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Frank M. Denison, D.D.S., Inc. v. Westmore Dental Arts, P.C.

United States District Court for the Western District of Pennsylvania

January 15, 1981

No. 80-842

Opinion

 [**602]  Bloch, District Judge.

Plaintiffs in this action are Frank M. Denison, D.D.S., Inc., a West Virginia professional corporation owned by Frank M. Denison, and Willow Beach Laboratory, Inc., a West Virginia corporation owned by plaintiff Frank M. Denison, D.D.S., Inc. (200 shares) and Hoyt Eagerton (100 shares). Denison operates a dental clinic which fits, sells and repairs dentures on a low-cost, high-volume, fast-service basis. Willow Beach manufactures the dentures for Denison pursuant to a requirements contract.

Plaintiffs claim their system is a trade secret which they obtained from Hoyt Eagerton. They claim to have the exclusive license to the trade secret in the states of Virginia, West Virginia, Maryland, Pennsylvania, Ohio and Michigan, and in the District of Columbia. In Count I of their complaint, they charge defendants Westmore Dental Arts, P.C., Westmoreland Dental Appliances, Inc., and James E. Nicolette [*2]  with misappropriation of trade secrets; in Count II, they charge the same three defendants and John J. Petitto and Ronald Sirk with unfair competition; in Count III, they charge those five defendants and 10 John Does with conspiracy to misappropriate trade secrets and to injure or destroy plaintiffs' business by enticing away plaintiffs' employees; in Counts IV and VI, they charge defendants Petitto and Sirk with breaches of a fiduciary duty and the duty of loyalty; and in Count V, they charge defendants Petitto and Sirk with breach of contract. Factually, they allege that following an unsuccessful attempt to lawfully purchase or license the trade secret utilized by plaintiffs, defendants Westmore Dental Arts, Westmoreland Dental Appliances and James E. Nicolette wooed away plaintiffs' employee John J. Petitto, who in turn wooed away plaintiffs' employee Ronald Sirk, and who in turn wooed away other employees. Petitto and Sirk became privy to plaintiffs' trade secret in the course of their employment with plaintiffs, and they used their knowledge to copy plaintiffs' secret operation for defendants, Westmore, Westmoreland, and Nicolette.

Denison and Willow Beach acquired Eagerton's [*3]  supposed trade secret pursuant to an employment contract between Willow Beach and Eagerton, with Denison as guarantor, whereby Eagerton agreed to work for Willow Beach for a term of ten years, setting up the operation, training Willow Beach's employees, and thereafter serving as an intermittent consultant, particularly to provide Willow Beach with whatever improvements on the system Eagerton might devise. For his services, Eagerton is to be paid $ 6 per denture sold. Pursuant to a shareholder's agreement between Eagerton and Denison, Inc., Willow Beach undertook to sell the dentures it manufactures to Denison, Inc., for its cost of manufacturing plus $ 6 profit, that $ 6 to be paid to Eagerton pursuant to his employment contract.

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1981 U.S. Dist. LEXIS 17332 *; 212 U.S.P.Q. (BNA) 601 **

Frank M. Denison, D.D.S., Inc. et al. v. Westmore Dental Arts, P.C. et al.

CORE TERMS

trade secret, patent, join, licensee, indispensable party, necessary party, joinder, denture, license, secret, manufacturing, infringement, plaintiffs', parties, Dental, cases, venue, exclusive license, bring suit, appears, employment contract, misappropriation, ownership

Torts, Business Torts, Unfair Business Practices, General Overview, Trade Secrets Law, Protected Information, Manufacturing Processes, Trade Secret Determination Factors, Continuous Use, Labor & Employment Law, Conditions & Terms, Trade Secrets & Unfair Competition, Trade Secrets, Business Use, Definition Under Common Law, Customer Lists, Machines, Civil Procedure, Joinder of Parties, Compulsory Joinder, Necessary Parties, Parties, Misappropriation Actions, Independent Development, Business & Corporate Compliance, Ownership, Conveyances, Assignments