## Facts

- Forest Laboratories, Inc. manufactured and packaged effervescent sweetener tablets and developed a method to extend shelf life.
- A key element of Forest’s method required tempering tablets before packaging in a room at 40% or less relative humidity for 24–48 hours.
- Forest disclosed its packaging process to Tidy House Corporation (a customer) in the course of their business relationship under circumstances found to be confidential.
- Pillsbury later acquired Tidy House’s business assets and began using the same packaging method at its Omaha, Nebraska facility in early 1964.
- A former Tidy House/Pillsbury employee (Richard Egan) communicated the process to Pillsbury personnel and stated it had been received in confidence from Forest.
- Forest obtained a patent in 1965 that publicly disclosed the tempering step; the parties stipulated to a judgment of noninfringement, leaving only trade-secret claims.
- In the district court (applying Wisconsin law), only the tablet-tempering step was found to be Forest’s protectable trade secret; Pillsbury was held liable for misappropriation and damages were determined through an accounting.

## Issues

1. Whether the tablet-tempering requirement (≤40% humidity for 24–48 hours pre-packaging) qualified as a trade secret under Wisconsin law.
2. Whether Pillsbury misappropriated the trade secret where it used the process after acquiring Tidy House’s business and had notice the information was confidential.
3. Whether Forest’s later patent disclosure eliminated trade-secret protection and limited remedies to the pre-patent period.
4. Whether the district court’s accounting and damages award (including denial of attorneys’ fees) was legally and factually proper.

## Decision

- The Seventh Circuit affirmed that the tablet-tempering step was a protectable trade secret under Wisconsin law.
- The court upheld the finding that Pillsbury misappropriated the trade secret because it used the process with notice of its confidential origin.
- The court held that patent issuance terminated trade-secret protection going forward, limiting trade-secret remedies to the period before public disclosure by patent.
- The court largely sustained the damages/accounting approach tied to pre-patent misuse and rejected Forest’s request for attorneys’ fees absent statutory or contractual authorization.
- The judgment was affirmed with modifications to aspects of the damages accounting.

## Legal Principles

- A trade secret may consist of a formula, pattern, device, or compilation of information used in business that provides a competitive advantage, including a process for treating or preserving materials (Restatement (First) of Torts § 757 cmt. b, as applied under Wisconsin law).
- Patent-level novelty is not required for trade-secret protection; the standards differ from patent law.
- Misappropriation may be found where a party uses information it knows (or is told) was received in confidence, even if the party acquired the business assets of the original recipient without expressly assuming all liabilities.
- Public disclosure through patent issuance ends trade-secret protection for the disclosed subject matter; trade-secret damages are confined to the period before disclosure.
- Attorneys’ fees are not recoverable absent statute or agreement.

## Conclusion

The court held that Forest’s tablet-tempering step was a protectable trade secret and that Pillsbury misappropriated it by using the process with notice of its confidential character, but it limited trade-secret remedies to the period before the process was disclosed by Forest’s later-issued patent and denied attorneys’ fees without statutory or contractual authority.


Forest Laboratories, Inc. v. Pillsbury Co., 452 F.2d 621 (7th Cir. 1971)