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Heyden Chemical Corp. v. Burrell & Neidig Inc.

Decided: March 9, 1949.

HEYDEN CHEMICAL CORPORATION, A CORPORATION, PLAINTIFF,
v.
BURRELL & NEIDIG, INC., A CORPORATION, HARRY BURRELL, CHARLES P. NEIDIG AND E.L. DEMAREST, DEFENDANTS



Civil action.

Grimshaw, J.s.c.

Grimshaw

Plaintiff, Heyden Chemical Corporation, is engaged in the business of manufacturing chemicals for industrial use. Among its products are formaldehyde and pentaerythritol. Heyden is the oldest commercial producer of formaldehyde in the United States and at present has but six competitors. 45% of the formaldehyde manufactured in the United States is made by Heyden and a large part of its income is derived from this source.

Pentaerythritol was developed in 1935 by one of the research chemists employed by Heyden at its Garfield plant. Commercial production of the substance was started in 1939. In this field Heyden has but four competitors and alone is responsible for 50% of the national production.

The defendant, Burrell, entered the service of Heyden in 1940 as a chemical engineer in the research department. In 1943 he was made the head of the department and continued in that capacity until he resigned in 1946. Burrell had used formaldehyde prior to his entry into the service of the plaintiff

but had had no experience with the manufacture of either formaldehyde or pentaerythritol. Neidig was originally employed in 1942 as a chemical engineer in the Heyden research department. He was later transferred to the technical sales division where he was working at the time of his resignation from the company's employ in May of 1946. Demarest was employed by Heyden as a chemical engineer and served in that capacity until his resignation in 1947. Neither Neidig nor Demarest had any experience with the manufacture of formaldehyde or pentaerythritol prior to his association with the Heyden Company.

In the course of their employment by Heyden all three defendants became thoroughly familiar with its research program and manufacturing processes. Burrell, upon becoming head of the research department, directed the research and experimentation in connection with both formaldehyde and pentaerythritol. Demarest, who was engaged by Heyden in 1942, was occupied at first with general engineering design. Later he was transferred to the production department where he supervised the production of both formaldehyde and pentaerythritol. And Neidig, both through his connection with the research department and the technical sales department, gained an intimate knowledge of research and production methods.

After their retirement from the service of Heyden, Burrell and Neidig formed a corporation known as Burrell & Neidig, Inc. The defendant, Demarest, joined the Burrell & Neidig organization upon his retirement from the Heyden organization in 1947. In the prospectus issued by Burrell & Neidig, Inc., and in trade journals, the defendants held themselves out as consultants in the field of industrial chemistry, specializing in the manufacture of formaldehyde and pentaerythritol and in the designing of plants for the production of both substances.

Claiming that the defendants had disclosed and were about to continue the disclosure of information which, it charged, was a trade secret, Heyden filed its bill in the old Court of Chancery seeking an injunction against the defendants. An

interlocutory injunction was signed and the matter came on for final hearing.

The manufacture of formaldehyde is a process consisting of a number of integrated steps. The same is true of pentaerythritol. The basic ingredients used in the production of both substances are well known to the chemical profession. There are approximately 850 scientific articles, patents and treatises upon the subject of formaldehyde and five or six hundred on the subject of pentaerythritol. The literature, generally speaking, deals with variations of the manner of treatment ...


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