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Columbus Steel Castings v. King Tool (Ohio App 12/4/08)

Columbus sued King and Alliance Castings Co. for misappropriation of trade secrets and related claims. The trial court granted summary judgment in favor of Alliance and the appellate court affirmed in part and reversed in part. Both Columbus and Alliance produce bolsters for railroad cars; bolsters are steel crossbeams that are positioned under railroad cars for support and stabilization. The production of bolsters requires the use of a bolster milling machine. In 2003, Columbus retained King to build a replacement bolster milling machine for use at its foundry. Alliance learned of this and asked Blake, who was doing consulting work for Alliance, to find out who made the machine for Columbus. Blake determined that it was King that built the machine and Blake went to King's foundry to inspect the machine before it was shipped to Columbus. Columbus later learned that Alliance had retained King to build it a bolster milling machine. According to Columbus, the machine built for Alliance by King was essentially the same as the one produced for it. The trial court held that Columbus had failed to produce evidence showing that Alliance used improper means to acquire the information, or that Alliance knew or had reason to know that the information was acquired improperly. This court held that a fact issue existed concerning whether there was a misappropriation of a trade secret. There was no dispute that a fact issue existed as to whether at least some of the information concerning the bolster milling machine built for Columbus constituted a trade secret. The dispute centered on whether a misappropriation had occurred. It was Columbus' contention that Alliance misappropriated its trade secrets due to Blake's misrepresentation to King that he worked as a consultant for both Columbus and Alliance, which allowed him to gain access to the machine being built for Columbus. Alliance responded that it could not be held liable for the acts of an independent contractor and that it did not know of Columbus' claim that the bolster milling machine was a trade secret. There was testimony in the record that Blake introduced himself as working for both Columbus and Alliance when he arrived at King to look at Columbus' machine. However, the testimony before the trial court was conflicting on this point. A finding that Blake had introduced himself in this manner would support a conclusion that Alliance had reason to know that the information was acquired improperly. The court rejected Alliance's contention that it was necessary for Columbus to prove that Alliance knew or had reason to know that the information was Columbus' trade secret. The statute did not provide that the misappropriating party had to have actual or constructive knowledge of who owned the trade secret.

Full post as published by The Trade Secrets Vault on December 15, 2008 (boomark / email).