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`DUR-A-FLEX, INC.
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`v.
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`SAMET DY
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`2
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`:
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`:
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`:
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`SUPERIOR COURT
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`JUDICIAL DISTRICT OF
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`HARTFORD
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`MARCH 28, 2019
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`Memorandum of Decision
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`1. Trade Secrets: the merely obvious versus the marginally magic.
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`If someone steals your trade secret you can sue them under General Statutes §§
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`35-50 to 35-58-
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`But first you have to have a trade secret. So this half of this case is about whether
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`the plaintiff Dur-a—flex has proved it owned trade secrets it can sue about.
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`Dur-a—flex’s trade secret claim is mostly about a commercial floor coating called
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`Poly-Crete. Poly-Crete is a cementitious urethane. It combines the hardness of cement
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`with the imperviousness of a polyurethane. These floor coatings are used in places
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`ranging from the slaughter house to the commercial kitchen to the county morgue.
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`Cementitious urethane floors are used in places where you plan to make a mess but
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`don’t want the floor to absorb it.
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`Everybody in the industry knows how to make a basic cementitious urethane.
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`Indeed, by weight and volume, people in this industry know almost everything in Poly—
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`Crete. And this matters. General Statutes § 35—51 ((1) says information can’t be a trade
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`1
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`secret if it is “generally known” or “readily ascertainable.” So people outside of Dur-a-
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`flex knowing exactly how to make Poly-Crete would be a problem. That’s why it’s
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`significant to note here that participants in the industry know almost everything about
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`making Poly-Crete, but not everything.
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`Knowing almost everything isn’t enough. Those same floor-coating people most
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`likely know most of a lot of things. They probably know most of how cheese is made;
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`how birdhouses are built, and where babies come from too. But that doesn’t mean they
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`would be right to think all cheese is the same; all birdhouses are alike or that all babies
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`are interchangeable. People knowing most of what’s in something doesn’t mean that it
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`can’t be a trade secret. After all, we are mostly water and yet somehow we can keep
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`secrets.
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`So it is no blow to Dur-a—flex that many can say that Poly—Crete has three main
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`components. They come in three separate containers and are combined by the end user.
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`The components are sold together to contractors in a kit. There is an aggregate that
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`includes the makings of the cement, a resin or polyol that makes the urethane a
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`polyurethane, and a hardener. It would be no surprise to anyone in the industry that
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`Dur-a-flex also uses castor oil as its polyol, nor that it uses sand as part of its aggregate.
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`Indeed, the aggregate—other than one part of it to be discussed later—isn’t itself claimed
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`to be a trade secret.
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`But that’s where most of the agreement stops. The real question here is whether
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`the less abundant ingredients added to the basic mixtures are enough to build a trade
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`secret on. And these smaller things matter more than they once did because the
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`evidence shows the cementitious urethane business has become more competitive over
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`the years.
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`2. “Foo fooity” and the art of cementitious urethane manufacturing.
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`a. The widely known versus the genuinely grown.
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`Significantly, there is a name for these smaller things. And while the people at
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`Dur—a-flex are very serious about this claim and perceive that they have millions of
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`dollars at stake, their hopes actually turn on a matter that doesn’t sound serious at all:
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`“foo foo dust.”
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`Foo foo dust is a term of art. And what’s worse, the relative foo fooity of Dur-a-
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`flex’s product will mean for it a win or loss at this stage of the trial. That’s because foo
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`foo dust describes the less bulky bits added to a formula that distinguish one product
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`from another in this industry—and perhaps in others as well. The foo foo dust
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`influences things like how well and how easily the product spreads, how it survives
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`temperature differences, and how it avoids bubbling, blistering, molding, and the like.
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`Anybody in this field can make a cementitious urethane, but Dur—a-flex says the foo foo
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`dust in its resin and hardener is its money—making magic.
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`Still, even some things about the foo foo dust itself are generally known in
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`cementitious urethane circles. They are the common topic of conversation among
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`industry insiders at the annual World of Concrete convention in Las Vegas. They can be
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`found in supplier literature, patents, product safety data sheets, and even in general
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`internet searches. You can even identify some things about the foo foo dust by sending a
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`sample of a product to a lab for chemical analysis—but, importantly, you can’t find
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`enough to duplicate the Poly-Crete product. There are a lot of things known about
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`cementitious urethane foo foo dust. But a cementitious urethane still isn’t a tossed
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`salad. You can’t figure out what’s in it merely by taking a look.
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`The “a lot” that’s known about the resin foo dust includes that it typically includes
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`defoamers that are added to the resin to keep bubbling down. Plasticizers and
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`superplasticizers are used to improve workability and keep the resin components in a
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`consistent suspended state rather than having them separate like oil and water.
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`Surfactants reduce the liquid’s surface tension and reduce beading. Rounded grains of
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`sand are generally known to roll and affect the pouring and spreading of the product.
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`And the suppliers of this foo foo dust are legion. If you call them up they will talk
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`up their products and propose ingredients. There are dozens of different defoamers,
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`surfactants, and plasticizers to choose from. Industry leaders will tell you they have
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`short lists of their favorite foo foos. But there are over a dozen ingredients in the Poly—
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`Crete resin alone, so with the choice of suppliers taken into account there are many
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`thousands of permutations that would explain the different choices a cementitious
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`urethane manufacturer might make to create a unique formula.
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`And the experts in this case agree that this large number of small choices really
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`matter. The experts for defendant Samet Dy—the Dur-a-flex eX-chemist— and the
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`companies that hired him emphasized that you can find the precise foo foo dust
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`ingredients Dur-a-flex uses on the web. Sure you can—if you know what they are. But
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`no one disputes that Dur-a-flex’s precise combination and the amount of each
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`ingredient and its supplier can’t be found anywhere except at Dur-a-flex.
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`The defense experts insist that a chemist skilled in this field can, within a few
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`months, make a product that is the “functional equivalent” or “substantially similar” to
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`Poly—Crete. But by “functional equivalent” or “substantially similar” product, they don’t
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`mean they can create Poly-Crete. Whether the Poly-Crete formula is a trade secret
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`doesn’t turn on how easy it is to make a cementitious urethane. It’s about Poly-Crete’s
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`foo fooity. It is about how small differences in the small ingredients can be a kind of
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`magic here, and —a topic for later—whether this magic has an independent value.
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`If you ask the experts on both sides of the case, they all agree that any small
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`chemical change in the brand of the foo foo dust or its ingredients changes everything.
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`In other words, there is a magic in every combination—a precise set of reactions that is
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`virtually never the same once any one thing is changed. In particular, all of the experts
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`say testing of performance has to be done all over again after anything about a single
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`ingredient is changed because it will likely have an effect on how the product behaves.
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`The plaintiffs say this is true to prove that the Poly-Crete formula deserves trade secret
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`protection. The defendants say this is true to prove how little value there is in the notes
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`of failed experiments that Dur-a—flex also claims are trade secrets.
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`But the defense can’t have it both ways. They are stuck with the logical conclusion
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`that unless you know the unpublished details of the foo foo dust you can’t create Poly—
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`Crete. And this means that the foo foo dust decisions reflected in the Poly—Crete formula
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`make the Poly—Crete formula not generally known nor readily ascertainable.
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`b. Independent value: the fruits of labor.
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`But this isn’t enough. The defendants say that even if this is true, the Poly-Crete
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`formula can’t be a trade secret unless the formula—in the statute’s words—has
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`“independent economic value.” Of course, Dur-a-flex contends it would hardly be suing
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`over a worthless formula, but there is more that indicates the formula has independent
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`economic value.
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`The evidence shows that as of the early 2000s Dur-a—flex had been buying
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`components of its cementitious urethanes from other manufacturers. Because of
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`shipping and other issues, Dur-a-flex ultimately recognized that it was worth money for
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`the company to try to develop its own cementitious urethane formula. It chemically
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`analyzed a target formula. Its chief chemist Jay Martin began reviewing the results and
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`started working on a formula while balancing his other duties.
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`Ultimately, in 2004, Dur—a-flex hired defendant Dy who began devoting most of
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`his time to developing Poly—Crete. We already know that getting the basics down wasn’t
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`too hard. Jay Martin had done that. The rest is the story of Dy trying to get the foo foo
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`dust right. His work is recorded in volumes of lab books. The work costs thousands of
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`dollars of Dy’s time. His goal was reducing foaming, improving workability, finding
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`cheap but effective ingredients, avoiding ingredients that might soon be unavailable,
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`and many other details.
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`Dur-a—flex started testing the product on jobs as early as 2004. It rolled out the
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`product formally in 2006, but the evidence shows that thousands of dollars of employee
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`time was spent improving it and tweaking the formula until after 2012 when changes to
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`it stopped being made.
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`At that point, as Murti Bhamidipati the lead scientist who in 2011 replaced Jay
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`Martin at Dur-a-flex testified, the product had desirable qualities. It was workable; it
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`was durable; it was stable in ways that it had not been at first and which assisted with a
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`rapid climb in product sales over the last several years. Its sales have grown by millions
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`of dollars over the years.
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`The court believes the time and money Dur—a—flex invested along with the sales
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`that resulted show that the Poly-Crete resin and hardener formulas had independent
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`value. Knowing the complete formulas would give a person in the marketplace not just a
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`place to begin but a place to profit from—because being there would save research time
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`and accelerate the point at which profits might begin to flow from a stable replicable
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`formula. The time and expense saved in creating a valuable product is an independent
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`value for trade secret purposes. A competitor would likely pay a significant sum to
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`realize this value.
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`c. Security need only respond to actual circumstances.
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`Still, a trade secret must be more than not widely known, not readily
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`ascertainable, and independently valuable. General Statutes § 35-50 (d) says it also
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`must be “the subject of efforts that are reasonable under the circumstances to maintain
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`its secrecy.”
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`The key words here are “reasonable” and “circumstances.” It would be
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`unreasonable, for instance, to publish the full Poly—Crete formula on the web and then
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`try to claim it’s a trade secret. Likewise, it would ignore the “circumstances” to expect
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`the company to adopt security measures akin to those surrounding the Manhattan
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`Project or the hideout of a James Bond villain.
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`Here, Dur—a-flex didn’t publish the formula on the web, in trade journals, at
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`conferences and the like. Indeed, in~the legally required safety data sheets defendant Dy
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`prepared when he worked for Dur—a-flex and put on the web, Dy described aspects of the
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`formula as “proprietary” and “trade secret.”
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`To the extent Samet Dy now says that when he was teaching customers how to
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`use Poly—Crete he showed them the formulas he himself had labeled secret, his claim is
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`8
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`dubious. The claim is self-interested and doesn’t fit well with the rest of the evidence.
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`The rest of the evidence is that Dur-a-flex didn’t tell people outside the company its
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`formula. Inside the company, under a dozen people in a plant now employing over 100
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`people have had the formula. Over the years, the full Poly—Crete formula was known by
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`those who owned it, those who invented it, and those who made it. There was no reason
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`to believe Dy discussed things like surfactant product names and ratios with customers
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`whose only concern was how to mix the stuff and pour it on the ground.
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`That visitors to the plant ——mostly customers—may have seen some of the
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`chemical ingredients also changes nothing. In some places at some times, there were
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`stations for the chemicals in Poly-Crete, and the chemicals were labelled. A visitor
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`might see some of the names depending on where they were standing. While most
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`visitors were escorted, trusted customers roamed the plant at times. It is theoretically
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`possible that at the low points in Dur—a-flex’s security history, an enterprising but
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`trusted customer might have hunted around enough to assemble a list of some
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`ingredients. It wasn’t clear whether this hypothetical spy could have seen them all. It
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`was clear enough though that seeing a few signs wouldn’t tell our suppositional snooper
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`how much of what ingredient was put into Poly—Crete when, where, and how.
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`That information would be on the batch tickets. But once used to make product,
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`the batch tickets were locked up. Later, Dur—a-flex began shredding them. Still, the
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`defense faults Dur—a—flex for not using within its plant a code rather than naming the
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`ingredients on the tickets that tell workers what to make and how much, and for leaving
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`the names of the ingredients on containers within the plant.
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`This failure too might theoretically expose Dur-a-flex to industrial espionage, but
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`it is a flawed argument against finding a trade secret here. It assumes that a party loses
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`trade secret protection by neglecting any measures it might have employed with little
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`burden rather than focusing on things that are reasonable under the circumstances. It
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`isn’t the theoretical possibility of theft that matters or the ease of a security measure.
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`What matters in determining the reasonableness of trade secret protection is to weigh
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`the actual risks of disclosure under the prevailing circumstances against the
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`contemporaneous measures taken to address them.
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`No experience over the early years of Poly-Crete development cried out for Dur-a—
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`flex to implement the measures defendants say Dur-a—flex should have adopted.
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`Nothing then or now suggests the company should be particularly worried about its
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`long-time customers abusing plant visits. Nothing suggests then or now that you can get
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`the Poly—Crete formula by seeing a few ingredient names or some chemicals on a shelf
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`here and there. Nothing in the relevant years suggested that everyone who entered the
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`plant with eyes and ears should have been welcomed bruskly by a demand for
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`contractual confidentiality.
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`Nonetheless, over the years, with new management and having been burned by
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`the loss of one trade secret to an insider, Dur-a-flex ultimately did tighten security and
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`10
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`demanded more. But what was done over the years was still reasonable under the
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`circumstances that then prevailed despite many things— simple or complex, obvious or
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`obscure—that Dur-a-flex could have adopted to protect its secrets even better.
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`Dur-a-flex itself initially overreached by claiming as trade secrets much of
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`everything Visible inside the plant. But emblematic of overreach by the defense in terms
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`of reasonable precautions was their reliance on Dur-a-flex’s laudable practice of inviting
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`school children to visit its labs without special safeguards and nondisclosure
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`agreements. The children were shown how chemistry makes things fizz, change color
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`and the like. They weren’t shown how to make Poly—Crete.
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`And the secret to Poly-Crete is no ever-lasting gob stopper. It wasn’t something
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`some enterprising urchin could simply steal off a shelf. Dur—a-flex should neither
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`discontinue these visits nor feel it must employ an army of oompa loompas to monitor
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`its student visitors.
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`For the circumstances pertinent to this case, Dur-a-flex took reasonable
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`measures to keep the Poly-Crete formulas secret.
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`And so, the Poly-Crete resin and hardener formulas are trade secrets. This has
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`implications for multiple products because there are Poly—Crete variants that emphasize
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`specific properties as well as color, etc. Therefore, to be clear, the resin and hardener
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`formulas for Poly-Crete HF, MD, TF, and WR are trade secrets because they all contain
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`11
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`the same resin and hardener. To the extent it uses the same resin and hardener, Poly-
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`Crete SL is also protected.
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`But it is the resin and hardener formulas that are trade secrets. The court isn’t
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`convinced that Poly—Crete SL deserves extra trade secret protection because of the
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`roundness of its aggregate. This factor seems too readily ascertainable to be a trade
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`secret. Poly—Crete SL is touted as self—levelling. But we all know round things roll and
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`spread. Indeed the very thing in this aggregate that rolls and spreads was explored and
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`rejected by one defendant years before anyone at that company heard the name Samet
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`Dy. And unlike the resin and the hardener a reasonable degree of magnification reveals
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`all. The Poly—Crete SL aggregate is not a trade secret.
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`3. Lesser things: Other formulas and the lab books.
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`Now to the lesser matters. Dur-a-flex wants protection for its lab books. It says
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`the records of the experiments that led to the current Poly-Crete formula are valuable
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`and secret. The books show what worked for the chemists and what didn’t work on the
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`road to creating a stable product. The defendants say they are useless because they deal
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`with variants unique to Dur-a-flex’s experience and wouldn’t prevent a competitor from
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`having to test every variant on its own accord.
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`But having to do additional work doesn’t mean that prior work has zero
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`independent value. The lab books reveal what works, how certain things reacted with
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`other things, and they show results Dur—a—flex achieved that can only be produced by
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`12
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`someone who knows what Dur-a-flex did. The value of these entries lies in the time and
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`money Dur—a—flex put into the work these capacious notebooks record. A competitor
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`would likely be willing to pay money to avoid these expenses and learn from these
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`records of trial and error. While some things would have to be duplicated, most likely
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`the books are worth more than a de minimis amount of time and money. They weren’t
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`published. They were kept inside the lab. They were valuable enough that they were kept
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`when completed in a fire-proof cabinet. They would be useful for patent claims but that
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`was not the books sole or necessarily even primary function. They were resources
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`looked back at by Dur-a-flex and, the evidence showed, used in the same way other
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`companies did: not merely for patents, but for reference. The specific experiments
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`performed and the data recorded related to these experiments with respect to Poly-Crete
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`and the products discussed below as recorded in the company lab books are trade
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`secrets .
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`Dur-a—flex also claims protections for some of its lesser products. First is its Dur-
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`a—glaze 4 resin and hardener. The same protections applied to keep the formula secret.
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`The same lab book principles pertain. The same development process was followed. It
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`also appears that for similar reasons the Dur-a-glaze resin and hardener ingredient were
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`neither widely known nor readily ascertainable. Again, if you know what to look for you
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`can find all the ingredients but you have to know what Dur—a-flex knows and doesn’t tell
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`to do that. The same holds true for the resin and hardener in Dur-a-glaze MVP. The
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`resin and hardener formulas for Dur—a-glaze 4 and Dur—a-glaze MVP are Dur-a-flex
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`trade secrets.
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`Dur-a—flex also claims protection for one of its failures: a polyaspartic-imine resin
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`floor coating. Dur—a—flex only got so far with this product because the product quite
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`literally stinks. The company put it on the shelf for possible further use. Dur—a-flex
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`protected it like the other secrets. It put time and money into it, thinking it might have
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`use for it if it can be deodorized. A person trying to make a polyaspartic-imine resin
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`would have a firm if pungent place to start and a limited problem to solve. The formula
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`would thus have independent value a reasonable competitor might pay for. This
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`formula for a polyaspartic-imine resin is a Dur-a-flex trade secret.
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`4. Contracts require consideration: Dur-a-flex may not enforce against Dy
`the confidentiality and competition document he signed.
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`Trade secrets aren’t the only thing before the court. The last thing is a legal
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`challenge to one of the steps the company tried to take to increase security. In 2011,
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`Dur—a—flex hired a hard—headed business type to replace the company’s comparatively
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`congenial owner in formulating the day-to-day policies at Dur-a—flex. One of the things
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`he came up with was requiring employees to sign non-competition and non-disclosure
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`documents or be fired. Chemist Jay Martin left rather than sign. Samet Dy stayed and
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`signed. Dur-a-flex gave Dy nothing in exchange for his signing beyond continuing his
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`job under the same terms and conditions as before he signed.
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`But as King Lear fatefully noted: “Nothing will come of nothing.” Wishing hard
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`enough will not change that Dur-a—flex gave Dy nothing but the status quo for his
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`signature. The status quo under Connecticut law is no consideration. No consideration
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`means no contract.
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`Our Appellate Court confirmed as much in 2014 in Thoma v. Oxford
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`Performance Materials, Ino.1 The Court in that case held that promises in an
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`employment agreement are unenforceable without consideration for them—courts won’t
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`enforce them unless there is “a benefit to the party promising, or a loss or detriment to
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`the party to whom the promise is made.”2 The Court held that a party giving nothing
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`more than the status quo of continuing employment—neither offering a benefit nor
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`accepting a harm—offers no consideration to exchange for his promise and the promise
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`is, therefore, unenforceable.3
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`Dur-a—flex claims it offered Dy a benefit. It says that when Dy left in 2013 it gave
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`Dy extra money to reaffirm this obligation and that this is consideration for the
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`promises in the document. But two of Dur-a—flex’s own witnesses don’t agree on this.
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`Smith, the company owner, explained that it was a charitable act while his president
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`gave less definitive testimony but also did not support this contention. Instead, he
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`claimed the money was compensation for Dy being available to help with transitional
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`1 153 Conn. App. 50.
`2 Id. at 56
`3 Id. at 66.
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`15
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`issues related to his departure. The severance money Dur—a—flex gave Dy was not
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`consideration for the agreement Dur—a-flex wants to enforce.
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`Dur—a-flex may not enforce against Dy the terms of the 2011 document he signed.
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`5. Conclusion: trade secrets, harder to prove but still protected.
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`In the place between sleep and awake lies the trade secret. It is deprived the
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`reassuring respite of the patent. It does not enjoy the conscious confidence of a
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`contract. Instead, it often depends on a little bit of magic: on the foo foo dust that may
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`make something—not quite unique— but special enough to protect.
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`So it is here. Chemistry, as the experts agree, is a matter of inches and lesser
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`things. Because of these small but significant matters, the resin and hardener in the
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`following Dur-a-flex products meet the statutory criteria for trade secrets: Poly-Crete
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`HF, MD, TF, WR, and SL.
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`The resin and hardeners in Dur—a-glaze 4 and Dur-a-glaze MVP are also trade
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`secrets. The specific experiments performed and the data recorded related to these
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`experiments with respect to any of the products protected here as recorded in the
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`company lab books are trade secrets.
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`No judgment is entering. Next, we will see if any of these trade secrets have been
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`misappropriated.
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`16
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`B
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`E OURT
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`Moukawsher, J.
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`17
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