on file in the office of the clerk until the time of trial before the court.

The court reached the following conclusions, which are supported by the findings: The plaintiff's Rasar process is a trade secret which it is entitled to have protected. The defendant first learned of this secret process in February, 1967, when he was shown the process in confidence. The plaintiff's sole purpose in disclosing its process to the defendant was in the reasonable expectation, apparent to the defendant, that he would render consulting services while their negotiations from time to time matured into an acceptable understanding whereby both parties would participate in the development and exploitation of the plaintiff's process with benefit to both sides. The defendant worked on the plaintiff's process and used and freely accepted the plaintiff's facilities and supplies doing nothing to disabuse the plaintiff of this reasonable expectation until the defendant's announced claim of ownership of the process in the September 25, 1967, issue of a trade magazine. The essence of the plaintiff's secret process was learned in confidence by the defendant from the plaintiff. It was not previously known to the defendant until learned in confidence from the plaintiff and was not known to the previous state of the art. The process for treatment of dilute waste water, as claimed by both the plaintiff and defendant, would not successfully operate without the incorporation of the plaintiff's trade secret. The variations made by the defendant to the plaintiff's process are minor in nature and do not at all affect the basic and critical character of the essential and unique feature of the plaintiff's process first learned by the defendant from the plaintiff's disclosure in confidence. The defendant appropriated the essence of the plaintiff's process and wrongfully claimed it for his own. The defendant's attempted use for his own benefit of the essential and unique feature of the plaintiff's process was a breach of the confidence and faith in which the process was reasonably disclosed to him. The bringing of the suit with an exhibit relative to the plaintiff's trade secret attached to the complaint has not impaired the secret character of the plaintiff's process.

The court further concluded that it had jurisdiction of this case, being a suit based on appropriation of a trade secret in breach of a confidential disclosure, under the equitable jurisdiction and powers of the court, and that the patentability of the Rasar process was not involved.

The defendant assigns as error the overruling by the trial court of its claim of law that the plaintiff's process was not a trade secret. ² In support of this assignment of error, the defendant first argues that the plaintiff's secret process is in fact not a secret by virtue of its disclosure in prior patents. The court in this case, having examined the patents which the defendant claims disclose the plaintiff's trade secret, concluded that no disclosures were made therein of the plaintiff's process.

In Town & Country House & Homes Service, Inc. v. Evans, 150 Conn. 314, 318-19, 189 A.2d 390, 393, we observed a basic rule of the law of trade secrets that '(m)atters of public knowledge or of general knowledge in an industry cannot be appropriated by one as his secret. . . . (A) substantial element of secrecy must exist, to the extent that there would be difficulty in acquiring the information except by the use of improper...