051107 Trade Secret Law: Gabriel Performance Products

Gabriel Performance Products v. Cognis Corporation, Court of Appeals of Ohio, 11th App. Dist., Ashtabula County, No. 2006-A-0071 (May 11, 2007)"

Issue:
DSCC created the hardening agent known as Capcure in the 1960s. It created the Capcure agent at its Astabula, Ohio, plant. DSCC went through some hard times, and it was subsequently broken down into assets and sold off to buyers that then sold to other buyers. Fast forward to the 2000s, and the Capcure process and technology is owned by Cognis, but the plant where it is created is owned by GabePro. The two companies had a business symbiosis for a while until Cognis decided that it didn't need the Astabula plant, and GabePro by extension, anymore. Cognis told GabePro of its intent to manufacture in Spain, and GabePro thereafter decided to create its own hardening agent known as GPM-800. Unsurprisingly, GPM-800 was the same agent created the same way as Capcure. The products were identical.

GabePro sought a declaratory judgment from the lower court, and various orders were handed down that led to some level of appeal by Cognis about breach of trade secrets and/or confidentiality restrictions. In particular, in Cognis' latest appeal, Cognis argued that GabePro was contractually restricted from creating its hardening agent because of confidentiality and non-use clauses that existed in several incarnations of various manufacturing agreements between the predecessors in interest to Cognis and GabePro. Included in these various copies of the manufacturing agreement executed between the predecessors in interest was a standard clause in the confidentiality section that defined confidential information, at least in part, as that information you did not possess before the relationship was entered. Cognis argued that GabePro, via the contractual relationship between it, Cognis, and the various predecessors in interest, became aware of the formula and process for Capcure and so was restricted from manufacturing it independently.

Pertinent Issue of Trade Secret Law:
1) When the know how is separated from the mechanism, is the know how owner safe from competition from the mechanism owner?

Conclusion:
The court found that since Capcure was created and initially manufactured by the same entity, DSCC, then all subsequent possessors of interest are presumed to have had the process and formula information of their predecessor(s) within their knowledge. Although Cognis did retain possession of the formula as part of its succession in interest, it could not prevent GabePro from using its knowledge of the formula and process since this information was within GabePro's predecessors in interests' knowledge prior to the execution of the first manufacturing agreement between the first successors in interest to DSCC.