Wednesday, July 05, 2006, 7/05/2006 08:45:00 AM

Trade Secrets and Cosmetics

From, a story concerning a fight between two cosmetics companies, Arch PCP and Active Concepts. In 2000, Arch acquired the personal care business of Brooks Industries, then owned in part by one Ivar Malmstrom. Malmstrom went on to become one of the founders of Active Concepts which, Arch claimed, misappropriated the trade secrets that Arch had acquired from Brooks. An earlier federal court case found that Malmstrom breached his contractual obligations and infringed on Arch's trademark.

A state court case in New Jersey by Arch for trade secrets misappropriation against Active Concepts didn't fare so well. In fact, the court ruled that all of the information that Arch acquired from Brooks was unprotected by reason of earlier disclosure prior to the acquisition. Not only that, according to the court, those trade secrets had been disclosed in an earlier lawsuit in which the trade secrets were discussed in open court.

The case is a not-so-subtle reminder that trade secrets have to be continually protected even while in court.
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