Opinion ID: 2434257
Heading Depth: 1
Heading Rank: 1

Heading: The Copied Tools

Text: Plaintiff contends that the Luccouses should be enjoined from using any sandline cutters which they have personally made as a result of the knowledge they gained about such tools by virtue of the licensing agreement. Plaintiff argues that the tools constituted a trade secret, and that defendants gained their knowledge of this secret while the confidential relationship created by the licensing agreement existed between plaintiff and defendants. Therefore, plaintiff concludes the lower court's action in enjoining defendants' use of these copied tools is supported by the decisions of this court wherein it was held that the equitable remedy of injunction will lie to prevent one person from damaging another through an abuse of confidence in wrongfully appropriating trade secrets. See Hyde Corporation v. Huffines, 158 Tex. 566, 314 S.W.2d 763; K & G Oil Tool & Service Co. v. G & G Fishing Tool Service, 158 Tex. 594, 314 S.W.2d 782. On the other hand, defendants argue that these cases lend no support to the lower court's holdings because the evidence shows as a matter of law that if [plaintiff's] tool had ever constituted a `trade secret,' its secrecy terminated many years prior to the time when defendants obtained knowledge of it. The generally accepted definition of a trade secret is that contained in the Restatement of Torts, § 757, p. 5, as follows: b. Definition of trade secret. A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers   . A trade secret is a process or device for continuous use in the operation of the business. Generally it relates to the production of goods, as, for example, a machine or formula for the production of an article. It is self-evident that the subject matter of a trade secret must be secret. See Wissman v. Boucher, 150 Tex. 326, 240 S.W.2d 278. It is defendant's position that when plaintiff patented the sand-line cutters in 1940, the issuance of the patent constituted such a public disclosure of the tools as to destroy their trade secrecy. This being so, defendants conclude that the injunctive relief granted plaintiff is punitive and also futile in that it enjoins defendants from making use of knowledge that is common to all the world. However, plaintiff contends that it is of no consequence that defendants could have gained their knowledge of the sand-line cutters from a study of the patent. Plaintiff argues that since defendants did not so gain their information, but instead gained it as a result of the licensing agreement, plaintiff did not lose the protection the tools might have as a trade secret, and an injunction will lie even though the tools in question were the subject of a patent, expired or otherwise. The cases relied upon by the Court of Civil Appeals as supporting plaintiff's position are distinguishable from the present case. First, in Hyde Corporation v. Huffines, supra, this court held the defendant, a licensee of the plaintiff, should be perpetually enjoined from manufacturing or selling any device made substantially in accordance with any feature of an invention patented by plaintiff. The defendant, as a result of a confidential relationship, had gained knowledge of the plaintiff's invention prior to its being patented, while it was still a trade secret. The defendant abused this confidential relationship, and improperly used the information gained. Under these circumstances, this court held the plaintiff's right to injunctive relief for the defendants' wrongful appropriation of trade secrets survived the disclosure of the secret in a subsequent patent. It was not held that the trade secret itself survived the complete disclosure in the patent grant. Inasmuch as the defendant had learned the secrets of the plaintiff's invention in confidence, and improperly disclosed and used them before the patent issued, it was held that the defendant should be enjoined from using that knowledge to prevent his obtaining a marketing advantage or head start as compared to the patentee or any manufacturer or processor licensed by him after the issuance of the patent. In the present case, the defendants have not obtained any marketing advantages from having prematurely gained information about the sandline cutters, since defendants received knowledge of the tools some sixteen years after they were patented, and used that knowledge after the patent expired. The case of K & G Oil Tool & Service Co. v. G & G Fishing Tool Service, supra, is also distinguishable from the present case. First, as in the Hyde case, supra, the defendant had gained knowledge of the plaintiff's invention prior to its being patented, while it was still a trade secret. Second, under the terms of a licensing agreement, the defendant specifically contracted that during the time it handled the tool in question, no one would disassemble said tool. It was mutually understood that the purpose of such agreement was to guard against anyone determining the internal construction of the tool involved. Notwithstanding this agreement, defendant did disassemble the tool, examined its interior construction and, using the information thus acquired, began making tools substantially in accordance with those of plaintiff. This court held that plaintiff was not deprived of his cause of action for defendant's breach of confidence simply because some of plaintiff's secrets were later disclosed by the issuance of a patent. The question as to whether plaintiff would have been entitled to injunctive relief if defendant had gained knowledge of the invention subsequent to its being patented was not before us in the K & G case. The Court of Civil Appeals cites the case of Welex Jet Services, Inc. v. Owen, 325 S.W.2d 856, Tex.Civ.App., wr. ref., n. r. e., as authority for the proposition that the issuance of a patent is not a public disclosure which destroys a trade secret. That case presented a situation where the subject matter of the trade secret protected by the Court was not the same as the invention covered by the patent, as the following language discloses:    [A]ppellant is the originator and primary developer of the `Jet Process'; in addition to its patent rights, appellant through experimentation has developed many trade secrets which it and its licensees use in the process;    during their employment by appellant, Owen and Gearhart, in confidence and while in fiduciary relationships, acquired knowledge of such trade secrets and have used and disclosed them for purposes other than for appellant's benefit;   . (Emphasis added.) Thus, unlike the present case, the trade secrets involved were not the inventions already protected by patent grants. The Court did not hold that a trade secret may simultaneously exist with a patent grant when both cover the same subject matter. Finally, the case of Franke v. Wiltschek, 2 Cir., 209 F.2d 493, is not authority for the position taken by the plaintiff. The defendants in that case contended that an expired patent on a process not involved in the suit was so similar to the process that was involved that the old patent had indirectly revealed the alleged trade secret with which the case was concerned. The Court held that one could have a trade secret over the same general subject matter disclosed in an expired patent. The subject matter claimed to be a trade secret was not and had not been patented at the time the defendants appropriated the information about it. In the present case, M. M. Kinley had an election as to the means of protecting his invention of the sand-line cutters. First, by the patent laws, Congress gave him an opportunity to secure the material rewards for his invention for a limited time, on condition that he make full disclosure for the benefit of the public of the manner of making and using the invention.. . . See Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249, 66 S.Ct. 101, 90 L.Ed. 47. Second, he could make no public disclosure of his invention and thereby protect his trade secret under the equitable jurisdiction of the state courts. See Becher v. Contoure Laboratories, 279 U.S. 388, 49 S.Ct. 356, 73 L.Ed. 752. Kinley elected to protect his invention by patent. When the patent was granted, the entire patent file and its contents became public property. See Grant v. Raymond, 6 Pet. 218, 8 L.Ed. 376; Sandlin v. Johnson, 8th Cir., 141 F.2d 660; Callman, The Law of Unfair Competition and Trademarks (2nd Ed.) § 533, Patents. Notwithstanding this choice, plaintiff claims the equitable powers of this court are available to protect his trade secret, a claim that is totally incompatible with the election to surrender the protection of secrecy in return for a patent. See Hyde Corporation v. Huffines, supra; Wissman v. Boucher, supra. The effect of the present injunction is to deprive the defendants of the right to do that which the public generally may do (e. g., copy plaintiff's sand-line cutters with impunity). While it is true that this court has enjoined persons from the right to avail themselves of the patentee's dedication, we point out that such holdings have been based on the theory that a person's wrongful acts may deprive him of the right which he would otherwise have had as a member of the public. See Hyde Corporation v. Huffines, supra; K & G Oil Tool & Service Co. v. G & G Fishing Tool Service, supra. In the present case, the defendants have committed no original wrong which would give justification for our denying them resort to the patent. We hold that the plaintiff has no trade secret for this court to protect, and the equitable remedy of injunction should not be employed to prevent defendants from using the information and knowledge they gained under the licensing agreement to build sand-line cutters, such information having been available to all the world sixteen years prior to the parties' contract.