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Sun Dial Corp. v. Rideout

Decided: April 17, 1953.

SUN DIAL CORPORATION, A CORPORATION OF NEW JERSEY, PLAINTIFF,
v.
CARL D. RIDEOUT, JAMES L. RIDEOUT, ROBERT A. WHITFIELD, NANCY ORI WHITFIELD AND PRECISION MARKING CO., A CORPORATION OF NEW JERSEY, DEFENDANTS



Freund, J.s.c.

Freund

The plaintiff, Sun Dial Corporation, seeks to restrain the defendants from using an alleged secret process obtained by the defendants while in plaintiff's employ. The defendants deny that the plaintiff's process is secret.

Since the proceeding involved an alleged secret process, the testimony was taken in camera and any discussion of the evidence will be general. Taylor Iron and Steel Co. v. Nichols , 73 N.J. Eq. 684 (E. & A. 1907). Heyden Chemical Corp. v. Burrell , 2 N.J. Super. 467 (Ch. Div. 1949).

In 1943, William J. Williams, Jr. organized the plaintiff corporation, of which he has always been president. He had

been employed by Chamborn Corporation and Linotone Corporation, both of which manufactured dials. In brief, the alleged secret process is a method of marking photographically the gradations on precision dials. Williams testified that Sun Dial has three licensees who manufacture dials by the plaintiff's process.

In 1951 the individual defendants, all former employees of the plaintiff, organized the defendant corporation, Precision Marking Co., and began the manufacture of dials in competition with the plaintiff. Many of the defendant's employees were formerly employed by the plaintiff.

Williams testified that from the inception of the plaintiff's business there was a "No Admittance" sign at the entrance of its plant, that every employee was told the process was secret, and accordingly, although there was no express contract, was under a duty not to use or divulge the alleged secret process. This testimony was partially corroborated by other witnesses for the plaintiff, but notwithstanding the fact that over the years an aggregate of 247 persons had been employed by the plaintiff, not one was called to testify that prior to 1949 employees were told the process was secret.

The proofs disclose that in 1949 after the plaintiff moved into its present plant, a sign was posted at the door of the plant, stating "* * * we are working under a secret process," and visitors in order to gain admittance to the plant were required to sign a register at the top of each page of which was the legend: "I, the undersigned, acknowledge that any processing observed on these premises is considered SECRET PROCESS which I agree not to use or divulge." Three of the four individual defendants were employed by the plaintiff prior to 1947. All the defendants testified, firmly corroborated by former employees of the plaintiff, that they never were told the process was secret. Those who had been in the plaintiff's employ in 1949 testified that the sign and the register stating "secret process" were put in use at that time for security reasons because of a government contract, and their testimony in this regard

is bolstered by photostats of pages of the register, in evidence, showing on each page a column headed "U.S. Citizen."

Williams testified that the manufacturing processes used by Chamborn and Linotone were not secret. Although he insisted that the Sun Dial process is so different from the Linotone process as to be "secret," there was testimony that basically there is nothing novel in the Sun Dial process. Admittedly, the defendants are using the Sun Dial process, and two employees of Linotone testified that they had inspected the Precision plant shortly before the trial of this matter, and that the Sun Dial process there being used was basically like the Linotone process, which was never secret. The proofs indicate that both processes use photography in the marking of dials. However, the Sun Dial process differs from the Linotone process in the method of coating and relieving the dials, and the solutions and agents used.

In July 1947 a nationally distributed trade magazine, Plastics , carried an article entitled "Photographic Process Speeds Markings." The article was written by Williams in collaboration with an associate editor of the magazine and it referred to the plaintiff corporation by name and purported to describe in detail its manufacturing process. ...


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