Friday, June 09, 2006, 6/09/2006 04:13:00 PM

Someone's Gotta Dye . . . .

By Todd
North Carolina is still home to lots of textile companies and suppliers who sell to them. Thortex, Inc. is a chemical dye and sales company which developed a formulation and method of manufacturing black dye for use by KM Fabrics. Thortex used some other companies to manufacture the dye for them for ultimate sale to KM Fabrics. Employees of those other companies routinely learned Thortex's formulation and method of manufacturing black dye. Some of those employees went out and started their own company and offered KM Fabrics the opportunity to buy the black dye from them. Let's call those people the "defendants" for the time being.

Thortex didn't like losing the KM Fabrics account to the defendants. So they sued them - that's why we call them the "defendants." They alleged, among other things, misappropriation of trade secrets. The defendants moved to dismiss this claim against them - and they won that argument too. The lower court and Court of Appeals noted "Plaintiffs appear to find themselves in the unfortunate situation of failing to require the manufacturers they used and their employees to enter into a confidentiality agreement. The allegations do tend to show that over the course of time, numerous manufacturers gained knowledge of the dye formulation and production methods and that in fact two employees with this knowledge formed their own manufacturing companies who subsequently became manufacturers of Thortex (the black dye) as well." The lower court and appellate court found that Thortex had NOT used reasonable means to maintain the black dye's formulation a secret. And those courts were right, of course.

We bet Thortex wished they would've called their attorneys and negotiated a simple NDA for use with their manufacturers way back when. Cat's outta the bag now. Call your next case. The case can be cited as Thortex, Inc. v. Standard Dyes, Inc., 2006 WL 1532136 (June 6, 2006, N.C. Ct.App.).

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