Formulabs, Inc. v. Hartley Pen Co.

318 F.2d 485, 7 Fed. R. Serv. 2d 505, 137 U.S.P.Q. (BNA) 825, 1963 U.S. App. LEXIS 5140
CourtCourt of Appeals for the Ninth Circuit
DecidedMay 29, 1963
DocketNos. 17741, 17799, 18180
StatusPublished
Cited by6 cases

This text of 318 F.2d 485 (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., 318 F.2d 485, 7 Fed. R. Serv. 2d 505, 137 U.S.P.Q. (BNA) 825, 1963 U.S. App. LEXIS 5140 (9th Cir. 1963).

Opinion

JERTBERG, Circuit Judge.

Since the above-entitled causes are to be disposed of in one opinion, a review of certain past proceedings in the District Court and in this Court may conduce to a better understanding of the problems presented in the various causes and place each party in proper focus.

The matters before us in the above causes are rooted in an action instituted by Hartley Pen Company against E. I. du Pont de Nemours & Company for damages for breach of warranty.

Hartley Pen Company is the petitioner in No. 17,799 and an appellee in No. 17,741 and No. 18,180. E. I. du Pont de Nemours & Company is a respondent in No. 17,799 and an appellee in No. 17,741 and No. 18,180. Formulabs, Incorporated, Clarence Schreur and Gordon S. Lacy, etc., are appellants in No. 17,741 and No. 18,180 and respondents in No. 17,799. The Honorable William C. Mathes, Judge of the United States District Court for the Southern District of California, is a respondent in No. 17,799.

For convenience, Hartley Pen Company will be referred to as “Hartley”, E. I. du Pont de Nemours & Company as “du Pont”, Formulabs, Incorporated as “Formulabs”, the Honorable William C. Mathes as “District Court”, and Formulabs, Incorporated, Clarence Schreur and Gordon S. Lacy, collectively, as “Intervenors”.

Hartley manufactures ball point pens containing cartridges filled with ink made under a secret formula comprising a trade secret belonging to Intervenors. The use of 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 complaint filed by Hartley against du Pont alleges that the inks made by Hartley 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 [487]*487the 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, the Honorable Benjamin Harrison now deceased, presiding, granted du Pont the right to inspect documents in Hartley’s custody or under its control without protective provisions. It was conceded that such inspection would presumably disclose the secret formula and secret test procedures.

On petition of Hartley to this Court for an extraordinary writ, this Court ordered a writ of mandamus to 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, of the secret testing procedures, or both, was or were relevant and necessary to the proper defense by du Pont of the damage 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 of before February 2, 1962.

It is not seriously questioned that the answers to the interrogatories and requests for admission will require the disclosure of the trade secrets. While the order contains protective measures devised by the District Court for the preservation of the trade secrets upon disclosure by Hartley to du Pont, and which measures appear to be as effective as may reasonably be devised, considering the purpose to be served, nevertheless, it is not seriously questioned that disclosure to du Pont portends general publication of the secrets during the course of fu1 ture proceedings in the main action.

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 Intervenors. 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 Intervenors pending the further order of this Court.

[488]*488In 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. This is the cause presented to us in No. 17,799.

We will now posture Cause No. 17,741. In doing so, we deem it unnecessary to review the efforts of Intervenors to intervene in the main action pending in the District Court between Hartley and du Pont by the filing of various pleadings in intervention. Suffice it to say that at a hearing held on July 31,1961, the District Court in part stated:

“So the leave, Mr. Sellers (counsel for Intervenors) is to file a complaint in intervention joining the Hartley Pen Company, the plaintiff, in opposing the efforts of the defendant to compel disclosure of the secret formula.

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

Related

Cite This Page — Counsel Stack

Bluebook (online)
318 F.2d 485, 7 Fed. R. Serv. 2d 505, 137 U.S.P.Q. (BNA) 825, 1963 U.S. App. LEXIS 5140, Counsel Stack Legal Research, https://law.counselstack.com/opinion/formulabs-inc-v-hartley-pen-co-ca9-1963.