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Dekalb Judge Tosses Trade Secrets Claim

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Dekalb Judge Tosses Trade Secrets Claim

Fulton County Daily Report

J.W. North spent 40 years developing a marketable clay-based lumber substitute to frame houses, make rooms soundproof and even float boats.

His business successors believed North’s patented formula for “ceramic timber” was so revolutionary they went to court to stop a former employee from stealing it.

The only problem with the product, said DeKalb County Superior Judge Gail C. Flake, is that it doesn’t work. On April 12, she threw out JWN Inc.’s trade secrets claim against a former employee it had accused of stealing the secret recipe.

The company sued Rosemary Allen, a ceramic artist, who was formerly North’s assistant. North died in 2004.

“They have no product, no customers, no revenue. With apologies to Shakespeare, “who steals [plaintiff’s] purse, steals trash,” Flake stated.

The judge was quoting Iago, the betrayer of Othello in Shakespeare’s play.

Flake also ruled JWN didn’t do enough to protect its purported secret. Details of the formula had largely been spelled out in North’s 1980 patent application, which is a public record. The plaintiffs also could not produce a non-disclosure contract they claimed Allen had signed.

Allen’s attorney, Jeffrey D. HORST, said he’s handled similar cases.

“The company does not have a valid no-compete contract from an employee so they try and bring a trade secrets claim even if it doesn’t have any merit under Georgia law,” said HORST, a partner with Krevolin & HORST.

HORST said to make a successful trade secrets claim, a plaintiff must show the secret was worth stealing and that steps were taken to prevent its theft.

But JWN attorney Raymon D. Burns of Andrew, Merritt, Reilly & Smith said that Georgia’s trade secrets act does not require that a product be ready for sale to be covered under the law.

“The court went down the wrong path,” said Burns. “We completely disagree with the conclusion.”

Burns said he found Flake’s ruling “harsh and a little shocking.” Burns said the company is considering an appeal.

JWN’s unprotected and incomplete formula may be unique, but the name of the product is not.

A Google search for “ceramic timber” turned up 730 hits, many of them advertizements for fake natural gas fireplace logs or floor and deck tiles that look like wood.

JWN’s product purportedly had much broader applications. In an affidavit, chief operating officer Michael W. Lashley stated that “in just the building industry alone, the product has tremendous applications for use as timber, structural beams/support, roofing, insulation fire walls and so forth.”

“It can be used as a substitute for gravel in concrete mixtures resulting in lighter concrete loads for floors,” Lashley stated. “The product is … so light weight that it floats in water and could be used for marine applications.”

However, Lashley later testified that after having spent hundreds of thousands of dollars to develop its brand of ceramic timber, the company did not have a product it could sell.

Lashley also acknowledged he could not back up the claim, included in JWN’s original complaint, that Allen had signed a confidentiality agreement before she left the company. Flake included some of Lashley’s testimony in her order.

“You’ve never seen one in the corporate record, correct?” HORST asked Lashley.

“That’s correct,” Lashley replied.

“And you looked before you filed this lawsuit?” HORST asked.

“Correct,” Lashley said.

Flake was not swayed by JWN’s claim that Allen’s signed agreement had “‘mysteriously’ disappeared from the corporate files.”

The case is J.W. North Co. v. Allen, No. 09CV8937-4.

Ben Smith, Special to the Daily Report

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