118 NY 30 (1889)
The Empire State’s status as a national center of industry, commerce and technology has often placed the Court of Appeals at the vanguard of the law’s development. A landmark example is Tabor v. Hoffman, an early case addressing intellectual property and trade secrets law.
The plaintiff had invented, patented and manufactured “Tabor’s Rotary Pump,” which he modified and perfected over time. The plaintiff did not secure patents for the modifications to the pump, which were kept secret. When the patent for the original pump expired, the defendant hired one of the plaintiff’s employees and induced him to secretly copy the patterns for the plaintiff’s modifications, which the defendant then used to manufacture his own pumps. The plaintiff sued to stop the defendant from using his secret patterns.
The Special Term ruled in the plaintiff’s favor and issued an order restraining the defendant from manufacturing any more pumps that were based on the patterns secretly copied by the plaintiff’s former employee. The General Term of the Supreme Court in the Fifth Judicial Department affirmed the judgment.[1] The Second Division of the Court of Appeals affirmed in an opinion by Judge Irving G. Vann.
The defendant’s argument on appeal was that the plaintiff was not entitled to any special protections since the modifications were not patented and it was possible, through experimentation and reverse engineering, to decipher and duplicate the patterns. Judge Vann, writing for the majority, rejected this argument, holding that while a competitor ordinarily may duplicate an unpatented product by reverse engineering, it is not permitted to do so by stealing the other competitor’s secret plans.
If a valuable medicine, not protected by patent, is put upon the market, anyone may, if he can by chemical analysis and a series of experiments, or by any other use of the medicine itself aided by his own resources only, discover the ingredients and their proportions. If he thus finds out the secret of the proprietor, he may use it to any extent that he desires without danger of interference by the courts. But, because this discovery may be possible by fair means, it would not justify a discovery by unfair means, such as the bribery of a clerk, who in course of his employment had . . . become familiar with the formula. The courts have frequently restrained persons, who have learned a secret formula for compounding medicines, beverages and the like while in the employment of the proprietor, from using it themselves or imparting it to others . . . . Even if resort to the patterns of the plaintiff was more of a convenience than a necessity, still if there was a secret, it belonged to him, and the defendant had no right to obtain it by unfair means, or to use it after it was thus obtained.
Chief Judge Follett took a different view of the issue. Inasmuch as the patent had expired, the plaintiff had lost his exclusive rights to the invention, and the theft of the plaintiff’s patterns was, at most, a “trespass,” entitling the plaintiff to damages rather than equitable relief enjoining defendant from manufacturing its pumps.
The plaintiff’s patent had expired and all of the parts of the pump represented by the patterns had been for a long time on sale in the form of a completed pump. The patent on the original invention having expired and the plaintiff having voluntarily made the subsequent improvements public by selling the improved article, he lost his right to their exclusive use.
The Tabor decision made several important distinctions that laid the foundation for the law of trade secrets. The court clarified that even though a product is publicly available and could theoretically be reverse engineered, any undisclosed underlying designs or processes used to create that product would still be legally protected as trade secrets if a competitor used unfair means, like unauthorized copying, to misappropriate them. Furthermore, if reasonable efforts are made to maintain secrecy then trade secret protection is not forfeited merely because employees or third parties gain access to inside information as part of the manufacturing process.
[1] The Fifth Department, comprising six counties in central New York, was created by an amendment of the State Constitution in 1882. It was abolished by the Constitution of 1894, which created the four departments of the Appellate Division that are now in place.