E. I. duPont de Nemours & Co. v. American Potash & Chemical Corp.

41 Del. Ch. 533
CourtCourt of Chancery of Delaware
DecidedMay 5, 1964
StatusPublished
Cited by11 cases

This text of 41 Del. Ch. 533 (E. I. duPont de Nemours & Co. v. American Potash & Chemical Corp.) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
E. I. duPont de Nemours & Co. v. American Potash & Chemical Corp., 41 Del. Ch. 533 (Del. Ct. App. 1964).

Opinion

Seitz, Chancellor:

This is the decision on defendants’ motion for summary judgment in plaintiff’s action to enjoin the use or disclosure of plaintiff’s trade secrets.

Plaintiff, E. I. duPont de Nemours and Company, a Delaware, corporation, brought this action against American Potash and Chemical Corporation (“Potash”), also a Delaware corporation, and Donald E. Hirsch (“Hirsch”), a former employee of the plaintiff who is currently employed by Potash. Plaintiff sought, and the court granted, [535]*535a restraining order which, inter alia, prohibited Hirsch from divulging or disclosing the plaintiff’s trade secrets and confidential information relating to the manufacture of titanium dioxide (TÍO2) pigments by its chloride process. The order also restrained Hirsch, despite the absence of a covenant not to compete, from accepting or undertaking any employment by Potash or engaging in any work with Potash in connection with or related to the operation and development of a chloride process or in connection with or related to the manufacture of Ti02 pigments by a chloride process. An appropriate restraint was also imposed upon defendant Potash. Later, after argument, the court ruled that a preliminary injunction in the same terms as the restraining order should issue. However, no such order was ever presented for signature. Concededly, however, the restraining order is still in effect. Plaintiff also seeks a permanent injunction of the same scope as the restraining order.

After the decision on the preliminary injunction argument was announced, certain depositions were taken and interrogatories filed and answered. Thereafter, the defendants filed a motion for summary judgment in effect to dismiss the case before trial for lack of legal merit. The decision on this motion requires a rather elaborate factual presentation.

Plaintiff is engaged in developing, manufacturing and marketing a large variety of chemical products. At two of its substantial manufacturing plants plaintiff is, and for many years has been, engaged in the commercial manufacture of TiO2 pigments by a chloride process. On this record it may be said still to be the only successful commercial manufacturer of the product by a chloride process, at least in this country. Plaintiff is now constructing at Antioch, California a new commercial plant which will be used exclusively for the manufacture of such pigments by its chloride process.

The defendant Hirsch was employed by plaintiff on August 21, 1950. He had previously been a college instructor with a bachelor’s and a master’s degree in chemical engineering. In 1954 he received a doctorate. When he joined plaintiff, he executed an agreement by which he agreed, inter alla, not to use or disclose any of plaintiff’s trade secrets without its prior written consent. As noted above, the [536]*536agreement contained no restriction against his employment by a competitor of the plaintiff in any field.

When Hirsch joined the plaintiff in 1950, it was undergoing at its Edge Moor, Delaware plant the trials and tribulations of attempting to manufacture TiO2 pigments by a chloride process for commercial use. Hirsch became a part of the personnel working to accomplish that objective. The successful development of the process was admittedly a long, involved, and expensive corporate effort.

From 1950 to 1955 and from 1960 to 1961, Hirsch was engaged principally in the research and development of plaintiff’s chloride process. In the interim he worked in plaintiff’s niobium manufacture. From the latter part of 1961, and until he resigned on November 27, 1962 to go with Potash, he was a very important member of a group assigned to advise in the design of plaintiff’s new Antioch plant.

It would appear that though the defendant Hirsch had advanced in his particular line of endeavor, he desired to become involved in some management aspect of this work rather than the purely technical side and made this known to his superiors. As time went by, he apparently became unhappy, not so much with the compensation as with the fact that he had not been transferred to some managerial aspect of the operation. Commencing in or about 1959, he made inquiries about job opportunities elsewhere, but nothing developed until Potash entered the picture.

Potash is a diversified manufacturer of industrial chemicals. In November 1960, arrangements were completed between Potash and Laporte Industries, Ltd., of Great Britain for Potash to manufacture titanium dioxide in the United States by the sulphate process, Laporte being a large manufacturer of TÍO2 by that process in England. By the spring of 1961, however, Potash had concluded that the competitive position of its TÍO2 venture in the United States would be enhanced through use of a chloride process in lieu of the sulphate process originally envisaged. The chloride process is said to have a number of distinct commercial advantages over the sulphate process.

On March 20, 1961, Potash requested from plaintiff a license granting it the right to use plaintiff’s patents and know-how relating [537]*537to the manufacture of Ti02 by its chloride process. Though plaintiff offered Potash a license under certain of its patents dealing with the chloride process, it refused to grant Potash any right with respect to its secret know-how relating to such process. Potash dropped that approach.

In August of 1962, defendant Potash began recruiting personnel for a plant it was then designing and intended to construct in California for the manufacture of Ti02. Production therein would be by a chloride process which defendants say was developed over a ten-year period by Laporte Industries, Ltd., through an extensive research and pilot plant program. At this stage, however, it appears that Laporte still does not produce Ti02 in commercial quantities by its chloride process. Nevertheless, Potash’s engineers and chemists have participated in Laporte’s work since 1960, and Potash alleges that it is now entirely capable with the help of Laporte of designing, constructing, and operating, presumably successfully, a large commercial plant for the manufacture of Ti02 by a chloride process in the United States.

In mid-September 1962, Potash first advertised in a Wilmington, Delaware paper, where plaintiff’s home offices and its Edge Moor plant are located, for applicants for the position which Hirsch ultimately accepted, viz., manager of plant technical services. Later, to aid it in its program of recruiting personnel, Potash engaged a management consultant firm. That firm advertised in a Chemical Engineers’ bulletin for a “Manager, Plant Technical Services”. Defendant Hirsch answered this advertisement. A personal interview followed, and on November 28, 1962 — one day after he had resigned from plaintiff — an employment agreement was signed with Potash, in which Hirsch agreed, inter alla, that he would not disclose “any information that he knows to be proprietary or confidential information, data, development or trade secret of a third party without the prior written consent of said third party”. Although the position Hirsch was to fill presumably was to come into active being only after Potash’s plant was completed, it is not suggested that he would not have become involved in the project before that time in the absence of this court’s injunction.

Hirsch accepted his new position with knowledge that plaintiff intended to try to block him from working for Potash in connection [538]

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Al Minor & Associates, Inc. v. Martin
117 Ohio St. 3d 58 (Ohio Supreme Court, 2008)
Whyte v. Schlage Lock Company
125 Cal. Rptr. 2d 277 (California Court of Appeal, 2002)
Heatron, Inc. v. Shackelford
898 F. Supp. 1491 (D. Kansas, 1995)
Curtis 1000, Inc. v. Youngblade
878 F. Supp. 1224 (N.D. Iowa, 1995)
BIEC International, Inc. v. Global Steel Services, Ltd.
791 F. Supp. 489 (E.D. Pennsylvania, 1992)
NAT. STARCH & CHEM. CORP. v. Parker Chem. Corp.
530 A.2d 31 (New Jersey Superior Court App Division, 1987)
Burten v. Milton Bradley Co.
592 F. Supp. 1021 (D. Rhode Island, 1984)
Travenol Laboratories, Inc. v. Turner
228 S.E.2d 478 (Court of Appeals of North Carolina, 1976)
Data General Corp. v. Digital Computer Controls, Inc.
357 A.2d 105 (Court of Chancery of Delaware, 1975)
Krajewski v. Blair
297 A.2d 70 (Court of Chancery of Delaware, 1972)
Operations Research, Inc. v. Davidson & Talbird, Inc.
217 A.2d 375 (Court of Appeals of Maryland, 1966)

Cite This Page — Counsel Stack

Bluebook (online)
41 Del. Ch. 533, Counsel Stack Legal Research, https://law.counselstack.com/opinion/e-i-dupont-de-nemours-co-v-american-potash-chemical-corp-delch-1964.