By-Buk Co. v. Printed Cellophane Tape Co.

329 P.2d 147, 163 Cal. App. 2d 157, 118 U.S.P.Q. (BNA) 550, 1958 Cal. App. LEXIS 1482
CourtCalifornia Court of Appeal
DecidedAugust 26, 1958
DocketCiv. 21708
StatusPublished
Cited by22 cases

This text of 329 P.2d 147 (By-Buk Co. v. Printed Cellophane Tape Co.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
By-Buk Co. v. Printed Cellophane Tape Co., 329 P.2d 147, 163 Cal. App. 2d 157, 118 U.S.P.Q. (BNA) 550, 1958 Cal. App. LEXIS 1482 (Cal. Ct. App. 1958).

Opinion

NOURSE, J. pro tem. *

Defendants appeal from a judgment enjoining them from using, assembling, or manufacturing certain machinery which was a trade secret of the plaintiff; ordering them to dismantle the machines assembled by them that embodied plaintiff’s trade secret and decreeing that the plaintiff is entitled to damages, both compensatory and punitive, to be fixed upon an accounting hereinafter to be had.

Prior to June of 1954 both the plaintiff and the defendants Gevirtz, doing business as copartners under the name of Printed Cellophane Tape Company, hereinafter called “Tape Company, ’ ’ had engaged in the business of manufacturing and selling pressure-sensitive adhesive tape for industrial uses.

In the spring of 1954 Homer G. Buck, one of the partners of plaintiff partnership, hereinafter called “Buck,” learned that a competitor, whose manufacturing operations were conducted in the eastern United States, was manufacturing and selling overlapping masking discs and die-cut masks of pressure-sensitive tape for use by manufacturers in masking certain parts of apparatus which they desired to shield from abrasives or paint. Desiring to produce a similar product Buck commenced experiments for the purpose of constructing machines or apparatus which would produce die-cut masks and overlapping masking discs. While Buck was in the process of developing these machines the defendant Robert Black, hereinafter called “Black,” entered plaintiff’s employ as a part-time employee and rendered some aid to Buck in the assembly of the machines upon which Buck was working.

*162 Black was a disabled veteran of World War II and was entitled to the benefits of Public Law 16, 78th Congress. On May 1st plaintiff, hereinafter called “By-Buk,” entered into a contract with the Veterans Administration under which it undertook to accept “from time to time and within its own discretion in each case, disabled veterans of World War II for a course of training on the job” which would render each employable as a “Die Maker (Steel Rule).” By the contract it agreed to provide competent instruction to each trainee accepted. The agreement further provided that it might be terminated by the establishment or the Veterans Administration on 15 days’ notice and that each veteran accepted for training would be under the control and supervision of ByBuk and subject to the same rules and regulations “governing the conduct of other comparable employees.” (Italics ours.) On the same date Black entered plaintiff’s employ to be trained as a die maker.

At about that time there was prepared on a form of the Veterans Administration a schedule of the skills in which Black was to be trained, the time allotted to instruction in each skill and a statement of the wages to be paid; the starting wage being $1.50 an hour and increasing in 6-month steps of $.25 an hour. 1 After May 1st Black continued to work with Buck on the assembling of the two machines and after their completion he operated the machines at times for the purpose of producing die-cut masks and overlapping discs. Buck, on several occasions both before and after May 1st, told Black that the processes of die-cutting masks and overlapping discs which were embodied in the machines were not to be disclosed to others and plaintiff at all times endeavored to prevent others from examining the machines and to keep its processes of producing the die-cut masks and overlapping discs secret.

Black continued in his employment with By-Buk until June 1954 and during the period of his employment By-Buk gave him training in the various skills which it had undertaken to teach him.

On June 30, 1954, Black terminated his employment with the plaintiff and in August entered the employ of defendant Tape Company. Upon entering the employ of Tape Company Black disclosed to Tape Company and defendants Gevirtz plaintiff’s methods of producing die-cut masks and overlapping discs and, under their instructions, constructed two machines which were substantially copies of plaintiff’s machines.

*163 Upon the completion of these machines defendant Tape Company commenced the production of die-cut masks and overlapping discs and sold these articles to the trade in competition with the die-cut masks and overlapping discs produced hy plaintiff. In producing these it used materials similar to those used by plaintiff. In its brochures sent to the trade in soliciting the sale of overlapping discs plaintiff had used a picture showing a roll of overlapping discs and the hands of a person removing the discs from the carrier tape. It advertised its overlapping discs under the name of Kwiky Dots. In its brochures defendant Tape Company used substantially the same picture of the hands removing the overlapping dots from the carrier as did the plaintiff 2 but gave its product the name of Pee-Cee Tapes.

The court found the facts in substantial accordance with the facts we have stated. Bach of the facts we have stated is supported by substantial evidence. Other findings of the trial court which are attacked by appellant will be noted later in our discussion of the case.

Under numerous headings defendants and amicus curiae attack the judgment of the trial court as impairing the purposes of the Veterans Administration training statutes and regulations (Public Law 16, and regulations adopted thereunder) and as being in contravention of the contract entered into by plaintiff with the Veterans Administration.

Boiled down, it is apparently defendants’ contention that Black was not an employee of the plaintiff but that plaintiff had sought to teach him as a student its business and that therefore upon terminating his relationship with plaintiff he was entitled to put to use any knowledge that he had acquired of plaintiff’s business and processes of manufacturing. We see no merit in these contentions.

Plaintiff’s undertaking with the Veterans Administration was to train Black, as its employee, in certain skills in order that he might be qualified for employment as a die maker. By the express terms of the contract between plaintiff and the Veterans Administration any person employed by plaintiff and whom it agreed to train was subject to the same obligations, rules and regulations as any other employee. Irrespective of whether there was an express agreement on Black’s part (which defendants and their amicus curiae in their brief *164 choose to term a “secret agreement”) not to divulge the means by which plaintiff was able to produce its die-cut masks and overlapping discs, that duty was implied in the contract of employment. Every employee is under the implied obligation not to divulge or use confidential information which he acquires by reason of his employment. Such information is the property of the employer and the employee holds that property in trust for the employer and cannot use it in-violation of his trust. (Empire Steam, Laundry v. Lozier, 165 Cal. 95, 100-102 [130 P. 1180, Ann.Cas. 1914C 628, 44 L.R.A. N.S. 1159] ; Riess v. Sanford,

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Bluebook (online)
329 P.2d 147, 163 Cal. App. 2d 157, 118 U.S.P.Q. (BNA) 550, 1958 Cal. App. LEXIS 1482, Counsel Stack Legal Research, https://law.counselstack.com/opinion/by-buk-co-v-printed-cellophane-tape-co-calctapp-1958.