Adolph Gottscho, Inc. charges that its trade secrets have been improperly used or dealt with by the
Proof was offered at trial that in recent years (as every consumer knows) there have been great increases in the practice of marketing goods in manufacturers' packages, and this growth has created an extensive demand for devices which will print upon a package at the time it is filled and closed for shipment. The information printed may be only the date of packaging, or it may be somewhat more extensive, but usually it will be in the nature of a last-minute legend to supplement the regular printing which has been placed on the container by other means. An informative short description of Flexography, its dependence upon quick-drying inks, its uses and the functions of machines like those of the plaintiff can be found in Wolfe, Printing and Litho Inks (5th ed. 1957), pp. 331 and 336.
The Gottscho company has made itself a leader in the marking machine business. The defendant Bell-Mark Corporation is in direct competition. It sells and offers for sale a line of marking machines designed to do essentially the same work as comparable Gottscho machines. The Bell-Mark business was commenced in 1959, long after the Gottscho business was established. Gottscho claims the right to equitable protection against the use in Bell-Mark's machines of a number of features which Gottscho says it originated and used before Bell-Mark entered the field. Gottscho also contends that the defendants other than Bell-Mark are in one way or another answerable in equity for contributing to Bell-Mark's use of Gottscho's trade secrets.
All of the plaintiff's claims to trade secrets depend upon physical characteristics of Gottscho machines. Although this generalization is not intended to rule out the effect of physical characteristics upon functioning, it is of some importance to note that this case does not involve manufacturing processes which remain inside the plant when a machine is shipped (e.g. Sun Dial Corp. v. Rideout, 16 N.J. 252 (1954)), or chemical formulae so well hidden in a marketed product (e.g. Colgate-Palmolive Co. v. Carter Products, Inc., 230 F.2d 855, 863 et seq. (4 Cir. 1956)) that they remain unknown even in the laboratories of competitors.
I think the first question to be answered is this: Are those characteristics of Gottscho machines which are urged as a basis for equitable relief secrets in the dictionary sense of something kept from the knowledge of others, or revealed only to a few? Though the answer will not dispose of the case, it will be an important step toward a decision.
Machines incorporating the features for which the plaintiff seeks protection have been sold and offered for sale on the open market. Particular machines have been sold by the thousands, while other machines have been designed for a smaller market or have received a much less cordial reception from customers. My conclusion is that those characteristics of its products on which the plaintiff's claims to "trade
I will not discuss each and every machine feature on which the plaintiff bases a claim to a trade secret. However, a few may be referred to as examples: Marking devices are commonly mounted near the end of a manufacturer's assembly line. The packaged product will pass the device on a conveyer belt or set of rollers, being imprinted as it passes. The marker can be mounted by fastening it to the frame of the conveyer. Some are "double hung," i.e., are fastened to both sides of the conveyer frame so that the package or product to be marked passes between the mountings of the marker. Others are "overhung" by having a mounting only on one side of the conveyer frame. These differences of mounting may be made obvious by comparing the conventional double-hung window, which slides up and down in a frame, to the casement-type of window which is hinged along one side and swings outward or inward on those hinges.
The mounting of a marking machine on a conveyer line has considerable practical importance because of the need to make adjustments, change printing type, replenish ink supply, and the like. There are advantages to the overhung mounting, and the plaintiff claims its use of that mounting is a trade secret. Secrecy in the dictionary sense is not present, however; anyone with an interest in the style of mounting can see at a glance the essential outlines of the overhung model, and I am satisfied that anyone with a general skill in designing machinery, having seen it, could successfully reproduce it. The advantages of the overhung mounting would also be readily apparent to an observer having knowledge of marking practices and problems in the packaging industry.
Other features of Gottscho machines, claimed as trade secrets, though less obvious, are still open to the world in the
Another feature claimed by the plaintiff as a trade secret is a sandblasted metal roller to transfer ink from a machine's ink roller to its printing cylinder. The sandblasting produces a roughened surface which handles the ink better than a smooth surface would. Essentially the same result might be obtained by engraving the face of the roller, but that would be more expensive. Here again, many sandblasted rollers have been sold, and I am satisfied that a skilled person by examining one of them would recognize without difficulty the method used in roughening the surface. Sandblasting is a common process, readily available in commercial metal treating shops.
To describe each of the other claims would produce no different conclusion than the one already stated for each claim which has been described. I am satisfied that all of them depend upon well-known mechanical devices and principles incorporated in machines which have been widely sold and even more widely offered for sale, and that such devices and principles are not hidden within the machines, but are readily available for recognition, inspection, testing and measuring by any person who might desire to copy or imitate.
"His conduct was grossly improper and gave rise to the plaintiff's cause of action, based on long-settled equitable principles and supported by the marked changes in the attitude of the law towards the need for commercial morality."
This brings me to a consideration of the conduct of the defendants and such relationships as they had with the plaintiff. Have the defendants, or any of them, acted so inequitably as to make it improper for them to use or deal with features of the plaintiff's products, features which would be readily available in the machines themselves for use by a stranger to the plaintiff having a fair amount of skill in designing and building machinery?
The defendants Guida and Alessi both worked at one time for the plaintiff. Guida has not appeared in the case, except to the extent that he gave a deposition sought by the plaintiff.
The order imposing fines was signed in the summer of 1957. Toward the end of 1958 Guida began to make drawings for Ross Clark, Jr., a defendant in the present case. Clark is a man who makes his living primarily as a salesman of packaging machinery, marking machines, conveyor equipment and related products. There is no question about his having acquired a store of technical knowledge in the course of his work, and this was true when he made his arrangement with Guida, whom he knew to be a former employee of Gottscho and of American Marking.
One result of the drafting done by Guida for Clark was a set of drawings which Clark sold to Bell-Mark Corporation on February 17, 1959. At least some of those drawings depicted marking machines, or parts of such machines, incorporating features claimed by the plaintiff as its trade secrets.
The record justifies the inference, I think, that Guida and Clark, as well as the defendant Mastracchio, who was Bell-Mark's president, all knew that the set of drawings, if used in manufacturing, would result in marking machines containing features like those which Gottscho had successfully enjoined American Marking Corporation from using. Nevertheless, they were used by Bell-Mark, at least in modified form.
Guida, when he left Gottscho, made the mistake of going to work for an employer, American Marking, who was not free to compete. Yet when he worked for Clark, and later on Bell-Mark for a time, he was serving employers who had no ties with Gottscho like the tie American Marking had through John K. Jackson. I conclude that the plaintiff's case, in so far as it depends upon Guida's employment by the other defendants and the drawings he made for them, must be judged by the same standards which would have been applicable had Guida left Gottscho in 1950 as a draftsman and gone to work for a legitimate competitor. There was, as I have said, no post-employment contract and, having ruled out the contempt judgment, I fail to find in the record here enough to furnish a basis for restricting Guida's use in subsequent employment of those marking machine features which the plaintiff claims as trade secrets.
The proofs indicate he was a capable draftsman, perhaps a talented one. Nevertheless, his position was only that of draftsman, and he was very young in age and experience. He held no official office or title. If it had been impressed upon him by the plaintiff that he must not use its secrets or betray them, his technical knowledge and skill would have made him aware that the "trade secrets" alleged in this case were not secrets at all because draftsmen like himself could imitate and duplicate them easily from Gottscho machines which anyone could buy. Comparison with John K. Jackson is inevitable,
Some other factors bearing upon Guida's situation may be mentioned. Eight years passed between the end of his Gottscho employment and the commencement of his work for Clark. Even if it could be assumed that in 1950 features now claimed as trade secrets were new and not fully introduced to the market, the plaintiff's proofs indicate extensive marketing by 1958. Shifting to the content of the work he did for Clark and Bell-Mark, there was some emphasis during the trial on the striking and obvious similarities between Bell-Mark and American Marking Corporation machines. Indeed, it was shown by the plaintiff that some working parts are interchangeable between the two makes. Although Guida's designs did incorporate features which the plaintiff claims as its own, the exhibits and the testimony show he was duplicating or imitating, to a large extent, American Marking Corporation machines rather than Gottscho's, in other words, was using what he learned after his employment with the plaintiff ended. Finally, the Gottscho company did not make Guida a party to its suit against Jackson and American Marking Corporation, which suggests a recognition of significant
The defendant Andrew Alessi, Jr. also worked at one time for the plaintiff and later for Bell-Mark. He started with the plaintiff as a young draftsman in 1946 and left in June 1957. His work for Bell-Mark commenced a little over two years later. On August 28, 1951, when he was chief draftsman for the plaintiff in a department of five or six men, he signed a contract relating, among other things, to the disclosure of information. Later he was given more important positions, and for a time was chief engineer, plant manager and vice-president. I am satisfied he had wide knowledge of the Gottscho machines when he left the plaintiff in 1957. He and Mastracchio, president of Bell-Mark, were brought together by the defendant Clark. I have no doubt that both Clark and Mastracchio were moved by a desire to have Bell-Mark get the benefit of knowledge which Alessi had acquired in his years with Gottscho.
The Alessi-Gottscho contract of August 28, 1951 had in it a prohibition against serving a competitor during a two-year period after the employment ended. That prohibition was not violated, but the plaintiff contends there are nondisclosure restrictions in the agreement without time limit which were broken by Alessi when he worked for Bell-Mark, and also contends that Alessi violated a duty imposed by law when he shared his knowledge of Gottscho's "trade secrets" with his new employer. Alessi's case included, among other things, testimony that he understood the two-year time limit applied to the entire contract, and a claim that he was justified in so believing.
Paragraph 5 reads:
"I agree to keep confidential and not to divulge or to disclose to others, any and all knowledge I may have of the existence and contents of all property, documents, or things specified in paragraphs 1, 3, and 4 hereof."
The material which the quoted language incorporates by reference covers a broad range. It reaches out beyond knowledge
"Conceivably an employer might exact from his employees a contract not to disclose the information even after the patent issued. Of what possible value such a contract could be, we find it hard to conceive; but, if an employer did exact it, others would perhaps be obliged to turn to the specifications, if they would use the information. Be that as it may, we should not so construe any secrecy contract unless the intent were put in the most inescapable terms; and the plaintiff's contract had none such."
When Alessi waited two years and then, by going to work for a Gottscho competitor, exercised the freedom his contract contemplated he should have at that stage, his conduct was not improper. He had been relieved of express and implied obligations to continue to respect confidences, because there was no longer anything confidential about the devices for which the plaintiff is seeking protection here.
Returning for a moment to the basic problem of classifying the plaintiff's devices, it is worth noting that I have considered the warning of Judge Clark against stressing in this field of the law the assumed abilities of a "good mechanic" to imitate a plaintiff's product. Franke v. Wiltschek, supra, 209 F.2d 493, 499. Nevertheless, I am convinced that the alleged "trade secrets" in the Gottscho machines are plainly there for the good mechanic to see, measure, test and copy. Judge Speakman recognized that as to the features which he
To buy a neighbor's product, copy it and then sell the copy will not be regarded as business conduct on the highest moral level. Yet copying is not per se actionable. Squeezit Corp. v. Plastic Dispensers, 31 N.J.Super. 217 (App. Div. 1954). Of course, Bell-Mark had its work eased and hastened by the help of Guida and Alessi, but because they were free to use their knowledge of these devices for the benefit of a new employer, their help does not change the legal result.
The preceding discussion, insofar as it relates to machines and their features, must be supplemented by a comment about the "J.C.L. Sideline Coder." It was built by three engineers in California who used their initials in naming it. The coder's function is to print upon the recessed bottom of a container, such as a modern spray can, which is moving along a conveyor. Both the plaintiff and Bell-Mark learned of the machine in 1960. It had been manufactured and sold before that; it had also been advertised in trade publications and exhibited at an industry show or shows. Mr. Low, one of the designers, when he first wrote to Mr. Ira Gottscho, gave names and addresses of "three prime users" of the machine, one of the three having 14 units. On July 21, 1960 Mr. Low and Mastracchio reached an informal understanding about sale of the coder to Bell-Mark, but a formal agreement was to follow.
Mastracchio had seen the J.C.L. machine at an industry show held in Atlantic City in March or April 1960. Both he and Alessi examined it then. No restrictions were placed upon them, and a rough sketch was made which later furnished the substance of a schematic drawing or sketch which was sent out to possible customers in an attempt to arouse enough interest to justify the development of a new model in the regular Bell-Mark line. During the trial much attention was paid to this drawing. It is dated April 5, 1960, some three months before Low and Mastracchio met. The plaintiff contends that Mastracchio's dealings with Low about a machine in which Bell-Mark had already shown so much interest indicate an unscrupulous attempt to get more details of the construction. On the other hand, it can be argued that no conditions of confidence were imposed by Low and that there could be no implied breach of faith with respect to a machine which had earlier been sketched at a public show. I see no need to resolve these matters; Bell-Mark has never made or sold the J.C.L. Sideline Coder or a machine like it. Bell-Mark does have a model which is designed to mark the bottom of containers, i.e. do the same work as the J.C.L. I saw it
The defendant Bell-Mark on its counterclaim has failed to prove a case against the plaintiff. The contentions of the defendant Clark with regard to his counterclaim, as those contentions are stated in the pretrial order, relate only to the effect upon Clark of the judgment in Adolph Gottscho, Inc. v. American Marking Corporation, supra. I conclude that his counterclaim has no legal merit.
As to the counterclaims, there will be a judgment in favor of the plaintiff. On all aspects of the plaintiff's affirmative case there will be judgment in favor of the defendants and against the plaintiff. Costs to the defendants.