Friday, April 21, 2006, 4/21/2006 02:19:00 PM

Judicial Deconstruction of a Trade Secrets Case

By Todd
It is not an everyday occurrence to read a judicial decision that picks apart a trade secret claim like Derrida picking apart a Platonic text. One such decision is that of Chief United States District Court Judge Babcock of the District of Colorado in the case of Hertz v. Luzenac America, Inc., et al., 2006 WL 1028865 (April 17, 2006)(slip copy) and one can say of Judge Babcock - he read the record and knows the facts. As readers of this blog know, a company claiming trade secret protection for one or another of its processes must show that it used reasonable efforts to keep that process secret and confidential. Here's what Judge Babcock says of Luzenac's allegedly secret process:

"But secrecy is the sine qua non of the claim and there can be no genuine dispute that the process for manufacturing 604AV was not a secret. As is clear from the above recitation of undisputed facts, Luzenac and VHM have utilized no discreet mixing time, instead adjusting the duration of each batch mix according to the equipment employed. Each of the eight other process elements Dr. Hauser identified as trade secrets was either obtained from the public domain - dispersion of talc as a cloud, use of undiluted silane, application of silane as a fine mist, storage for two weeks before sale - or disseminated in the public domain - use of 6.0 grind, testing by the Scott volumeter - or both - use of VTEO silane, use of 0.5% and 0.6% silane concentrations . . . . The record demonstrates beyond dispute that Luzenac shared the process with its distributors, with temporary employees, with Littleford Day, with customers, with potential customers, in trade journals, and at trade expositions. Rather than refuting its silane supplier's assertions that the process was not proprietary, Luzenac declined to obtain a confidentiality agreement." And so on the opinion goes for a good bit more, with Chief Judge Babcock referring to Luzenac's efforts to maintain the secrecy of their so-called trade secrets "superficial." One can almost hear Homer Simpson reading the opinion and responding at this point - "DOH!!!!"

We have to hand it to Chief Judge Babcock - he knew his stuff. We also have to wonder if Luzenac would've been better served to take out a checklist of trade secret requirements before litigating this case to summary judgment that resulted in its claim being dismissed.


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