Schavoir v. American Rebonded Leather Co.

• Decision Date: 29 May 1926
• Citation: 133 A. 582,104 Conn. 472
• Court: Connecticut Supreme Court
• Parties: SCHAVOIR v. AMERICAN REBONDED LEATHER CO.

133 A. 582

104 Conn. 472

SCHAVOIR v. AMERICAN REBONDED LEATHER CO.

Supreme Court of Errors of Connecticut.

May 29, 1926

Appeal from Superior Court, Fairfield County; John R. Booth, Judge.

Action for injunction by Arnold L. Schavoir against the American Rebonded Leather Company to restrain the use of a trade secret disclosed to it by plaintiff. Judgment for plaintiff and defendant appeals. No error.

Ralph H. Clark and Samuel C. Morehouse, both of New Haven, for appellant.

Raymond E. Hackett, of Stamford, for appellee.

MALTBIE, J.

The plaintiff brings this action to restrain the defendant from using or disclosing a certain formula and process which he claims to have originated and disclosed to the defendant under its promise to keep it secret and to use it only when authorized by him.

For several years prior to 1923 the plaintiff had been engaged in manufacturing various kinds of rubber goods and specialties. In and prior to that year he, with his son, had been experimenting in the effort to produce a cushion fabric known as channel cloth, to be placed between the metal piece which holds the glass in automobile windows and the glass itself. The material then in use for that purpose was composed of a cloth base, coated with a mixture of cork linseed oil, and other ingredients, and it was not satisfactory, because it was hard and inflexible. The plaintiff was seeking a composition which, when placed upon a cloth base, would be soft and pliable, and flow to the contour of the glass. He finally discovered a formula, the basic feature of which was a mixture of cork and rubber, to which were added other ingredients such as shellac and rubber substitutes. This formula was adapted to experimental work, but would require modification before it could be used for quantity production. Not being equipped to manufacture the product, the plaintiff approached the defendant with a view to making with it an arrangement to produce the cloth in quantity for him, stating that he would only disclose his formula upon the defendant's promise to keep it secret and to use it only when authorized by him. An arrangement was finally made in which the defendant undertook to try to produce an article similar to the sample submitted to it by the plaintiff, and, if successful, to manufacture the cloth for him, promising to keep the formula secret, and only to use it as authorized by him.

The plaintiff thereupon disclosed his formula, and the defendant experimented with it further, and finally succeeded, by making some changes, in producing a composition suitable for quantity production, and for these experiments the plaintiff paid the defendant. The formula so reached consisted of cork, rubber in different forms, rubber substitute and micronex, with a considerable quantity of litharge, to act as an accelerator, and small quantities of two or three other materials. Thereafter the defendant proceeded to manufacture large quantities of the cloth for the plaintiff, and continued to do so until the plaintiff discovered that the defendant was circulating samples of the cloth among automobile manufacturers with a view to establishing a market of its own for its manufacture and sale. The agreement between the parties was thereupon abrogated, and the plaintiff withdrew from the defendant the authority he had given to it to use the formula. Thereafter the defendant proceeded to manufacture channel cloth, using a formula consisting of cork, rubber, rubber substitute, carbon black or micronex, with litharge added, in much the same proportions as it had used these materials before. After the action was brought, the defendant further simplified its formula by leaving out the litharge and rubber substitute, slightly varying the proportions of the materials remaining. The channel cloth produced by this formula was similar in appearance to, and had the same characteristics as, that the defendant had been manufacturing for the plaintiff.

The trial court has further found that in 1859 there was issued by the United States Patent Office the so-called Goodyear patent, which covered the process of combining cork and rubber and allied gums and spreading them upon cloth; that this process had been known and used ever since to produce artificial leather and the like, but that the use of a composition of rubber and cork, or of that with other ingredients to produce a cushion fabric or channel cloth, originated with the plaintiff, and had never been used for that purpose until the plaintiff disclosed his formula to the defendant, nor had the defendant ever used the Goodyear process for any purpose or produced material similar to that it manufactured for the plaintiff.

The defendant's main contention in brief is that the plaintiff is entitled to relief only as he can show that he had a property right of some nature entitled to protection in equity, and that by reason of the long-time knowledge and use of the process covered by the Goodyear patent, which included the basic feature of the plaintiff's formula, he could have no property right in that formula. The principle upon which courts proceed in the protection of trade secrets is stated in Du Pont Powder Co. v. Masland, 244 U.S. 100, 102, 37 S.Ct. 575, 576 (61 L.Ed. 1016), where the court, by Justice Holmes, said:

" The word ‘ property,’ as applied to trademarks and trade secrets, is an unanalyzed expression of certain secondary consequences of the primary fact that the law makes some rudimentary requirements of good faith. Whether the plaintiffs have any valuable secret or not the defendant knows the facts, whatever they are, through a special confidence that he accepted. The property may be denied, but the

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