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Thermech Engineering Corp. v. Laboratories12/22/2003
Plaintiff Thermech Engineering Corporation sued defendant Abbott Laboratories for fraud and violation of both the federal Racketeer Influenced and Corrupt Organization Act (18 U.S.C. § 1961 et seq.) and the California Uniform Trade Secrets Act (UTSA) (Civ. Code, § 3426 et seq.; all further statutory references are to the Civil Code). After a non-jury trial, the superior court entered judgment for plaintiff under the UTSA based on defendant's misappropriation of a proprietary procedure plaintiff developed to coat the inside surfaces of small diameter tubes with Teflon, and awarded plaintiff damages, prejudgment interest, and injunctive relief.
Defendant contends the trial court erred by finding plaintiff has a maintainable trade secret in the Teflon coating procedure, and by rejecting its statute of limitations and unclean hands affirmative defenses. In addition, defendant challenges the trial court's award of damages and injunctive relief to plaintiff. We affirm the trial court's judgment in its entirety.
FACTS
Plaintiff is certified as a licensed applicator of Teflon material. In the late 1970's, it began using Teflon to coat the interior surfaces of tubes for a company eventually acquired by defendant. Defendant has several divisions, among which are its Diagnostics Division (ADD), located in Texas, and the Corporate Development Shop (CDS), an engineering, manufacturing, and product development support facility in Illinois . ADD manufactures and distributes machines used to analyze human blood, including the TDx Analyzer and the IMx Analyzer. One component of each device is a specially manufactured small-diameter steel tube that transfers a blood sample for testing known as a probe.
CDS experimented with the probes seeking to prevent fluid drawn through a probe during one test from sticking to the interior wall, i.e. "carryover," and thereby contaminating the results of subsequent tests. This effort resulted in the decision to coat the entire inside surface and a portion of the outside surface of probes with a Teflon compound. In 1984, defendant began working with plaintiff to develop a production-level procedure to coat the interior walls of the probes with a smooth Teflon surface. Plaintiff became defendant's exclusive supplier of coated probes for defendant's analyzers.
The parties presented conflicting evidence on who developed the coating process. One witness who worked at CDS testified he participated in the development of a coating procedure in the early 1980's. In November 1984, CDS recorded a videotape of this procedure.
Charles Ripley, one of plaintiff's original principals who participated in the Teflon-coating project on the probes, testified concerning plaintiff's development of its process during the 1970's. According to plaintiff's evidence, it both designed equipment and developed a process to perform the task. The equipment included a device that simultaneously holds 25 probes and specially designed forced-air dryers. The process utilizes a vacuum to draw the Teflon compound from a tank into the probes and then remove excess material by forcing air through them. Next, the device holding the probes is plugged into a force-dry dryer operating at a specified air pressure level for five minutes. Thereafter, the device is plugged into two other forced-air dryers for the same length of time, each operating at a different air pressure level. Finally, the probes are "cured" in an oven.
Ripley admitted defendant provided plaintiff with both advice on the coating process and certain specialized equipment to perform it, but he denied defendant showed plaintiff the procedure or provided input on plaintiff's co
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