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Rycoline Products, Inc. v. Walsh

Employer stated claim against former employee for theft of "trade secret" even where allegedy stolen chemical formula had been reverse-engineered from third-party competitor's product.

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The full case caption appears at the end of this opinion.

Plaintiff Rycoline Products, Inc. (Rycoline) manufactures chemical products for use in the printing industry. It appeals from certain pretrial rulings and from an order entered after the presentation of plaintiff’s case dismissing its claims pursuant to R. 4:37-2(b). [FOOTNOTE 1] Defendant C&W Unlimited (C&W) is a competitor of Rycoline and is owned and operated by defendants Michael Walsh and Eric Berliner. Defendant Karl Kaiser began his employment with Rycoline in 1976 and by 1995 held the position of East Coast District Manager. Testimony introduced at trial indicated that he was responsible for the local manufacturing facility as well as for manufacturing chemical products according to the proper formula and within Rycoline’s quality control guidelines. In October 1985, Kaiser executed a “confidentiality agreement” with Rycoline. It provided that he would not disclose certain information that was deemed “confidential” by Rycoline. Pursuant to this agreement, Kaiser agreed not to reveal to others “during and after my employment . . . so long as any such information may remain confidential, secret or otherwise wholly or partially protectable” plaintiff’s “formulas, processes, methods, manufacturing techniques, discoveries, mixes, compounds” or other such matter including “production or sales activities.” Kaiser had not, however, entered into either a restrictive covenant not to compete or a formal written employment agreement with Rycoline. In 1995, defendants Steven Pauloski and Bernard Bush were members of the sales staff of Rycoline’s East Coast District. Other members of the sales staff included Morton Altholz and Frank Kreppel.

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