## Facts

- Rohm and Haas developed a “second generation” latex paint vehicle manufacturing process after a seven-year research program, producing commercially successful products that competitors generally could not match.
- The company had previously sold products made under an earlier, patented “first generation” process, but treated the later process as proprietary and nonpublic.
- Rohm and Haas limited access to the process to key employees and used confidentiality or nondisclosure obligations, including for laboratory technician Joseph Harvey, who learned the process through his work.
- Harvey left Rohm and Haas and joined competitor Adco; Rohm and Haas alleged Adco’s ability to produce comparable vehicles resulted from Harvey’s disclosure of the process.
- Evidence suggested defendants were uniquely able to sell vehicles with the same desirable qualities as Rohm and Haas’s second-generation product; Adco’s consultant testified there was no reason to believe Adco could have derived the successful process solely from public literature.

## Issues

1. Whether the manufacturing process qualified as a protectable trade secret even if its individual elements were generally known in the industry.
2. Whether Rohm and Haas used reasonable measures to maintain secrecy sufficient for trade secret protection.
3. Whether the record supported an inference of misappropriation through a former employee’s disclosure and use by competitors.
4. Whether the district court applied the correct legal standards in denying relief on the trade secret claim.

## Decision

- The Third Circuit reversed the district court’s denial of relief on the trade secret claim.
- The court held the district court erred by treating the presence of generally known components as defeating trade secret status, rather than assessing secrecy and value of the overall combination.
- The case was remanded solely to determine appropriate relief (such as injunctive relief and/or damages) consistent with the appellate court’s conclusions.

## Legal Principles

- A trade secret may consist of a formula, process, or compilation of information that provides a competitive advantage because it is not known or used by competitors.
- A unique combination or sequence of elements can be a trade secret even when individual elements are publicly known, if the combination is not generally known or readily ascertainable by proper means.
- Trade secret protection depends on (1) secrecy of the overall information, (2) reasonable efforts to maintain that secrecy, and (3) economic value attributable to the secrecy.
- Misappropriation may be inferred where a knowledgeable former employee joins a competitor and the competitor achieves rapid, otherwise unlikely duplication of the claimant’s results, particularly when independent development from public sources is implausible.

## Conclusion

The Third Circuit held that Rohm and Haas’s second-generation manufacturing process could be a protectable trade secret as an integrated combination of known elements, and that the district court’s contrary approach misapplied trade secret law; the case was remanded to determine the proper remedy for misappropriation.


Rohm & Haas Co. v. Adco Chem. Co., 689 F.2d 424 (3d Cir. 1982)