Progressive Products, Inc. v. Swartz

A plaintiff must prove trade secrets were not available by proper means and that reasonable efforts were made to maintain the secrecy in order to prevail on a misappropriation claim.

For Full Opinion:
2011 Kan. LEXIS 308
2011 WL 3759938

Opinion (Rosen): Thomas Swartz (“Swartz”), Marvin Robarts (“Robarts”), and Calvin Bunney (“Bunney”) were employed at Progressive Products, Inc. (“PPI”) before starting a competing company, VIN Manufacturing (“VIN”). PPI used a ceramic-backing procedure developed by PPI which Swartz, Robarts, and Bunney used while working at PPI. When VIN was formed, PPI’s ceramic-backing procedure was used by the competing company. PPI alleged three instances of misappropriation of trade secrets against VIN: the formula and mixing process for its ceramic backing, computerized customer lists, and a computer pricing program. The district court held VIN had misappropriated all the secrets, but the Court of Appeals only affirmed misappropriation of the secrets relating to the formula and calculation of batch amounts. The Kansas Uniform Trade Secrets Act required PPI to prove VIN employed theft or breach of duty to acquire the trade secrets, that the secrets were not readily ascertainable to VIN by proper means, and that PPI made reasonable efforts to maintain the secrecy of the trade secrets. Since the formula was kept secret and measures were taken to hide ingredients from anyone visiting PPI, the district court did not err in finding trade secrets for the ceramic formula and calculation of batch amounts. However, the Court of Appeals was correct in finding no evidence to support trade secrets for the customer lists. Judgment of the Court of Appeals finding trade secrets for PPI AFFIRMED.