which is used in one's business, and which gives him an advantage over competitors who do not know or use it. . . Generally it relates to the production of goods, as for example, a machine or formula for the production of an article.
By-Buk Co. v. Printed Cellophane Tape Co., 163 Cal.App.2d 157 at 166, 329 P.2d 147 at 152 (1958); Richardson v. Suzuki Motor Co., Ltd., 868 F.2d 1226, 1243 (Fed. Cir. 1989).I
The burden of proof is on the plaintiff to show: (a) a legally protectable trade secret; and (b) a legal basis, either a covenant or a confidential relationship, upon which to predicate relief. Imi-Tech Corp. v. Gagliani, 691 F.Supp. 214, 230 (S.D.Cal. 1986); quoting Futurcraft Corp. v. Clary Corp., 205 Cal.App.2d 279, 283, 23 Cal. Rptr. 198 (1962). It appears that there exist sufficient facts before the court under that standard to permit the plaintiff to withstand the motion for summary judgment on the misappropriation of trade secrets claim. All that is required is that, except by use of improper means, there would be difficulty in acquiring the information. Imi-Tech Corp., supra at 231.
Initially, it does appear that Composiflex possessed information that fit the definition of a trade secret. Composiflex had a method of applying urethane coating materials to various fabrics in different shapes. They had developed the technology consisting of impregnating a reinforcing fiber braid with two different levels of stiffness of thermoset polyurethanes. Composiflex had developed reinforced tubular products prior to contact with ACS. They had a trade secret which consisted of "a compilation of information which is used in one's business, and which gives him an advantage over competitors who do not know or use it . . . and it generally relates to the production of goods." Richardson, supra, 868 F.2d at 1243.
Composiflex also can meet the second part of the trade secret test, namely that there is "a legal basis, either a covenant or confidential relationship, upon which to predicate relief." Imi-Tech, supra, 691 F. Supp. at 230. Plaintiff correctly points out that the parties at Paragraph 12 of the D&L Agreement go into great detail spelling out the parameters of the confidentiality that was to be maintained with regard to their exchange of information. Both parties were cognizant that the exchange of confidential information was an essential element of the contractual relationship, and committed themselves to very specific terms in spelling out the terms and conditions of the contract.
Plaintiffs may also be able convince a factfinder that they meet the other prong of the Imi-Tech test, that is "that, except by use of improper means, there would be difficulty in acquiring the information." Id. at 231. ACS apparently had a problem when they would grind the coated shaft of the catheters in order to make them smooth and round, and this would damage many of the catheters because the coating on the catheter was not concentric. As a result, the percentage of good quality catheters was quite low. It was this information on how to solve the problem with the catheters that Composiflex possessed, as it was able to coat the Kevlar braid smoothly and give it the desired physical characteristics. There was difficulty for ACS to acquire this information from any other source than Composiflex, that is why Dr. Mandleco in September 1987 undertook a nationwide search for someone who already had the manufacturing proficiency to solve the problem. As a result, ACS entered into the D&L Agreement with Composiflex. The court believes this prong of the trade secret test has also been met, namely tht ACS would have had "difficulty in acquiring the information, except by use of improper means."
The issues are many that remain before this complex matter will be resolved. Both sides have presented voluminous material to support their positions. The court is confident, however, that a reasonable factfinders can sort through the facts and make the credibility determinations that is their function. The court will deny the motion of defendant ACS for summary judgment.
EDITOR'S NOTE: The following court-provided text does not appear at this cite in 795 F. Supp. 151.
An appropriate order will follow.
BORDER OF COURT R
AND NOW this 21st day of May, 1992,
IT IS HEREBY ORDERED that the motion for summary judgment filed by the defendant, Advanced Cardiovascular Systems, Inc., is DENIED.
Glenn E. Mencer
United States District Judge