Macbeth-Evans Glass Co. v. Schnelbach
Macbeth-Evans Glass Co. v. Schnelbach
Opinion of the Court
Opinion by
It may now be accepted as settled law, under the authority of English and American cases, that courts of equity if the facts warrant will restrain an employee from making disclosure or use of trade secrets communicated to him in course of a confidential employment. The character of the secrets, if they be peculiar and important to the business, is not material. They may be secrets of trade, or secrets of title, or secret processes of manufacture, or any other secrets important to the business of the employer. They, however, must be the particular secrets of the complaining employer, not general secrets of the trade in which he is engaged, nor even the same secrets as those sought to be protected, if they be discovered by the independent investigation of outside parties. The duty of the servant not to disclose the secrets of the master may arise from an express contract, or it may be implied from their confidential relations. It is likewise true that other persons who induce such disclosures by an employee, knowing of his contract not to disclose, or knowing that the disclosure is in violation of the confidence reposed in him by his employer, will be enjoined from making use of the information so
There still remains another question for consideration. There was no express contract on the part of Schnelbach not to disclose the trade secrets of his employer, and it becomes necessary to inquire whether because of the position he occupied and the confidence reposed in him, there arose an implied duty not to disclose. His employment began with the incorporation of the appellee company in 1899 and continued until he left it in 1910. Prior to 1899 he had been in the employ of the Evans Company, which was subsequently merged with the present company, for upwards of seven years. In all, his employment with the two companies covered a period of sixteen years. The testimony shows that he was a trusted and valued employee, that for many years he had general supervision of the plants and manufacturing end of the business; that his employers reposed great confidence in him and communicated to him without reserve all the secrets of their business; that in the manufacture of glass there are many trade secrets; and that, nothing was withheld from him in connection with these secrets, but that he was treated at all times on the basis of a. confidential relation. The knowledge of the secret formula involved in this controversy came to him by reason of the position he occupied and the confidence reposed in him by his employers. The secret formula was communicated to him, not for his personal use, nor that he might profit by the knowledge thus obtained, but for the sole benefit of his employers whose interests he was in duty bound to protect. It, therefore, would be inequitable and unjust that he should either disclose .it to others, or make use of it himself, to the prejudice of his employers who were entitled as against him and. those associated with him, to whatever advantage the manu
We agree with the learned court below that as shown by the testimony the Jefferson Glass Company acquired its knowledge of the secret formula used in making Alba glass from Schnelbach in breach of the trust and confidence reposed in him by appellee, and in violation of a contract implied from that confidential relation not to disclose trade secrets. Every fact in the case shows that appellants intended to do what the court below found they did, namely, manufactured Alba glass by the secret process and sold the same in the market in competition With appellee. If Schnelbach was properly enjoined, so was the Jefferson Glass Company, because it is clear that the officers, directors and stockholders of this company intended to and did make use of the secret process of appellee in manufacturing glass of the same quality as Alba.
We have carefully examined Slemmer’s App., 58 Pa. 155, so strongly relied on by appellants, but have not been convinced that it has any application to the facts of the case at bar. The rights of parties under a patented invention were involved in that case, and the equitable doctrine which protects an employer in the use and enjoyment of his trade secrets was not discussed.
To save confusion it may be remarked that the word Alba, so frequently used in this case, is simply a trade name adopted by appellee to designate the particular kind of glass manufactured by use of the secret formula, and has no other significance.
The learned court below gave this case most careful consideration, and as we view it, reached a just and proper conclusion under the law as applied to the facts. We also agree that the decree entered must be understood in the sense suggested by the court below in the opinion sur exceptions to form of decree. Appellants are restrained from making and selling Alba glass under any name whatever, because this would be the appropri
Decree affirmed at cost of appellants.
Reference
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- Equity — Injunction—Trade secrets — Master and servant — Confidential relation. 1. A court of equity, if the facts warrant, will restrain an employee from making disclosures or use of trade secrets communicated to him in course of a confidential employment. The character of the secrets, if they be peculiar and important to the business, is not material. They may be secrets of trade, or secrets of title, or secret processes of manufacture, or any other secrets important to the business of the employer. They, however, must be the particular secrets of the complaining employer, not general secrets of the trade in which he is engaged, nor even the same secrets as those sought to be' protected, if they be discovered by the independent investigation of outside parties. 2. The duty of the servant not to disclose the seerets of the master may arise from an express contract, or it may be implied from their confidential relations. It is likewise true that other persons who induce such disclosures by an employee, knowing of his contract not to disclose, or knowing that the disclosure is in violation of the confidence reposed in him by his employer, will be enjoined from making use of the information so obtained. Where confidence is reposed, and the employee by reason of the confidential relation has acquired knowledge of trade secrets, he will not be permitted to make disclosure of those secrets to others to the prejudice of his employer. 3. An injunction may be granted to enjoin the use of a trade secret, or to restrain the manufacture and sale of an article so made against a defendant, who acquired his knowledge in violation of an express contract not to divulge, or in breach of confidence between employee and employer. 4. On a bill in equity for an injunction to restrain the use of a trade secret, the burden is on the complainant to show: (1) that there was a trade secret, or a secret process of manufacture; (2) that it was of value to the employer and important in the conduct of his business; (3) that by reason of discovery or ownership the employer had the right to the use and enjoyment of the secret, and (4) that the secret was communicated to the employee while he was employed in a'position of trust and confidence under such circumstances as to make it inequitable and unjust for him to disclose it to others, or to make use of it himself, to the prejudice of his employer. 5. On a bill in equity to enjoin the use of a trade secret it appeared that the plaintiff was a corporation engaged in making glass, and that the defendants were a former superintendent of the plaintiff an'd another corporation to whom it was alleged the superintendent had disclosed the trade secret in question. The evidence showed that the president of the plaintifE company had for years, partly by himself and partly with the assistance of a young chemist employed by plaintiff, engaged in experiments with a view to discovering a process for making a semi-translucent glass, possessing greater diffusive qualities than any glass then known. He finally discovered a formula which proved satisfactory in laboratory tests but required confirmation by tests in the large melting pots of the factory. The formula was communicated to the superintendent who was directed to test it out in the factory furnaces. In making this test the superintendent ascertained that there was a proper length of time, not too long, and not too short, for the melting of .the glass to produce the proper translucent qualities. The superintendent remained after this discovery in the plaintiff’s employment for seven years in making the glass in question without ever asserting that he regarded the. secret process as his discovery or property. He then left the plaintiff’s employment and went into the employment of the other defendant. He had been in plaintiff’s employment as a trusted and confidential employee for sixteen years. Held, that an .injunction was .properly awarded against both defendants. 6. In such a case where it appears that the plaintiffs gave a trade name to the particular glass in question, it is proper that the defendants should be enjoined from making and selling the glass under that trade name, or for making and selling the same quality of glass by any other name, if the glass should be made by using ,the essential ingredients of the particular formula; but they may make any glass to serve the same purpose, if they discover a new process entirely different from the secret process of the plaintiff to accomplish the result.