A person in a confidential relationship must not fraudulently abuse the trust reposed in them regardless of whether the information constitutes a property right.
A former employee seeks to disclose a former employer's alleged secret processes to experts and witnesses to prepare a defense against an injunction. The court considers whether the protection of trade secrets constitutes a property right or a matter of confidential obligation. The court holds that the core issue is not property, but the duty to not fraudulently abuse the trust reposed in a person through a confidential relationship. While the injunction limits disclosure to counsel, the trial judge maintains the discretion to permit the revelation of secrets to others under specific precautions if deemed necessary for the proceedings.
At page 102 Analyzing confidential relations and disclosure obligations12 citing cases“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. . . . the starting point for the present matter is not property or due process of law, but…”
- DVD Copy Control Ass'n v. Bunner, 75 P.3d 1 (Cal. 2003).publishedDu Pont de Nemours Powder Co. v. Masland (1917) 244 U.S. 100, 102 [ 61 L.Ed. 1016 , 37 S.Ct. 575 ].) By sanctioning the acquisition, use, and disclosure of another’s valuable, proprietary information by improper means, trade secret law min…
- Simplified Telesys, Inc. v. Live Oak Telecom, L.L.C. David Womack Dan Hardy Khan Ryder Lewis Dale Dornfeld, No. 03-00-00097-CV (Tex. App.—Austin Dec. 21, 2000).unpublished Du Pont de Nemours Powder Co. v. Masland, 244 U.S. 100, 102 (1917); Hyde Corp. v. Huffines, 314 S.W.2d 763, 770 (Tex. 1958).
- Jet Spray Cooler, Inc. v. Crampton, 385 N.E.2d 1349 (Mass. 1979).published See Junker v. Plummer, 320 Mass. 76, 80 (1946); E.I. duPont de Nemours Powder Co. v. Masland, 244 U.S. 100, 102 (1917).
- Klamath-Orleans Lumber, Inc. v. Miller, 87 Cal. App. 3d 458 (Cal. Ct. App. 1978).publishedDu Pont de Nemours Powder Company v. Masland, (1917) 244 U.S. 100, 102 [ 61 L.Ed. 1016, 1019 , 37 S.Ct. 575 ].) Hence, we must sustain the judgment if the record contains substantial evidence of defendants’ misappropriation and wrongful us…
- Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974).published Universal Oil Co. v. Globe Co., 322 U. S., at 484 ; United States v. Dubilier Condenser Corp., 289 U. S., at 186—187; Becher v. Contoure Laboratories, 279 U. S. 388, 391 (1929); Du Pont Powder Co. v. Masland, 244 U. S. 100, 102 (1917); Dr.…
- Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244 (Cal. Ct. App. 1968).publishedDuPont de Nemours Powder Co. v. Masland (1917) 244 U.S. 100, 102 [ 61 L.Ed. 1016, 1019 , 37 S.Ct. 575 ]; Bancroft-Whitney Co. v. Glen (1966) 64 Cal.2d 327, 350-351 [ 49 Cal.Rptr. 825 , 411 P.2d 921 ]; Langendorf United Bakeries, Inc. v. Ph…
- Ernst & Ernst v. Carlson, 247 Cal. App. 2d 125 (Cal. Ct. App. 1966).publishedDuPont de Nemours Powder Co. v. Masland, 244 U.S. 100, 102 [ 61 L.Ed. 1016 , 37 S.Ct. 575 ] : “. . . that the ‘starting point’ is not property or due process of law but the confidential relation between the parties and that ‘Whether the pl…
- Gen. Aniline & Film Corp. v. Frantz, 50 Misc. 2d 994 (N.Y. Sup. Ct. 1966).publishedCo. v. Technical Tape Corp., 23 Misc 2d 671, 683 [1959], affd. 15 A D 2d 960 [1962]; Fairchild Engine & Airplane Corp. v. Cox, supra, p. 656; Du Pont Powder Co. v. Masland, 244 U. S. 100, 102 [1917]; Restatement, Torts, § 757, Comment b.)…
- Futurecraft Corp. v. Clary Corp., 205 Cal. App. 2d 279 (Cal. Ct. App. 1962).publishedDu Pont De Nemours Powder Co. v. Masland, 244 U.S. 100, 102 [ 37 S.Ct. 575 , 61 L.Ed. 1016 ], quoted on page 16 of plaintiff’s trial brief: ‘ ‘ ‘ Whether the plaintiffs have any valuable secret or not, the defendant knows the facts, whatev…
- Riess v. Sanford, 117 P.2d 694 (Cal. Ct. App. 1941).publishedCo. v. Masland, 244 U. S. 100, 102 [37 Sup. Ct. 575, 61 L.
Show 1 more citing case
- Sims v. MacK Truck Corp., 488 F. Supp. 592 (E.D. Pa. 1980).published
At page 103 Scope of injunction regarding disclosure of trade secrets6 citing cases“it will be understood that if, in the opinion of the trial judge, it is or should become necessary to reveal the secrets to others, it will rest in the judge's discretion to determine whether, to whom, and under what precautions, the revelation should be made.”
- Lawrence S. Bittaker v. Jeanne S. Woodford, 331 F.3d 715 (9th Cir. 2003).published (It will be understood that if, in the opinion of the trial judge, it is or should become necessary to reveal the secrets to others, it will rest in the judge’s discretion to determine whether, to whom, and under what p…)
- Stein v. I 5 Exteriors Inc, No. 3:21-cv-05093 (W.D. Wash. Sept. 15, 2021).I. du Pont de Nemours 3 Powder Co. v. Masland, 244 U.S. 100, 103 (1917).
- Sioux Pharm, Inc. v. Eagle Labs., Inc. Bio-Kinetics Corp., 865 N.W.2d 528 (Iowa 2015).published Justice Oliver Wendell Holmes in one of the leading early trade-secret cases emphasized that “it will rest in the judge’s discretion to determine whether, to whom, and under what precautions, the revelation should be made.” E.I. du Pont de…
- Fed. Open Mkt. Comm. of Fed. Reserve Sys. v. Merrill, 443 U.S. 340 (1979).published I. du Pont de Nemours Powder Co. v. Masland, 244 U. S. 100, 103 (1917); 8 J.
- United States v. Carriles, 654 F. Supp. 2d 557 (W.D. Tex. 2009).published(where “it is or should become necessary to reveal [trade] secrets to others it will rest in the judge’s discretion to determine whether, to whom, and under what precautions, the revelation should be made)
- Grundberg v. Upjohn Co., 140 F.R.D. 459 (D. Utah 1991).published
61 L. Ed. at 1019 Judge's discretion in determining trade secret revelation3 citing cases
- Sioux Pharm, Inc. v. Eagle Labs., Inc. Bio-Kinetics Corp., 865 N.W.2d 528 (Iowa 2015).published Justice Oliver Wendell Holmes in one of the leading early trade-secret cases emphasized that “it will rest in the judge’s discretion to determine whether, to whom, and under what precautions, the revelation should be made.” E.I. du Pont de…
- Am. Tobacco Co. v. Evans, 508 So. 2d 1057 (Miss. 1987).publishedDuPont DeNemours Powder Co. v. Masland, 244 U.S. 100, 102 , 37 S.Ct. 575 , 61 L.Ed. 1016, 1019 (1917).
- Sun Dial Corp. v. Rideout, 108 A.2d 442 (N.J. 1954).publishedDu Pont de Nemours Powder Co. v. Masland, 344 U. S. 100 , 103, 37 S. Ot. 575, 61 L.
37 S. Ct. at 675 cited at this page1 citing case
- Abbott Labs. v. Norse Chem. Corp., 147 N.W.2d 529 (Wis. 1967).publishedHanley, J., took no part. 1 Kalinowski, Key Employees and Trade Secrets, 47 Virginia Law Review (1961), 583. 2 Ibid. 3 (1917), 244 U. S. 100, 102 , 37 Sup. Ct. 675, 61 L.
Other citing cases
- Deerpoint Grp., Inc. v. Agrigenix, LLC, No. 1:18-cv-00536 (E.D. Cal. Sept. 5, 2019).
- Universal City Studios, Inc. v. Superior Court, 110 Cal. App. 4th 1273 (Cal. Ct. App. 2003).published
- A. Hirsh, Inc. v. United States, 657 F. Supp. 1297 (Ct. Intl. Trade 1987).published
- United States Court of Appeals, Third Circuit, 733 F.2d 1059 (3d Cir. 1984).unpublished
- Publicker Indus., Inc. v. Cohen, 733 F.2d 1059 (3d Cir. 1984).published
- Vigitron, Inc. v. Ferguson, 419 A.2d 1115 (N.H. 1980).published
- Sarkes Tarzian, Inc. v. Audio Devices, Inc., 166 F. Supp. 250 (S.D. Cal. 1958).published
- Victor G. Reiling Assocs. & Design Innovation, Inc. v. Fisher-Price, Inc., 450 F. Supp. 2d 175 (D. Conn. 2006).published
- Hayes-Albion Corp. v. Kuberski, 364 N.W.2d 609 (Mich. 1985).published
- Jerrold-Stephens Co. v. Gustaveson, Inc., 138 F. Supp. 11 (W.D. Mo. 1956).published
v.
Masland Et Al.
delivered the opinion of the court.
This is a bill to prevent the defendant Walter E. Mas-land from using or disclosing secret processes the knowledge of which was acquired by the defendant while in the plaintiffs’ employ. The defendant admits that he intends to manufacture artificial leather, to which some of the plaintiffs’ alleged secret processes relate, but denies that he intends to use any inventions, trade secrets, or secret processes of the plaintiffs that he may have learned in any confidential relation, prefacing his denial, however, with the averment that many of the things claimed by the plaintiffs are well known to the trade. A preliminary injunction was refused at first. 216 Fed. Rep. 271. But before the final hearing the defendant proposed to employ[*102] one or more experts and to make such disclosures to them as the preparation of the defence might require. Thereupon the District Court issued a preliminary injunction against disclosing any of the plaintiffs’ alleged processes to experts or witnesses during the taking of proofs, but excepting counsel, with leave to move to dissolve the injunction if occasion to consult experts arose. Later a motion to dissolve was denied and the hearing was continued for a decision by the Appellate Court. 222 Fed. Rep. 340. The Circuit Court of Appeals reversed the decree. 224 Fed. Rep. 689. Before any further order was entered the writ of certiorari was granted by this court.
The case has been considered as presenting a conflict between a right of property and a right to make a full defence, and it is said that if the disclosure is forbidden to one who denies that there is a trade secret, the merits of his defence are adjudged against him before he has a chance to be heard or to prove his case. We approach the question somewhat differently. The word property as applied to trade-marks 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 confidence cannot be. Therefore the starting point for the present matter is not property or due process of law, but that the defendant stood in confidential relations with the plaintiffs, or one of them. These have given place to hostility, and the first thing to be made sure of is that the defendant shall not fraudulently abuse tne trust reposed in him. It is the usual incident of confidential relations. If there is any disadvantage in the fact that he knew the plaintiffs’ secrets he must take the burden with the good.
[*103] The injunction asked by the plaintiffs forbade only the disclosure of processes claimed by them, including the disclosure to experts or witnesses "produced during the taking of proofs — but excepting the defendant’s counsel. Some broader and ambiguous words that crept into the decree, seemingly by mistake, may be taken as stricken out and left on one side. This injunction would not prevent the defendant from directing questions that should bring out whatever public facts were nearest to the alleged secrets. Indeed it is hard to see why it does not leave the plaintiffs’ rights somewhat illusory. No very clear ground as yet has been shown for going further. But the judge who tries the case will know the secrets, and if in his opinion and discretion it should be advisable and necessary to take in others, nothing will prevent his doing so. It will be understood that if, in the opinion of the trial judge, it is or should become necessary to reveal the secrets to. others it will rest in the judge’s discretion to determine whether, to whom, and under what precautions, the revelation should be made.
Decree reversed and case remanded for further proceedings in conformity with this opinion.