Formulabs, Inc. v. Hartley Pen Co.

306 F.2d 148
CourtCourt of Appeals for the Ninth Circuit
DecidedJuly 11, 1962
DocketNos. 17741, 17799
StatusPublished
Cited by1 cases

This text of 306 F.2d 148 (Formulabs, Inc. v. Hartley Pen Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Formulabs, Inc. v. Hartley Pen Co., 306 F.2d 148 (9th Cir. 1962).

Opinion

JERTBERG, Circuit Judge.

The matters before us in the above causes have their genesis in an action instituted by Hartley Pen Company, an appellee in No. 17741 and the petitioner in No. 17799, against E. I. du Pont de Nemours & Company, etc., an appellee in No. 17741 and a respondent in No. 17799, for damages for breach of warranty. Formulabs, Incorporated, Clarence Schreur and Gordon S. Lacy, etc. are appellants in No. 17741 and respondents (sometimes referred to as inter-venors) in No. 17799. The Honorable William G. Mathes, Judge of the United States District Court for the Southern District of California, Central Division, is a respondent in No. 17799.

For convenience the parties will be referred to respectively as “Hartley,” “du Pont,” “Formulabs,” and “District Court.”

In order to place the parties in proper posture and to consider the questions presented by these two causes, it is necessary to review prior proceedings in the Court below and in this Court.

Hartley manufactures ball point pens containing cartridges filled with ink made under a secret formula comprising a trade secret belonging to Formulabs. The use of the secret formula by Hartley was under the terms of a written license agreement with Formulabs.1

The ink manufactured by Hartley and placed in the cartridges incorporated a dye purchased by Hartley from du Pont. In August 1953, du Pont sold to Hartley blue B dyes from Lots 36 and 37. The [150]*150complaint filed by Hartley against du Pont alleges that the inks made by Hart-ley using dyes from Lots 36 and 37 proved to be defective and unmarketable. Hartley claims that it suffered general and special damages in large amounts as the proximate result of the alleged defective and unmarketable dye.

As part of its discovery proceedings, du Pont sought, by interrogatories, to learn Formulabs’ secret formula used by Hartley in the formulation of the alleged defective ink using the alleged defective dye, Lots 36 and 37, as well as certain of Formulabs’ secret test procedures which had been disclosed to Hartley.

Formulabs moved the District Court to intervene in the pending action between Hartley and du Pont on the ground that the property affected belonged to it and that its right of ownership would be seriously injured and destroyed by disclosure of the trade secrets. Formulabs proposed cross-complaint prayed that Hartley be enjoined from disclosing such trade secrets. The District Court entered a final judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., denying Formulabs’ petition for intervention. On appeal, this Court held that under the plain language of Rule 24(a) (3),2 Formulabs had a right to intervene in the action, and reversed the order of the District Court denying intervention. Formulabs, Inc. v. Hartley Pen Company, et al., 275 F.2d 52 (9th Cir. 1960) cert. denied 363 U.S. 830, 80 S.Ct. 1600, 4 L.Ed.2d 1524.

On du Pont’s motion for production and inspection, the District Court granted du Pont the right to inspect documents in Hartley’s custody or under its control. It was conceded that such inspection would presumably disclose the secret formula and the secret test procedures.

This Court granted Hartley leave to file its petition for writ of prohibition and for writ of mandate, either or both in the alternative, and for other relief, and issued an order to show cause. Basically, the petition sought to have set aside by this Court the orders of the District Court requiring disclosure of the secret formula and the secret test procedures. This Court ordered that a writ of mandamus issue to the District Court and the Judges thereof, directing the setting aside of those portions of the orders made by the District Court which required disclosure of the secret formula and the secret testing procedures, without prejudice, however, to du Pont’s right to thereafter initiate such discovery procedures as might be proper in an endeavor to establish that disclosure of the secret formula or the secret testing procedures, or both, was or were relevant and necessary to the proper defense by du Pont of the damages action pending in the District Court. Hartley Pen Company v. United States District Court for the Southern District of California, Central Division et al., 287 F.2d 324 (9th Cir. 1961).

Following the return of the mandate of this Court to the District Court, du Pont initiated new discovery procedures against Hartley by way of interrogatories and requests for admissions, and by order signed January 10, 1962 and filed on January 11, 1962, Hartley was ordered over its objections to answer the interrogatories and requests for admissions and to do so on or before February 2, 1962. The order of the District Court contained certain protective provisions. It is not seriously questioned that the answers to the interrogatories and requests for admissions will require the disclosure of the secret formula. Formulabs appealed to this Court from [151]*151said order and said appeal forms the subject matter of Cause No. 17741.

We granted leave to Hartley to file its petition for writ of prohibition and for writ of mandate, either or both in the alternative, and for other relief, and issued an order to show cause directed to the District Court, du Pont and Formu-labs. This petition seeks to have set aside by this Court the order of the District Court signed January 10, 1962 and filed January 11, 1962. Such order has been stayed by this Court to the extent that Hartley is relieved of the obligation to make, and is enjoined from making, any disclosure to any third party of any trade secrets belonging to Formu-labs pending the further order of this Court.

In substance, Hartley contends, for the reasons assigned in its petition, that the District Court was guilty of an abuse of discretion under the circumstances of the case in making and signing the disclosure order, and prays that an extraordinary writ be issued.

A proper consideration and disposition of Hartley’s petition is hampered by the fact that it is inextricably intertwined with the questions presented to us in Cause No. 17741. As previously noted, Formulabs appealed from the disclosure order signed January 10, 1962 and filed January 11, 1962. Hartley and du Pont have moved to dismiss the appeal on the ground that the order appealed from by Formulabs is not a final appealable order. Formulabs concedes that the order appealed from is not a final order as it relates to Hartley and du Pont but contends that the effect of the order is tantamount to an order denying Formulabs the relief which it seeks, i. e., to prevent Hartley from disclosing Formulabs’ trade secrets. For- ■ mulabs’ contention proceeds on the premise that if Hartley discloses the trade secrets pursuant to the disclosure order, its efforts in the District Court to enjoin such disclosure by Hartley will be evanescent. For that reason, Formulabs urges us to accept the appeal as a petition for writ of mandamus, prohibition, or other writ for relief in the event we should conclude that the order appealed from is not an appealable order.

In order to place Formulabs’ position in proper focus, it is necessary to partially review certain proceedings in the District Court.

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