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Metallurgical Indus. v. Fourtek, Inc. - 790 F.2d 1195 (5th Cir. 1986)


Although the law requires secrecy, it need not be absolute. Public revelation would, of course, dispel all secrecy, but the holder of a secret need not remain totally silent. One may, without losing one's protection, communicate it to employees involved in its use. One may likewise communicate it to others pledged to secrecy. Nevertheless a substantial element of secrecy must exist, so that except by the use of improper means, there would be difficulty in acquiring the information.


Metallurgical Industries, Inc. (“Metallurgical”) purchased zinc furnaces from Therm-O-Vac Engineering & Manufacturing Company (“Therm-O-Vac”). Metallurgical made efforts to modify the furnaces. Irvin Bielefeldt, a former Therm-O-Vac employee, formed Fourtek, Inc. (“Fourtek). Fourtek began manufacturing and selling zinc recovery furnaces using Metallurgical’s modification process. Metallurgical brought suit for misappropriation of trade secrets against Fourtek, its officers, including Bielefeldt, and Smith, a customer that purchased one of Fourtek's furnaces. The district court granted defendants' motion for directed verdict, finding that no trade secret was involved in the case because the process had been publicized in the trade previously, therefore, misappropriation did not occur. Metallurgical appealed.


Did the district court err in directing a verdict in favor of defendant Bielefeldt?




The court concluded that the inferences from the facts, construed favorably to Metallurgical, were Metallurgical wished only to profit from its secrets in its business dealings, not to reveal its secrets to the public. Evidence at trial could have led a jury to believe that a trade secret existed. The court found that the evidence suggested that Smith knew of possible problems with trade secrets and did nothing but rely on the denials of Bielefeldt, who was a former employee of Therm-O-Vac that initially dealt with Metallurgical’s trade secrets. The court found that Bielefeldt’s memory that he allegedly relied on in constructing the furnaces at issue might have been due to working with Metallurgical. Therefore, the issue of the Bielefeldt’s liability was an inappropriate ground for a directed verdict. The court stated that on retrial, the task for the trier of fact was to determine whether Bielefeldt committed any wrong. But because Metallurgical failed to provide any evidence that Smith had so far benefited from any misappropriation, the directed verdict in its favor was proper. On Metallurgical's motion, counts against the other Fourtek officers had been dismissed.

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