Colgate-Palmolive Co. v. Carter Products

230 F.2d 855 (1956)

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Colgate-Palmolive Co. v. Carter Products

United States Court of Appeals for the Fourth Circuit
230 F.2d 855 (1956)

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Facts

Joseph Spitzer (plaintiff) had an idea for a shaving cream that would emerge from the can already in the form of a durable lather. Spitzer and his colleagues worked with two chemists—Reich and Fine, who signed confidentiality agreements—to develop a pressurized shaving cream for which they obtained a patent. Spitzer granted an exclusive license to Carter Products (plaintiff) to market and sell the shaving cream under the brand name Rise. Rise was an immediate commercial success. Colgate-Palmolive Co. (Colgate) (defendant), one of Rise’s competitors, tried and failed to create a competitive pressurized shaving-cream product, until it hired Fine. Fine gave Colgate a formula for success by taking the Rise formula and improving upon it to make an even creamier lather. Fine did so by helping Colgate adopt a lathering process he had been working on at Rise. Colgate was aware of Fine’s confidentiality agreement and that Fine was suggesting processes to Colgate that had worked for Rise. Spitzer and Carter Products sued Colgate for patent infringement and misappropriation of trade secrets. The lower court held that Colgate misappropriated Carter Products’ trade secrets and enjoined Colgate from infringing the related patent. Colgate appealed, arguing that it could not be held liable for trade-secret misappropriation because Fine, not Colgate, had a confidentiality agreement with Spitzer and Carter Products.

Rule of Law

Issue

Holding and Reasoning (Parker, C.J.)

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