Gibraltar Lubricating Services, Inc. v. Pinnacle Resources, Inc.
2016 Ark. App. 156
Ark. Ct. App.2016Background
- GLS (Gibraltar Lubricating Services) sells compressor lubricants formulated from an additive package developed decades earlier and kept confidential by company owners.
- GLS disclosed formulas to Pinnacle (a custom blender) after Pinnacle assured confidentiality; emails and stamped documents emphasized non-duplication and secure storage.
- Pinnacle later developed and marketed a synthetic lubricant used by GLS’s large customer Kinder Morgan; GLS lost Kinder Morgan and sued Pinnacle for trade-secret misappropriation.
- Pinnacle moved for summary judgment, arguing GLS’s formulas were not trade secrets because they were generally known or readily ascertainable via reverse engineering, supported by an expert affidavit estimating $3,000–$4,500 and a few hours of testing per lubricant.
- GLS opposed with its own expert and affidavits from company principals asserting the formulas were unique, time-consuming and costly to reverse engineer, and were subject to reasonable secrecy measures.
- The circuit court granted summary judgment for Pinnacle, relying on Pinnacle’s expert and finding the cost/time to reverse engineer made the formulas readily ascertainable; GLS appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GLS’s formulas qualify as trade secrets under Ark. Code Ann. § 4-75-601(4) (ascertainability and secrecy) | Formulas are unique, not generally known, and not readily ascertainable; reasonable measures were taken to keep them secret | Formulas are simple, ingredients publicly known, and readily ascertainable by reverse engineering at modest time/cost | Reversed — summary judgment improper because factual disputes remain about ascertainability and secrecy |
| Whether reverse engineering capability alone destroys trade-secret protection | Reverse engineering may still leave a trade secret if process is difficult or costly; GLS’s evidence shows significant time/cost | If a product can be reverse engineered easily and cheaply, it is not a trade secret | Reversed — disputed expert opinions on difficulty/cost create a genuine fact issue |
| Whether the circuit court properly weighed expert credibility on summary judgment | Credibility and competing expert testimony create fact questions that preclude summary judgment | Court relied on Pinnacle’s expert credibility and specific cost estimate to grant SJ | Reversed — court improperly resolved credibility and made factual findings at SJ stage |
| Whether alternative grounds (insufficient secrecy efforts or lack of development costs evidence) support affirmance | GLS presented evidence of secrecy measures; disputed fact questions remain on reasonableness and development costs | Pinnacle contends GLS failed to show reasonable secrecy or development investment | Not resolved on appeal — court declined to affirm on alternative grounds and remanded for trial |
Key Cases Cited
- Turner v. Northwest Arkansas Neurosurgery Clinic, 133 S.W.3d 417 (Ark. App. 2003) (credibility determinations improper on summary judgment)
- Swindle v. Lumbermens Mut. Cas. Co., 869 S.W.2d 681 (Ark. 1993) (conclusory affidavits cannot create fact questions)
- Avidair Helicopter Supply, Inc. v. Rolls-Royce Corp., 663 F.3d 966 (8th Cir. 2011) (reverse engineering does not necessarily defeat trade-secret status if too difficult or costly)
- Minnesota Mining & Mfg. Co. v. Pribyl, 259 F.3d 587 (7th Cir. 2001) (combination of publicly known components can remain a trade secret)
- Saforo & Assocs., Inc. v. Porocel Corp., 991 S.W.2d 117 (Ark. 1999) (reasonable efforts to maintain secrecy is an element of trade-secret protection)
- Adams v. Wolf, 43 S.W.3d 757 (Ark. App. 2001) (summary-judgment standard: credibility weighing is inappropriate)