Opinion ID: 544777
Heading Depth: 2
Heading Rank: 1

Heading: Existence of a Trade Secret

Text: 21 Appellants contend that the district court misconstrued Georgia law in determining that Salsbury possesses a trade secret. We find, however, that the district court applied the proper standard adopted by the Georgia courts. 4 Appellants further argue that even under the proper definition of trade secret stated in Thomas v. Best Manufacturing Co., supra, Salsbury did not establish that it possesses a trade secret. The district court found in part that the precise process in its entirety that Salsbury used in producing MG-BAC does not exist in the public domain and constitutes a trade secret. The district court concluded, and we agree, that 22 [a]t each individual step of the process, there are a variety of alternatives that could be selected for use. Salsbury, through much research and experimentation, chose specific ingredients, specific amounts for each ingredient, specific methods, and specific ways in which to employ each method, at each individual step in the MG-BAC production process. The combination arrived at by Salsbury has resulted in a unique production process unknown to Salsbury's competitors or to anyone in the vaccine industry. 23 Order of April 6, 1989 at 38. 24 This production process as a whole fulfills the requirements of a trade secret. The evidence establishes that it is a process the precise elements of which are known only to Salsbury and its employees who in confidence worked extensively on the development of MG-BAC. 25 Contrary to appellants' contention, the district court did not ignore Georgia's novelty requirement by relying upon Cataphote Corp. v. Hudson, 444 F.2d 1313, 1315 (5th Cir.1971), and Water Services, Inc. v. Tesco Chemicals, Inc., 410 F.2d 163 (5th Cir.1969). In those cases, the Court of Appeals for the former Fifth Circuit guessed that Georgia would not require novelty to be proved. 410 F.2d at 172-73. More recent Georgia cases have required a concept or product to be truly unique and original. See, e.g., Wilson v. Barton & Ludwig, Inc., 163 Ga.App. 721, 296 S.E.2d 74 (1982); see also Kewanee Oil Co. v. Biscron Corp., 416 U.S. 470, 476, 94 S.Ct. 1879, 1883, 40 L.Ed.2d 315 (1974) (Novelty, in a patent law sense, is not required for a trade secret.... However, ... secrecy, in the context of trade secrets, ... implies at least minimum novelty.), and Outside Carpets, Inc. v. Industrial Rug Co., Inc., 228 Ga. 263, 268, 185 S.E.2d 65, 68 (1971) (fact question existed as to whether the machine [a fusing oven] and the process [to laminate vinyl backing to carpets and rugs] upon which the plaintiff bases its claim is nothing more than a process and device generally in use in the carpet and mat producing industry). The district court found that Salsbury's process for producing MG-BAC had never been used prior to its development by Salsbury and did not exist in the public domain. The steps of Salsbury's process had never been combined in the same manner prior to Salsbury's developing the process, and the result was a unique production process. The record supports the finding that producing MG-BAC on a commercial scale was a novel accomplishment which took several years to achieve, that a commercial MG bacterin was not in existence and had not yet been manufactured in the United States before Salsbury developed MG-BAC, and that the process itself as performed by Salsbury was not known to Salsbury's competitors or to anyone in the vaccine industry and not generally in use. Thus, plaintiff's process of manufacturing its MG bacterin fulfills the novelty requirement. 26 Nor was the development of MG-BAC merely an extension of the existing methods of producing an MG vaccine on a small scale. Cf. Wilson v. Barton & Ludwig, Inc., supra (appellant's idea of rental management merely utilized the existing system of neighborhood offices and enlarged its scope). While the autogenous MG vaccine provided the basis for commercial development, there is ample evidence that much time, labor and money were expended by plaintiff in developing a new process and product. Once plaintiff introduced MG-BAC in 1982, it was the sole marketer in the United States of that vaccine until 1987. 27 Salsbury proved that it possessed a process known only to it and its employees to whom it was necessary to be confided in order to apply it to the uses intended. Thomas v. Best Mfg. Corp., 234 Ga. at 789, 218 S.E.2d at 71. This is not a case of a plaintiff complaining of the simple loss of expertise of its employees, cf. Textile Rubber & Chemical Co., 243 Ga. at 591, 255 S.E.2d at 708. Plaintiff disclosed its trade secret information to Hildebrand and Berg in confidence; they were in a position of trust while employed by plaintiff, and the work they performed resulted in the formulation of a specific process to produce MG-BAC on a commercial scale. Appellants were aware that Salsbury wished to maintain the confidentiality of its developments. Hildebrand and Berg both signed Patent Assignment and Trade Secrecy Agreements at Salsbury, as they did when they came to Merieux. Salsbury had implemented a number of other internal controls to prevent the unauthorized dissemination of information it considered to be confidential or a trade secret. The record contains memoranda which were circulated to employees outlining Salsbury's policy of maintaining confidentiality; the memoranda stated that product outlines and research reports could be transmitted only with prior authorization and that records were to be made of the transmittals. There was also testimony that access to certain research data was controlled and access to Salsbury's facilities was limited. See University Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 535 (5th Cir.1974) (plaintiff used great caution in attempting to preserve its confidentiality). 28 Plaintiff's process is also sufficiently concrete to be a trade secret. Cf. Shanco Int'l, Ltd. v. Digital Controls, Inc., 169 Ga.App. 184, 187, 312 S.E.2d 150, 153 (1983) (idea to expand known card games to video games was not novel or sufficiently concrete to be usable so could not be usurped, thus was too abstract for protection as a trade secret). Furthermore, plaintiff's production process possesses commercial value. Defendants' witness, Dr. Yoder, who was qualified as an internationally recognized expert in mycoplasma and avian species, testified in regard to Salsbury's production outline submitted to the USDA as part of the licensing process: 29 Well, it didn't surprise me one bit that they mentioned a commercially licensed product and told me almost nothing about it; otherwise, they'd be giving the world their production protocol. 30 . . . . . 31 They would be--I shouldn't say crazy, but that wouldn't be a very good economic thing for their company, to tell people how to make their bacterin. 32 Rec. Vol. 4 at 142. 33 Several years of experimentation and effort were required before Salsbury perfected the multi-step process to produce the inactive MG-BAC vaccine on a commercial scale. Defendants Hildebrand and Berg learned of the specific formulations in the proper order which would successfully yield Salsbury's product while they worked at Salsbury. Salsbury is entitled to protection of that process as a trade secret. Thus, the district court did not clearly err in its determination that plaintiff possesses a trade secret in the MG-BAC process as a whole under Georgia law. See Wilson v. Barton & Ludwig, 163 Ga.App. at 724, 296 S.E.2d at 78 (the determination of the existence of a trade secret has been treated as a question of fact). 5 34 Because we conclude that Salsbury's entire multi-step process is a trade secret, we do not consider the district court's holding that several of the individual steps of the production process are also entitled to protection as trade secrets. 6