## Facts

- Inventors Spitzer and Small developed a pressurized shaving-cream product that dispensed as a stable lather and obtained U.S. Patent No. 2,655,480, which was exclusively licensed to Carter Products and sold as “Rise.”
- Chemists working on the development, including Fine, executed confidentiality agreements covering the formula and related know-how.
- Colgate attempted to develop a competing pressurized shaving cream but was unsuccessful; it later hired Fine.
- While employed by Colgate, Fine provided information that enabled Colgate to produce a competing pressurized shaving cream.
- Carter Products and the patent owners sued Colgate and related entities for patent infringement and misappropriation of trade secrets tied to the formula and process.
- Defendants conceded infringement if the asserted claims were valid but challenged validity and sought a declaration of invalidity.
- The district court held the asserted patent claims valid, found trade-secret misappropriation, enjoined infringement and secret use, ordered assignment of certain patent applications derived from the secrets, and referred damages issues to a special master.

## Issues

1. Whether the asserted claims of the pressurized shaving-cream patent were valid over the prior art or were an obvious combination of known elements.
2. Whether Colgate could be liable for trade-secret misappropriation by using information obtained from a chemist bound by confidentiality obligations to the trade-secret owner.
3. Whether equitable relief properly included injunctions, compelled assignment of patent applications derived from misappropriated secrets, and an accounting framework for damages and profits.

## Decision

- The Fourth Circuit affirmed the judgment for plaintiffs.
- The court upheld validity of the patent claims in suit and sustained the infringement injunction.
- The court affirmed the finding that Colgate knowingly used misappropriated trade secrets obtained through Fine’s breach of confidence.
- The court upheld equitable relief requiring assignment of patent applications based on the misappropriated secrets.
- The court approved the reference to a special master to determine infringement damages, trade-secret damages and profits, and whether increased patent damages were warranted.

## Legal Principles

- A combination patent may be valid even if its individual elements are known, when the claimed combination yields a new and useful result not anticipated or obvious in the prior art.
- Evidence such as failure of others, commercial success, and later copying may support a finding of nonobviousness.
- Trade-secret liability may extend to a recipient who is not a party to the original confidentiality agreement if the recipient knows or has reason to know the information is confidential and is being disclosed in breach of a duty of confidence.
- Equity may enjoin use of misappropriated trade secrets and may require assignment of patent applications (and related rights) derived from the wrongful use of confidential information to prevent unjust enrichment and restore the benefits of the secret to its owner.
- Courts may order an accounting and refer damages, profits, and potential enhanced patent damages to a master for determination.

## Conclusion

The Fourth Circuit sustained both patent and trade-secret protections for the pressurized shaving-cream technology, holding the patent valid and affirming that a competitor that knowingly exploits confidential know-how obtained through a breach of confidence is liable and may be compelled to assign patent rights derived from that misuse.


Colgate-Palmolive Co. v. Carter Prods., Inc., 230 F.2d 855 (4th Cir. 1956)