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Adolph Gottscho Inc. v. American Marking Corp.

Decided: January 25, 1954.

ADOLPH GOTTSCHO, INC., A CORPORATION, PLAINTIFF,
v.
AMERICAN MARKING CORPORATION, A CORPORATION, AND JOHN K. JACKSON, DEFENDANTS



Speakman, J.s.c.

Speakman

This is an action by Adolph Gottscho, Inc., a New York corporation authorized to do business in New Jersey, originally brought against four defendants: American Marking Corporation, Alfred Reinke, Gus Reinke Machinery & Tool Company, and John K. Jackson. The case first came on for trial before Judge Stein on May 22, 1952, at which time one day's testimony was taken; and the trial was then continued to a later date. At that time all the parties mentioned were in the action.

Subsequently the case was set down for trial before Judge Stein for June 9, 10 and 11, 1953, but due to his assignment elsewhere the matter came on before me temporarily assigned to try the case. By agreement and stipulation of the parties the testimony taken before Judge Stein on May 22, 1952 was part of the record before me and it was agreed that I should read it is though the testimony had been taken before me. The trial continued before me on the 9th, 10th, 11th and 12th of June, 1953, and was adjourned to the fall, when it commenced in the early part of October and concluded in December.

Before disposing of the meritorious questions involved in the case, a few preliminary observations will not be inappropriate.

Between May 22, 1952, when the trial commenced before Judge Stein, and June 9, 1953, when it was resumed before me, the plaintiff and the defendants Alfred Reinke and Gus Reinke Machinery & Tool Company, entered into a stipulation of dismissal and an agreement, which was introduced in evidence at the opening of the trial before me on June 9.

The remaining defendants, i.e. , Jackson and American Marking Corporation, which for convenience will be considered as Jackson hereinafter, thereupon made a motion to dismiss as to them on the ground that the release of one joint tort-feasor released the other. The soundness of this principle is unquestioned and it is the law of New Jersey. Here, however, it was decided that it was not a release but was a covenant not to sue, and that therefore the Jackson defendants were not released. The motion of these defendants at that time was accordingly denied. During the summer recess application was made to the Appellate Division under Rule 4:2-2(b), now R.R. 2:2-3(b), for leave to appeal from that order, which application was denied.

At the resumption of the trial before me this fall the defendants renewed the application to dismiss on the grounds previously stated, and I believe that at the conclusion of the plaintiff's case one of the grounds of a motion for dismissal was the same as that alleged in June and at the opening of the trial this fall. Again the application was denied.

In addition, on the motion to dismiss at the end of the plaintiff's case the defendants contended that because of the issuance of letters patent with respect to certain of the alleged secrets, while this case was pending, the court no longer had jurisdiction over the subject matter covered by the patent; and further argued that as to those alleged secrets which were not included in the letters patent issued, but which were disclosed in the application, that there was a public disclosure which entitled the defendant to a dismissal of the action. These motions were denied for the reasons then stated.

It seems to me that whatever the law may be elsewhere -- and I question that that is the law elsewhere -- it did not appear to be the law in New Jersey or in the Third Circuit,

nor did it appear to be the law in the Sixth or Seventh Circuits. As to New Jersey and the Third Circuit, refer to Stone v. Goss and Graselli Chemical Co. , 65 N.J. Eq. 756 (E. & A. 1903); Thiberg v. Bach , 107 F. Supp. 639 (D.C. 1952), affirmed 203 F.2d 956 (3 Cir. 1953).

I reaffirm, on the briefs and on the arguments of ten days ago, the rulings heretofore made on applications for dismissal on the ground of the release of one tort-feasor releasing the other, the lack of jurisdiction of this court because of the issuance of letters patent with respect to some of the alleged secrets, and the disclosure by the patents issued as well as by the application for the patents. For a number of years the plaintiff has been engaged in the design, manufacture, and sale of automatic marking and printing machines used to imprint code numbers, lettering, and other marks of identification on packages. It appears from the evidence that in the packaging industry for many years it had been the practice to buy packages on which appeared the printing when purchased, or that the packages were bought flat and the printing would be applied before placing the object in the particular carton. The purpose and the function of the machines involved here is to provide a means whereby that imprinting or coding or whatever it might be, may be done after the carton has been packed and put through the assembly line -- taking the case of the large machine, the Markocoder, as part of an assembly line -- so that it would work in with our standards of manufacture in this country, the assembly line method of starting at one end and going right through to completion.

The plaintiff, in about 1948, commenced to develop the secrets involved here, and with respect to some it may have started earlier. Basically, they involved three machines: the Rolacoder, the Rolaprinter, and the Markocoder 3M.

In 1948 the plaintiff hired the defendant John K. Jackson. This hiring was the result of conversations between the defendant Jackson and the plaintiff's officer, Ira Gottscho. The conversations were started earlier in the year following the Packaging Show -- which it is agreed was always held in the

spring -- and these conversations were renewed in the summer or fall. Jackson was first hired as a salesman, and shortly thereafter as a design engineer. Then, in June 1949, he was made assistant general manager and continued as such until February of 1950, when he was made chief engineer. He continued, in that position, until he was discharged in September of 1950.

It was during this time that the plaintiff alleges substantially all the secrets here involved were perfected by experimentation and trial-and-error. The plaintiff claims that at the time of the hiring or before Ira Gottscho hired Jackson on behalf of the plaintiff corporation, they had a discussion in which Jackson agreed to keep confidential all the information he received. This is disputed by Jackson, but for the purposes of this case it seems to me unnecessary to determine that, because I am satisfied from the nature of the employment in which Jackson was engaged that the plaintiff corporation thought a confidential relationship existed within the meaning of that term as expressed in the opinion of Judge Goldmann in the case of Sun Dial Corporation v. Rideout , decided by the Appellate Division in January of this year and filed January 6, 1954, 29 N.J. Super. 361. No useful purpose will be served to reiterate herein the list of authorities mentioned in the Sun Dial case; most of them have received our consideration during the course of this trial.

The basic question here is whether the information transmitted by the plaintiff to the defendant was of a secret nature; that is, did it refer to trade secrets within the meaning of that term.

It seems to me to be beyond question that the defendant had no knowledge of or experience with imprinting or coding machines prior to his employment with the plaintiff. While he had been employed for many years in one engineering capacity or another by different substantial organizations, particularly in the packaging industry, the record is absolutely barren of any evidence that he had had any experience whatsoever with coding or imprinting machines. The conclusion seems to me to be inescapable that any information and

knowledge that he obtained as to the design, construction and manufacture of imprinting and coding machines like those in issue here, was acquired by him while he was employed by the plaintiff corporation.

It was held in the Sun Dial case, following what seems to be accepted throughout the country, that

"a trade secret may consist of a plan, process, formula, device, or compilation of information used in one's business and which affords an opportunity to obtain an advantage over competitors who do not know or use it. There must be employed creative faculties in originating it, amounting to a ...


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