1006-00004 · Crestline Packaging Solutions LLC · Analysis

trade-secret-identification-memo.docx DOCUMENT Litigation

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

Date: February 12, 2024

To: Catherine Bloom, Partner, intellectual Property Group, Calderwood & Harkness LLP

From: Omar Siddiqui, Lead Associate, and Christy Bauer, Working Associate, intellectual Property Group, Calderwood & Harkness LLP

Re: Trade Secret Identification and Reasonable Measures Analysis — CPS-BC-1147 Barrier Coating Formulation; Crestline Packaging Solutions LLC v. Harlow Chemical Supply Inc.

Matter No.: 1006-00004

This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected by the work-product doctrine. Do not distribute outside the engagement team without prior approval.

I. Executive Summary

The purpose of this memorandum is to analyze whether the proprietary barrier coating formulation designated CPS-BC-1147, developed and owned by Crestline Packaging Solutions LLC ("CPS" or the "Client"), qualifies as a protectable trade secret under both the federal Defend Trade Secrets Act ("DTSA"), 18 U.S.C. §§ 1836–1839, and the Ohio Uniform Trade Secrets Act ("OUTSA"), Ohio Rev. Code §§ 1333.61–1333.69. This analysis is undertaken in anticipation of the filing of a complaint and motion for temporary restraining order against Harlow Chemical Supply Inc. ("Harlow"), Gerald W. Norris, and Kenneth Fielding.

Conclusion. Based on the facts gathered to date, it is our assessment that CPS-BC-1147 meets the statutory definition of a trade secret under both the DTSA and the OUTSA. Specifically, the formulation derives independent economic value, both actual and potential, from not being generally known to, and not being readily ascertainable through proper means by, other persons who can obtain economic value from its disclosure or use. Furthermore, CPS undertook reasonable measures to maintain the secrecy of the formulation, including partial disclosure protocols, physical segregation of the most sensitive formulation components, and comprehensive contractual protections embodied in the Toll Manufacturing Agreement between CPS and Harlow.

This memorandum is organized as follows: First, it identifies the specific information constituting the claimed trade secret with the degree of particularity that will be required in litigation. Second, it catalogs the reasonable measures CPS undertook to maintain the secrecy of the formulation. Third, it flags potential weaknesses in CPS's position that opposing counsel may exploit, and evaluates the strength of available counter-arguments. Fourth, it recommends further factual development that should be completed prior to filing the complaint, which is targeted for on or about February 26, 2024, in the United States District Court for the Southern District of Ohio, Eastern Division.

We are prepared to discuss this memorandum at your earliest convenience and to begin drafting the complaint and TRO briefing upon your authorization.

II. Background

A. The Client — Crestline Packaging Solutions LLC

Crestline Packaging Solutions LLC is an Ohio limited liability company with its principal place of business at 4800 Scioto Industrial Parkway, Columbus, Ohio 43228. CPS is a manufacturer of specialty barrier coatings, laminates, and packaging substrates serving the food, pharmaceutical, and industrial packaging industries. The company maintains production facilities in Columbus and operates pilot-line and quality-assurance laboratories on the same campus.

CPS's annual coatings production volume is approximately 38 million pounds. For fiscal year 2023, CPS reported total revenue of approximately $214.7 million and earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately $31.2 million. The company employs approximately 620 individuals, including a dedicated research and development team of approximately 30 scientists, chemists, and laboratory technicians.

CPS is a portfolio company of Ridgepoint Capital Partners LP, a Delaware limited partnership headquartered at 1900 Euclid Avenue, Suite 3400, Cleveland, Ohio 44115. Ridgepoint is a Cleveland-based middle-market private equity firm that acquired CPS in 2019 for approximately $285 million in enterprise value. The Managing Partner of Ridgepoint Capital is Thomas Alderman, and the Operating Partner overseeing the CPS investment is Sarah Engel. Ridgepoint's ownership structure and its investment thesis for CPS are relevant insofar as they underscore the significant economic value of CPS's proprietary formulations to both CPS and its equity sponsors.

Key CPS personnel relevant to this matter include:

• David Kessler, Chief Executive Officer

• Dr. Margaret Yuen, Vice President of Research & Development

• Rachel Sung, General Counsel

• Brian Novotny, Sales Director

B. The Defendant — Harlow Chemical Supply Inc.

Harlow Chemical Supply Inc. is an Indiana corporation with its principal place of business at 1120 Commerce Boulevard, Terre Haute, Indiana 47802. Harlow operates as a contract (toll) chemical manufacturer serving the coatings, adhesives, and sealants industries. Harlow maintains blending, packaging, and warehousing facilities at its Terre Haute location, where it provides toll manufacturing services for third-party customers who supply proprietary formulations and, in some cases, proprietary raw materials.

Harlow's estimated fiscal year 2023 revenue was approximately $87.3 million. The company employs approximately 210 individuals. Harlow is a privately held company; its sole shareholder is Gerald W. Norris, who also serves as CEO.

Key Harlow personnel relevant to this matter include:

• Gerald W. Norris, CEO and Sole Shareholder

• Kenneth Fielding, Vice President of Technical Operations

• Amanda Trent, Sales Director

Harlow is represented in this matter by the law firm of Voss Gentry & Whitaker LLP, located at 300 North Meridian Street, Suite 2500, Indianapolis, Indiana 46204. The lead attorney is Brian Whitaker, Partner, with Danielle Pacheco, Associate, also assigned to the matter.

C. Development of CPS-BC-1147

CPS-BC-1147 is a water-based, high-performance barrier coating designed for application to food-grade paperboard packaging substrates. The coating provides moisture-vapor barrier, grease barrier, and oxygen barrier properties in a single application, which represents a significant technical achievement in the packaging coatings industry. The formulation allows CPS's customers — primarily converters and paperboard manufacturers — to replace multi-layer barrier systems (which often incorporate non-recyclable plastic films or fluorinated chemistries) with a single-coat, water-based solution that is both high-performing and compatible with recycling streams.

CPS-BC-1147 was developed by CPS's R&D team under the direction of Dr. Margaret Yuen over a period of approximately 24 months, from January 2015 through December 2016. The development effort involved extensive bench-scale formulation trials, pilot-line coating trials, accelerated aging and performance testing, and regulatory compliance testing to confirm suitability for food-contact applications under applicable FDA regulations (21 C.F.R. Parts 174–178).

CPS's total research and development investment in CPS-BC-1147 was approximately $3.8 million. This figure encompasses the cost of specialized laboratory equipment, raw material procurement for formulation trials, personnel costs (including dedicated time of senior chemists and laboratory technicians), pilot-line testing runs, and the cost of FDA compliance and food-contact safety testing conducted by third-party laboratories.

Since its commercial introduction in early 2017, CPS-BC-1147 has become CPS's highest-revenue coatings product and a cornerstone of the company's competitive positioning. In fiscal year 2023, CPS-BC-1147 accounted for approximately 22% of CPS's total coatings revenue, or approximately $47.23 million ($214.7 million × 22%). The product's commercial success was a material factor in Ridgepoint Capital's decision to acquire CPS in 2019 and remains central to CPS's valuation and growth trajectory.

D. The Toll Manufacturing Agreement

To supplement its Columbus production capacity during a period of growing demand, CPS entered into a Toll Manufacturing Agreement ("TMA") with Harlow, dated March 15, 2017. Under the TMA, Harlow agreed to blend and package CPS-BC-1147 at Harlow's Terre Haute facility using raw materials and CPS-supplied proprietary concentrates, in accordance with CPS's specifications and under CPS's quality oversight.

The TMA contained several provisions specifically designed to protect CPS's proprietary information:

Section 7 — Confidentiality and Non-Disclosure. This section required Harlow to maintain the confidentiality of all CPS proprietary information disclosed in connection with the tolling relationship. Harlow was obligated to restrict access to CPS proprietary information to only those Harlow personnel who had a need to know for purposes of performing the tolling services. Harlow was expressly prohibited from disclosing CPS proprietary information to any third party without CPS's prior written consent.

Section 8.2 — Reverse-Engineering Prohibition. This section expressly prohibited Harlow from analyzing, decompiling, reverse-engineering, or otherwise attempting to derive the composition of CPS Concentrate A or any other CPS proprietary material provided under the TMA. This prohibition was a critical safeguard, as CPS Concentrate A contained the five most sensitive constituents of the CPS-BC-1147 formulation, which were withheld from Harlow's knowledge.

Section 9.1 — Non-Compete. This section restricted Harlow from manufacturing, blending, selling, or offering for sale any barrier coating that was "substantially similar" to CPS-BC-1147 for a period of three years following the effective date of termination of the TMA.

Section 9.3 — Customer Non-Solicitation. This section prohibited Harlow from directly or indirectly soliciting, contacting, or attempting to divert any customer of CPS for the purpose of selling any product that competed with CPS-BC-1147, for the same three-year post-termination period.

CPS adopted a deliberate partial-disclosure strategy in connection with the tolling relationship. Of the 14 distinct chemical constituents that comprise CPS-BC-1147, CPS disclosed only 9 to Harlow, along with general proportional ranges (rather than precise weight percentages) for those 9 constituents. The remaining 5 proprietary additive components — which represent the most technically novel and competitively sensitive aspects of the formulation — were never disclosed to Harlow individually. Instead, CPS pre-blended these 5 constituents at its Columbus facility into a single additive concentrate designated "CPS Concentrate A." CPS Concentrate A was then shipped from Columbus to Harlow's Terre Haute facility in sealed, labeled containers for incorporation into the blending process. At no time was Harlow provided with the individual identities, proportions, or processing parameters for the components of CPS Concentrate A.

The tolling fee under the TMA was $0.38 per pound of finished product. In calendar year 2022, Harlow processed approximately 9.4 million pounds of CPS-BC-1147 for CPS, generating tolling fees to Harlow of approximately $3,572,000 (9,400,000 lbs × $0.38/lb). The tolling relationship was thus commercially significant to Harlow.

CPS terminated the TMA effective January 31, 2023. The termination was driven by CPS's successful expansion of its in-house production capacity at its Columbus facility, which rendered the Harlow tolling arrangement no longer necessary from a capacity standpoint. The termination was not precipitated by any known misconduct on Harlow's part at that time.

E. The Alleged Misappropriation

Approximately two months after the effective date of termination, in or about April 2023, Harlow began marketing a new barrier coating product under the trade name "ShieldCoat Pro 900" to the food-grade paperboard packaging industry — the same market segment served by CPS-BC-1147.

CPS first became aware of Harlow's competing product on June 12, 2023, when CPS's Sales Director, Brian Novotny, received information from Mapleridge Paper Corp. — a longstanding and significant CPS customer — that Harlow's Sales Director, Amanda Trent, had approached Mapleridge and offered ShieldCoat Pro 900 as a direct replacement for CPS-BC-1147, at a price approximately 15% below CPS's prevailing pricing.

Between June and November 2023, CPS undertook an internal investigation and confirmed that Harlow's Amanda Trent had contacted at least four additional CPS customers to offer ShieldCoat Pro 900, including:

• Pinnacle Flexible Films LLC

• Orion Paperboard Inc.

• Great River Packaging Co.

• TerraFold Industries LLC

CPS's investigation further revealed evidence suggesting that Harlow's development of ShieldCoat Pro 900 was the product of deliberate misappropriation rather than independent development. Specifically, CPS learned that in September 2022 — approximately five months before the termination of the TMA — Harlow, at the direction of its Vice President of Technical Operations, Kenneth Fielding, sent a sample of CPS Concentrate A to Archer Material Sciences Inc., located at 9300 Harding Street, Indianapolis, Indiana 46221, for compositional analysis. This act was in direct violation of Section 8.2 of the TMA, which expressly prohibited Harlow from analyzing or attempting to derive the composition of CPS Concentrate A.

Additionally, upon information and belief, Kenneth Fielding retained batch production records, analytical test results, and process parameter logs generated during the tolling relationship beyond the scope permitted by the TMA's document-retention and return-of-materials provisions. These records, in combination with the compositional analysis of CPS Concentrate A, would have provided Harlow with all information necessary to reproduce the complete CPS-BC-1147 formulation.

On November 8, 2023, CPS, through its General Counsel Rachel Sung, retained Thornburg Analytics LLC, located at 7225 Research Park Drive, Cincinnati, Ohio 45237, to conduct a forensic chemical analysis comparing ShieldCoat Pro 900 to CPS-BC-1147. Thornburg Analytics is a nationally recognized analytical chemistry laboratory specializing in coatings and polymers forensic analysis. The engagement was led by Dr. Elena Vasquez, a Senior Analytical Chemist with over 18 years of experience in coatings chemistry.

Dr. Vasquez's preliminary forensic report, dated December 22, 2023, concluded that ShieldCoat Pro 900 matched CPS-BC-1147 in all 14 constituent chemicals within a margin of ±0.3% by weight. Dr. Vasquez characterized this degree of compositional concordance as "not achievable through independent development" and "consistent only with access to the complete formulation, including the identities and precise proportions of all constituent chemicals." The Thornburg report is a critical piece of evidence and will serve as the foundation for both the complaint and the TRO motion.

On January 18, 2024, Calderwood & Harkness LLP, on behalf of CPS, sent a cease-and-desist letter to Harlow Chemical Supply Inc. demanding that Harlow immediately cease all production, marketing, and sale of ShieldCoat Pro 900 and cease all solicitation of CPS customers. On February 5, 2024, Harlow's counsel, Voss Gentry & Whitaker LLP (Brian Whitaker), responded by letter denying any misappropriation and asserting that ShieldCoat Pro 900 was "independently developed by Harlow's technical team using publicly available information and Harlow's own proprietary expertise in barrier coating chemistry." The letter did not provide any specific details regarding the purported independent development process.

III. Legal Framework

A. The Defend Trade Secrets Act (18 U.S.C. §§ 1836–1839)

The DTSA, enacted in 2016, provides a federal private right of action for trade-secret misappropriation. The statute defines "trade secret" broadly. Under 18 U.S.C. § 1839(3), a trade secret includes:

all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if — (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.

The DTSA thus imposes two affirmative requirements for trade-secret status: (1) the owner must have taken "reasonable measures" to keep the information secret, and (2) the information must derive "independent economic value" from its secrecy. Both elements must be established by the plaintiff.

In addition, to invoke federal jurisdiction under the DTSA, the trade secret must be "related to a product or service used in, or intended for use in, interstate or foreign commerce." 18 U.S.C. § 1836(b)(1). This jurisdictional element is easily satisfied here. CPS-BC-1147 is manufactured in Ohio and sold to customers across multiple states, including but not limited to Ohio, Indiana, Michigan, Pennsylvania, Georgia, and Texas. Harlow's competing ShieldCoat Pro 900 product is similarly marketed and sold in interstate commerce.

The DTSA provides the following remedies for misappropriation:

Injunctive Relief. Under 18 U.S.C. § 1836(b)(3)(A), a court may grant an injunction to prevent any actual or threatened misappropriation, provided the order does not prevent a person from entering into an employment relationship and any conditions placed on such employment are based on evidence of threatened misappropriation and not merely on the information the person knows. An injunction may, in appropriate circumstances, condition future use upon payment of a reasonable royalty for no longer than the period of time for which such use could have been prohibited.

Damages. Under 18 U.S.C. § 1836(b)(3)(B), a court may award damages for actual loss caused by the misappropriation and damages for unjust enrichment caused by the misappropriation that is not addressed in computing damages for actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for the misappropriator's unauthorized disclosure or use of the trade secret.

Exemplary Damages. Under 18 U.S.C. § 1836(b)(3)(C), if the trade secret is willfully and maliciously misappropriated, the court may award exemplary damages in an amount not more than two times the amount of the damages awarded under subsection (b)(3)(B).

Attorneys' Fees. Under 18 U.S.C. § 1836(b)(3)(D), the court may award reasonable attorneys' fees to the prevailing party if the trade secret was willfully and maliciously misappropriated or if a claim of misappropriation was made in bad faith.

The DTSA also provides for ex parte seizure of property necessary to prevent the propagation or dissemination of the trade secret under 18 U.S.C. § 1836(b)(2). We note, however, that we are not pursuing an ex parte seizure in this matter. Instead, we intend to seek a temporary restraining order under Federal Rule of Civil Procedure 65(b), which we believe is sufficient to preserve the status quo and can be obtained on an expedited basis. The ex parte seizure remedy is extraordinary, and its use is disfavored by courts absent evidence that a defendant would destroy or conceal the trade secret upon receiving notice of the action. While we have concerns about the integrity of Harlow's document retention, we do not presently have evidence that would satisfy the heightened standard for seizure.

B. Ohio Uniform Trade Secrets Act (Ohio Rev. Code §§ 1333.61–1333.69)

Ohio has adopted the Uniform Trade Secrets Act, codified at Ohio Rev. Code §§ 1333.61–1333.69 ("OUTSA"). The OUTSA provides a complementary state-law cause of action for trade-secret misappropriation. Under Ohio Rev. Code § 1333.61(D), a "trade secret" is defined as:

information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following: (1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. (2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The OUTSA definition is substantially similar to, and functionally equivalent with, the DTSA definition. Both statutes require the same two core elements: (1) independent economic value derived from secrecy, and (2) reasonable efforts to maintain secrecy. There are minor differences in statutory language — for example, the OUTSA uses "efforts that are reasonable under the circumstances" while the DTSA uses "reasonable measures" — but Ohio courts have not drawn any meaningful distinction between these formulations. See, e.g., Heartland Home Fin., Inc. v. Allied Home Mortg. Capital Corp., 258 F. App'x 860, 862 (6th Cir. 2008); State ex rel. Besser v. Ohio State Univ., 89 Ohio St. 3d 396, 399 (2000).

The OUTSA provides the following remedies:

Injunctive Relief. Under Ohio Rev. Code § 1333.62, a court may enjoin actual or threatened misappropriation. An injunction may be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time to eliminate any commercial advantage that otherwise would be derived from the misappropriation.

Damages. Under Ohio Rev. Code § 1333.63(A), a complainant may recover damages for the actual loss caused by misappropriation and for the unjust enrichment caused by the misappropriation that is not taken into account in computing actual loss. In lieu of measuring damages by other methods, the complainant may recover a reasonable royalty.

Exemplary Damages. Under Ohio Rev. Code § 1333.63(B), if willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subsection (A).

Attorneys' Fees. Under Ohio Rev. Code § 1333.64, the court may award reasonable attorneys' fees to the prevailing party if a claim of misappropriation is made in bad faith or if willful and malicious misappropriation exists.

We intend to assert claims under both the DTSA and the OUTSA. The claims are not mutually exclusive, and asserting both provides maximum flexibility with respect to remedies and preserves the ability to recover under state law if, for any reason, the federal claim is dismissed or narrowed.

C. Key Elements to Establish

To prevail on its trade-secret misappropriation claims under both the DTSA and the OUTSA, CPS must establish the following elements:

1. The information constitutes a "trade secret." CPS must identify the claimed trade secret with "reasonable particularity" and demonstrate that the information falls within the statutory definition. Courts require that the plaintiff do more than make vague, general assertions — the plaintiff must describe the trade secret in sufficient detail to separate it from matters of general knowledge in the trade or of special knowledge of persons skilled in the trade. See DeRubeis v. Witten Techs., Inc., 244 F.R.D. 676, 681 (N.D. Ga. 2007); Sit-Up Ltd. v. IAC/InterActiveCorp., No. 05 Civ. 9292, 2008 WL 463884, at 11 (S.D.N.Y. Feb. 20, 2008). However, the plaintiff need not disclose the trade secret itself in its pleadings in a manner that would destroy the very secrecy it seeks to protect. See* 18 U.S.C. § 1835(b) (DTSA confidentiality provisions).

2. The information has independent economic value from not being generally known or readily ascertainable. CPS must show that the secrecy of the information provides CPS with a competitive advantage or economic benefit that would be lost or diminished if the information were publicly known.

3. The owner took reasonable measures to maintain secrecy. CPS must demonstrate that it implemented security measures, contractual protections, and other safeguards that were objectively reasonable under the circumstances. Perfection is not required; the standard is one of reasonableness. See Oakwood Labs. LLC v. Thanoo, 999 F.3d 892, 907 (3d Cir. 2021); Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102, 114 (3d Cir. 2010).

4. The information was misappropriated. CPS must establish that Harlow acquired, disclosed, or used the trade secret by improper means or in breach of a duty to maintain its secrecy. Under both the DTSA and the OUTSA, "improper means" includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. 18 U.S.C. § 1839(6); Ohio Rev. Code § 1333.61(A). Violation of the contractual restrictions in the TMA constitutes a breach of a duty to maintain secrecy, which satisfies the misappropriation element.

Sections IV through VI of this memorandum address elements 1 through 3 in detail. Element 4 — the fact of misappropriation — is supported by the Thornburg forensic analysis, the evidence regarding Harlow's submission of CPS Concentrate A to Archer Material Sciences for compositional analysis, the retention of proprietary records by Kenneth Fielding, and the circumstantial evidence of customer solicitation in violation of Section 9.3 of the TMA. A detailed analysis of the misappropriation element will be provided in the separate memorandum supporting the TRO motion.

IV. Identification of the Trade Secret — CPS-BC-1147

A threshold requirement for any trade-secret claim is that the plaintiff identify the claimed trade secret with "reasonable particularity." This requirement serves two purposes: it ensures that the claim is not based on vague or overbroad assertions of proprietary information, and it enables the defendant and the court to evaluate whether the specific information at issue qualifies for trade-secret protection. See IDX Sys. Corp. v. Tidewater Systems Sys. Corp., 285 F.3d 581, 583 (7th Cir. 2002) (noting that a trade-secret plaintiff must "describe the trade secrets at issue with sufficient particularity to allow a defendant to ascertain at least the boundaries within which the secret lies"); Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 661 (4th Cir. 1993).

We set forth below the specific categories of information that constitute the CPS-BC-1147 trade secret.

A. The Formulation Itself

CPS-BC-1147 comprises 14 distinct chemical constituents combined in proprietary ratios pursuant to a defined manufacturing protocol. The trade-secret claim encompasses the following specific categories of protected information:

1. Identity of the 14 Constituent Chemicals. The specific chemical identities (by chemical name, CAS number, and commercial-grade specification) of each of the 14 constituents that comprise CPS-BC-1147. While certain of these constituents are commercially available raw materials that are individually known in the coatings industry, the specific combination of these 14 particular chemicals in a single barrier coating formulation is proprietary to CPS and is not known to others in the industry.

2. Precise Weight Percentages and Ratios. The exact weight percentages of each of the 14 constituents, as well as the ratios between specific component groups (e.g., the ratio of cross-linking agents to film-forming polymers, the ratio of surfactant to rheology modifier, and the loading level of barrier-enhancing additives). These proportions were optimized through extensive trial-and-error experimentation during the 24-month development period and represent a substantial body of non-obvious technical knowledge.

3. Order-of-Addition Protocol. The specific sequence in which the 14 constituents are introduced during the blending process. The order of addition is critical to the performance characteristics of the finished coating; introducing certain constituents out of sequence can result in incomplete dispersion, phase separation, premature cross-linking, or other defects that degrade barrier performance. CPS's order-of-addition protocol was developed through numerous pilot-line trials and is not intuitive even to a skilled formulation chemist.

4. Processing Temperatures. The defined temperature set points at each stage of the blending process. Certain constituents must be introduced at elevated temperatures to achieve proper dissolution or dispersion, while other constituents are temperature-sensitive and must be introduced only after the batch has been cooled to a specified range. The processing temperature profile is integral to the formulation and constitutes protected information.

5. Shear Rates During Mixing. The defined agitation speeds and shear rates employed at each stage of the blending process. Shear rate affects particle size distribution, dispersion quality, and viscosity, all of which directly impact the barrier performance of the finished coating. CPS's shear-rate protocol was optimized through pilot-line testing and is not publicly available.

Critically, the CPS-BC-1147 formulation is not disclosed on any product technical data sheet, material safety data sheet (SDS/MSDS), patent application, issued patent, academic paper, conference presentation, or any other public filing or publication. CPS made a deliberate strategic decision not to pursue patent protection for CPS-BC-1147, in part because doing so would have required public disclosure of the formulation in the patent specification, and in part because the 20-year term of patent protection was viewed as insufficient given the expected commercial lifespan of the product and the difficulty of detecting infringement in a formulation context.

The specificity of the CPS-BC-1147 trade secret — a 14-constituent formulation with defined weight percentages, order-of-addition protocol, processing temperatures, and shear rates — satisfies the "reasonable particularity" standard applied by courts in trade-secret litigation. The trade secret is not defined in terms of vague concepts or general industry knowledge; it is a discrete, identifiable body of technical information that can be precisely articulated and distinguished from information that is publicly available. See Oakwood Labs., 999 F.3d at 905 (finding that a pharmaceutical formulation identified by specific ingredients, proportions, and processing parameters was described with sufficient particularity).

B. CPS Concentrate A

CPS Concentrate A is the pre-blended additive concentrate containing the 5 undisclosed proprietary constituents of the CPS-BC-1147 formulation. As described above, CPS designed the CPS Concentrate A system specifically to segregate the most sensitive and novel components of the formulation from Harlow's knowledge during the tolling relationship. Harlow received CPS Concentrate A as a single, opaque liquid concentrate, with no information regarding the identity, number, or proportions of its constituent chemicals.

The composition of CPS Concentrate A constitutes a trade secret both independently — as a standalone formulation — and as an integral component of the overall CPS-BC-1147 formulation. The 5 constituents contained in CPS Concentrate A include the barrier-enhancing additives and cross-linking agents that are principally responsible for the superior moisture-vapor, grease, and oxygen barrier performance that differentiates CPS-BC-1147 from competing products. The development of these additives and their optimization within the CPS-BC-1147 system represented the most technically challenging and resource-intensive aspect of the 24-month development effort.

C. Ancillary Technical Data

In addition to the formulation itself, the trade-secret claim encompasses ancillary technical data generated during both the development and commercial production of CPS-BC-1147, including:

• Batch production records generated during the tolling relationship at Harlow's Terre Haute facility, which contain processing parameters (temperatures, agitation speeds, hold times, and addition sequences) as well as raw material lot numbers and quantities.

• Analytical test results performed on finished batches, including viscosity measurements, solids content, pH, particle size distribution, and barrier performance testing (moisture-vapor transmission rate, grease resistance, and oxygen transmission rate). These results, viewed in combination with the corresponding batch production records, could enable a skilled formulator to reconstruct or optimize the formulation.

• Process parameter logs documenting production-scale adjustments to blending conditions, which reflect CPS's accumulated manufacturing know-how.

• FDA compliance testing data and pilot-line testing parameters generated during the development of CPS-BC-1147, which are not publicly available and which provide insight into the formulation's composition and performance characteristics.

While the formulation itself is the primary trade secret at issue, these ancillary data sets are relevant because they provide pathways by which a competitor with access to such data — as Harlow had during the tolling relationship — could reconstruct the complete formulation. Kenneth Fielding's alleged retention of these records beyond the scope permitted by the TMA is therefore a significant element of the misappropriation claim.

V. Independent Economic Value

Under both the DTSA and the OUTSA, a trade secret must derive "independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information." 18 U.S.C. § 1839(3)(B); Ohio Rev. Code § 1333.61(D)(1). This element requires a showing that the secrecy of the information provides the owner with a competitive advantage or economic benefit. The analysis below demonstrates that CPS-BC-1147 comfortably satisfies this requirement.

A. Revenue Attribution

CPS-BC-1147 is the single most commercially significant product in CPS's coatings portfolio. In fiscal year 2023, CPS-BC-1147 accounted for approximately 22% of CPS's total coatings revenue, which translates to approximately $47.23 million in annual revenue ($214.7 million × 22%). This figure represents direct, quantifiable economic value attributable to the formulation.

The product's revenue contribution has grown steadily since its commercial introduction in 2017 and is projected to continue growing as the food-packaging industry transitions away from fluorinated barrier chemistries (PFAS) and toward water-based alternatives. CPS's internal forecasts, which we should obtain from David Kessler or Rachel Sung, will likely show additional forward-looking economic value.

The revenue generated by CPS-BC-1147 also contributes materially to CPS's overall enterprise value — a factor that is relevant to Ridgepoint Capital's investment. At the time of Ridgepoint's acquisition in 2019, CPS was valued at approximately $285 million in enterprise value, and CPS-BC-1147's revenue and growth trajectory were identified as key value drivers. Any erosion of CPS's competitive position in the barrier coatings market directly impacts the value of Ridgepoint's investment.

B. R&D Investment

CPS invested approximately $3.8 million over approximately 24 months (January 2015 through December 2016) in the development of CPS-BC-1147. This investment encompassed the cost of specialized laboratory and pilot-line equipment, raw material procurement for extensive formulation trials (including the evaluation of numerous constituent chemistries that were ultimately rejected), personnel costs (including dedicated time of Dr. Yuen and multiple senior chemists and laboratory technicians), pilot-line coating trials at commercial scale, and FDA food-contact compliance testing performed by accredited third-party laboratories.

The magnitude of this R&D investment is relevant to the independent economic value analysis in two respects. First, it reflects the cost that would be required for a competitor to independently develop an equivalent formulation through legitimate means — a cost that CPS's competitors are able to avoid if they obtain access to the formulation through misappropriation. Second, it demonstrates that the information contained in the formulation is not trivial or readily ascertainable; it is the product of substantial, sustained investment in research and experimentation.

Courts have consistently recognized that significant R&D investment is probative of independent economic value. See, e.g., Motorola, Inc. v. Lemko Corp., No. 08 C 5427, 2012 WL 2339516, at 7 (N.D. Ill. June 19, 2012); Composite Marine Propellers, Inc. v. Van Der Woude*, 962 F.2d 1263, 1266 (7th Cir. 1992).

C. Competitive Advantage

CPS-BC-1147 provides CPS with a differentiated product offering in the food-grade packaging substrate market. The formulation's ability to deliver moisture-vapor, grease, and oxygen barrier properties in a single water-based application is a significant competitive differentiator, particularly in an industry that is increasingly seeking alternatives to multi-layer plastic laminates and fluorinated chemistries. This differentiation generates customer loyalty, premium pricing power, and a sustainable competitive position.

The economic significance of this competitive advantage is further illustrated by Harlow's conduct. The fact that Harlow was able to offer ShieldCoat Pro 900 — a product that, according to the Thornburg forensic analysis, is compositionally identical to CPS-BC-1147 — at a price approximately 15% below CPS's prevailing pricing, while presumably still earning a profit, demonstrates the economic advantage derived from access to the formulation without bearing the associated R&D costs. Harlow's ability to undercut CPS's pricing by 15% represents the quintessential type of economic harm that trade-secret protection is designed to prevent: a competitor obtains, through improper means, the fruits of another's investment, and then uses that information to compete unfairly on price.

D. Not Generally Known or Readily Ascertainable

The formulation of CPS-BC-1147 is not published in any patent, patent application, academic paper, trade publication, product technical data sheet, material safety data sheet, regulatory filing, or any other publicly available source. CPS made a deliberate decision not to patent the formulation, and no other party has published the formulation or any material portion thereof.

The Thornburg Analytics forensic analysis provides additional support for the conclusion that the formulation is not readily ascertainable by proper means. Dr. Vasquez's finding that ShieldCoat Pro 900 matched CPS-BC-1147 in all 14 constituent chemicals within ±0.3% by weight — a degree of concordance she characterized as "not achievable through independent development" — supports the inference that the formulation cannot be derived from publicly available information or from general knowledge in the coatings industry.

Moreover, the combination of 14 specific chemical constituents in proprietary ratios, together with a defined order-of-addition protocol and specified processing temperatures and shear rates, represents a level of formulation complexity that cannot be reverse-engineered from the finished coating product alone. A competitor analyzing a sample of the finished CPS-BC-1147 coating through standard analytical chemistry techniques (e.g., FTIR spectroscopy, GC-MS, ICP-OES) might be able to identify certain constituent chemicals, but would face significant challenges in determining (a) the precise proportions of all 14 constituents, (b) the order in which they were added, (c) the processing temperatures at each stage, and (d) the shear rates employed during mixing. These processing parameters leave no direct chemical signature in the finished product and are not ascertainable through post-production analysis. See Mangren Research & Dev. Corp. v. Nat'l Chem. Co., 87 F.3d 937, 943 (7th Cir. 1996) (finding that a chemical formulation constituted a trade secret where the formula could not be determined merely by analyzing the finished product).

VI. Reasonable Measures to Maintain Secrecy

Both the DTSA and the OUTSA require that the owner of a trade secret take "reasonable measures" (DTSA) or "efforts that are reasonable under the circumstances" (OUTSA) to maintain the secrecy of the information. This element does not require that the trade-secret owner take every conceivable precaution; rather, it requires that the owner implement measures that are objectively reasonable in light of the circumstances, including the nature of the information, the size and resources of the owner, and the context in which the information was disclosed. See Oakwood Labs., 999 F.3d at 907; Bimbo Bakeries, 613 F.3d at 114; Compulife Software Inc. v. Newman, 959 F.3d 1288, 1313 (11th Cir. 2020).

CPS's secrecy measures are cataloged below.

A. Partial Formulation Disclosure Under the TMA

CPS adopted a deliberate, stratified disclosure strategy in connection with the Harlow tolling relationship. Of the 14 distinct chemical constituents that comprise CPS-BC-1147, CPS disclosed only 9 to Harlow. Even for those 9 constituents, CPS provided only general proportional ranges — not the precise weight percentages — necessary for Harlow to perform quality-control checks and handle raw materials safely. The remaining 5 proprietary constituents were withheld entirely from Harlow's knowledge and were supplied only in pre-blended form as CPS Concentrate A, which was manufactured at CPS's Columbus facility and shipped to Harlow in sealed, labeled containers.

This approach ensured that Harlow never possessed the complete formulation. Even with knowledge of the 9 disclosed constituents and their general ranges, Harlow could not have reproduced CPS-BC-1147 without the 5 undisclosed constituents contained in CPS Concentrate A. The partial-disclosure strategy was deliberately designed by Dr. Yuen and approved by CPS's management team as a trade-secret protection measure.

Courts have consistently held that partial disclosure to business partners under appropriate contractual restrictions does not defeat trade-secret protection. See Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009) ("A trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret."); Learning Curve Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714, 723 (7th Cir. 2003). The fact that CPS disclosed partial information to Harlow — while withholding the most sensitive components and protecting the disclosed information through contractual restrictions — is evidence of reasonable measures, not the absence thereof.

B. Contractual Protections in the Toll Manufacturing Agreement

The TMA between CPS and Harlow, dated March 15, 2017, contained multiple contractual provisions specifically designed to protect CPS's proprietary information:

Section 7 — Confidentiality and Non-Disclosure. This provision imposed a comprehensive confidentiality obligation on Harlow, requiring Harlow to (i) maintain the confidentiality of all CPS proprietary information disclosed in connection with the tolling relationship, (ii) restrict access to CPS proprietary information to only those Harlow personnel who had a need to know for purposes of performing the tolling services, (iii) refrain from disclosing CPS proprietary information to any third party without CPS's prior written consent, and (iv) use CPS proprietary information solely for the purpose of performing the tolling services under the TMA.

Section 8.2 — Reverse-Engineering Prohibition. This provision expressly prohibited Harlow from analyzing, decompiling, reverse-engineering, or otherwise attempting to derive the composition of CPS Concentrate A or any other CPS proprietary material. This prohibition was specifically directed at the risk that Harlow might attempt to use its access to CPS Concentrate A to learn the identities and proportions of the 5 undisclosed constituents.

Section 9.1 — Non-Compete Covenant. This provision restricted Harlow from manufacturing, blending, selling, distributing, or offering for sale any barrier coating that was "substantially similar" to CPS-BC-1147 for a period of three years following the effective date of termination of the TMA. The three-year post-termination period extends through January 31, 2026, and Harlow's launch of ShieldCoat Pro 900 in approximately April 2023 falls squarely within this restricted period.

Section 9.3 — Customer Non-Solicitation Covenant. This provision prohibited Harlow from directly or indirectly soliciting, contacting, or attempting to divert any customer of CPS for the purpose of selling any product that competed with CPS-BC-1147, for the same three-year post-termination period. Harlow's contacts with Mapleridge Paper Corp., Pinnacle Flexible Films LLC, Orion Paperboard Inc., Great River Packaging Co., and TerraFold Industries LLC — all CPS customers — constitute apparent violations of this covenant.

The existence of these contractual protections is among the strongest evidence of reasonable measures available under trade-secret law. Courts routinely cite confidentiality agreements, non-disclosure obligations, and restrictive covenants as hallmarks of reasonable secrecy efforts. See Oakwood Labs., 999 F.3d at 907 ("Requiring employees and business partners to sign confidentiality agreements is a paradigmatic example of a 'reasonable measure.'"); Bimbo Bakeries, 613 F.3d at 114; StoneCoat of Tex., LLC v. ProCal Stone Design LLC, 426 F. Supp. 3d 311, 334 (E.D. Tex. 2019) (finding that NDA provisions in supply agreements supported reasonable-measures element).

C. Internal Access Controls at CPS

Within CPS's own facilities, access to the complete CPS-BC-1147 formulation was restricted to authorized R&D and production personnel on a need-to-know basis. Dr. Margaret Yuen personally oversaw access to formulation documentation and managed the preparation of CPS Concentrate A. The complete formulation — including the identities and proportions of all 14 constituents, the order-of-addition protocol, processing temperatures, and shear rates — was not made available to CPS's sales team, administrative staff, or other personnel who did not require access to perform their job functions.

Based on our preliminary discussions with Rachel Sung, we understand that CPS maintained password-protected formulation databases accessible only to authorized users, that formulation documents were stored in restricted areas with limited physical access, and that the distribution of complete formulation records was limited to a small number of designated personnel. However, we do not yet have detailed documentation of these internal security measures, and we recommend confirming the specifics through interviews with Dr. Yuen and CPS's IT department, as described in Section VIII below.

The importance of documenting CPS's internal access controls cannot be overstated. While the contractual protections in the TMA and the physical segregation of CPS Concentrate A are strong evidence of reasonable measures, courts also look to the trade-secret owner's internal security practices in evaluating the reasonableness of its overall approach. See Compulife Software, 959 F.3d at 1313 (considering internal access restrictions, password protections, and employee agreements as factors in the reasonable-measures analysis). We need to be prepared to present a comprehensive picture of CPS's internal security infrastructure.

D. Physical Segregation of CPS Concentrate A

CPS Concentrate A was blended exclusively at CPS's Columbus, Ohio facility under the supervision of Dr. Yuen and authorized R&D/production personnel. The concentrate was packaged in sealed, labeled containers and shipped to Harlow's Terre Haute facility via tracked freight. At no point was Harlow given access to the raw materials, equipment, or processes used to manufacture CPS Concentrate A. The physical segregation of the 5 undisclosed constituents from Harlow's operations was a deliberate, affirmative, and meaningful secrecy measure that went beyond what many toll manufacturing relationships require.

This physical segregation approach effectively created a "firewall" between Harlow's knowledge and the most sensitive elements of the formulation. Even with access to the 9 disclosed constituents and their general ranges, and even with possession of CPS Concentrate A in its blended form, Harlow could not — through any legitimate means — determine the composition of the concentrate without violating Section 8.2 of the TMA. The fact that Harlow ultimately resorted to sending CPS Concentrate A to Archer Material Sciences for compositional analysis is itself evidence both of the effectiveness of CPS's segregation strategy and of the deliberateness of Harlow's misappropriation.

E. Significance of the $3.8 Million R&D Investment

While the magnitude of CPS's R&D investment is not, strictly speaking, a "measure" taken to maintain secrecy, it is relevant context for the court in evaluating whether CPS's overall approach was reasonable. A company that invests $3.8 million over 24 months in developing a proprietary formulation, and then implements partial-disclosure protocols, physical segregation of key components, and comprehensive contractual protections, presents a picture of an organization that treated its trade secrets with seriousness and care. Courts have recognized that the extent of a company's investment in developing proprietary information is relevant to the reasonableness inquiry. See Composite Marine Propellers, 962 F.2d at 1266.

VII. Potential Weaknesses and Risk Assessment

While we believe CPS's trade-secret claim is well-supported, candor requires identification of the potential weaknesses that Harlow's counsel may seek to exploit. We address each potential vulnerability below, together with our assessment of the available counter-arguments.

A. Scope of Disclosure to Harlow

Although CPS withheld 5 of the 14 constituents and supplied them only in pre-blended form as CPS Concentrate A, CPS did disclose the identities of 9 constituents and their general proportional ranges to Harlow. Defense counsel at Voss Gentry & Whitaker may argue that by disclosing even partial formulation information to a third-party toll manufacturer, CPS undermined the secrecy of the formulation and thus failed to take reasonable measures to protect it.

Counter-argument. This argument is unlikely to succeed. Partial disclosure to business partners is standard practice in toll manufacturing relationships and is, in fact, widely recognized by courts as a reasonable approach to balancing operational necessity with trade-secret protection. CPS disclosed only the information that was strictly necessary for Harlow to perform the blending and packaging operations, and it withheld the most technically novel and competitively sensitive components. Moreover, the disclosure was made under the protective umbrella of the TMA's confidentiality, reverse-engineering, and non-compete provisions. Courts have repeatedly upheld trade-secret protection in circumstances where partial disclosures were made to business partners under NDA or confidentiality agreements. See Faiveley, 559 F.3d at 118; Learning Curve Toys, 342 F.3d at 723; Westmark Enterprises, Inc. v. Michalski, 579 N.E.2d 214, 218 (Ohio Ct. App. 1990). Indeed, CPS's decision to limit the scope of its disclosure — rather than sharing the complete formulation — is itself evidence of reasonable measures.

B. Adequacy of CPS's Monitoring of Harlow

A more significant potential vulnerability is CPS's apparent failure to conduct audits, inspections, or other monitoring of Harlow's compliance with the TMA's secrecy provisions. Based on the facts known to date, CPS does not appear to have conducted any on-site inspections of Harlow's Terre Haute facility to verify that Harlow was complying with the reverse-engineering prohibition (Section 8.2), the access-restriction requirements (Section 7), or the document-retention limitations under the TMA.

This gap is underscored by the fact that Harlow was able to send CPS Concentrate A to Archer Material Sciences in September 2022 for compositional analysis — a clear and deliberate violation of Section 8.2 — without CPS's knowledge. Defense counsel may argue that CPS's failure to monitor Harlow's compliance demonstrates a lack of vigilance inconsistent with the requirement of reasonable measures.

Counter-argument. While the absence of monitoring is a weakness, it is not fatal. Courts have consistently held that a trade-secret owner is not required to take every conceivable measure to protect its trade secrets — only "reasonable" measures under the circumstances. See Oakwood Labs., 999 F.3d at 907; Compulife Software, 959 F.3d at 1313. The contractual prohibitions in the TMA, combined with the physical segregation of CPS Concentrate A, constitute objectively reasonable steps that were specifically designed to prevent the precise type of misappropriation that occurred. The fact that Harlow was able to covertly violate the reverse-engineering prohibition does not retroactively negate the reasonableness of CPS's measures any more than a burglary negates the reasonableness of a homeowner's locks. A trade-secret owner is entitled to rely on the contractual commitments of its business partners; the failure to foresee and prevent a deliberate, covert breach of those commitments does not amount to unreasonable conduct on the part of the trade-secret owner. See Turret Labs USA, Inc. v. CargoSprint, LLC, No. 19-cv-6793, 2020 WL 1330840, at *6 (S.D.N.Y. Mar. 23, 2020).

That said, we should develop the factual record on this point. If CPS did conduct any compliance checks — even informal ones, such as periodic inquiries to Harlow management regarding adherence to the TMA's confidentiality provisions — those facts should be documented and presented.

C. Post-Termination Return of Materials

We should verify whether the TMA contained a specific provision requiring Harlow to return or destroy all CPS proprietary materials — including batch production records, analytical test results, process parameter logs, and any remaining inventory of CPS Concentrate A — upon termination of the agreement. If such a provision exists, we should determine whether CPS enforced it and whether Harlow provided a written certification of compliance.

If CPS did not follow up on the return or destruction of proprietary materials after the January 31, 2023 termination, defense counsel may point to this as evidence of lax secrecy practices. Conversely, if CPS did request return or destruction and Harlow failed to comply — or if Harlow provided a false certification — that fact would significantly strengthen CPS's misappropriation claim and potentially support an allegation of willful and malicious conduct.

This is a factual gap that must be closed before filing. We have requested Rachel Sung to locate all correspondence between CPS and Harlow regarding termination and return of materials.

D. Internal Security Measures at CPS — Need for Further Documentation

As noted in Section VI.C above, we have limited documentation of CPS's internal access controls governing the CPS-BC-1147 formulation. While we understand from preliminary discussions that CPS maintained password-protected formulation databases, restricted physical access to formulation documents, and limited distribution to need-to-know personnel, we do not have copies of the specific policies, access logs, or employee agreements that would substantiate these assertions.

This gap is concerning because defense counsel may argue that CPS's internal security was inadequate, particularly if CPS cannot produce documentary evidence of its access controls. Courts evaluating the reasonable-measures element typically consider the totality of the trade-secret owner's security practices, including both external protections (contractual measures, physical segregation) and internal controls (employee NDAs, access restrictions, IT security). See Compulife Software, 959 F.3d at 1313.

We recommend obtaining the following documents and information from CPS as a priority:

(i) Copies of any employee confidentiality or non-disclosure agreements signed by CPS personnel who had access to the CPS-BC-1147 formulation;

(ii) IT access logs showing which individuals had access to the formulation database, and when such access was granted or revoked;

(iii) Internal policies or standard operating procedures governing formulation security, document classification, and handling of proprietary information;

(iv) Any visitor logs, badge-access records, or physical access controls for the R&D and production areas where CPS-BC-1147 is manufactured and where CPS Concentrate A is blended.

Dr. Yuen and Rachel Sung are the appropriate contacts for these materials.

E. Independent Development Defense

In its February 5, 2024 denial letter, Voss Gentry & Whitaker asserted on behalf of Harlow that ShieldCoat Pro 900 was "independently developed by Harlow's technical team using publicly available information and Harlow's own proprietary expertise in barrier coating chemistry." This is a predictable defense, and we should be prepared to rebut it comprehensively.

The Thornburg Analytics forensic report is the centerpiece of our rebuttal. Dr. Vasquez's finding that ShieldCoat Pro 900 matched CPS-BC-1147 in all 14 constituent chemicals within ±0.3% by weight is extraordinarily strong evidence that ShieldCoat Pro 900 was not independently developed. As Dr. Vasquez stated in her preliminary report, this degree of compositional concordance is "not achievable through independent development" and is "consistent only with access to the complete formulation." The statistical improbability of independently arriving at the same 14 constituents in the same proportions (within ±0.3%) — given the vast number of available raw materials and the near-infinite range of possible proportions — will be a compelling argument at trial and on a TRO motion.

However, we should anticipate that Harlow may retain its own expert to challenge the Thornburg analysis. Potential defense-expert arguments may include: (a) challenging Dr. Vasquez's analytical methodology or the accuracy of her measurements; (b) arguing that the degree of similarity is coincidental or the result of convergent engineering choices driven by publicly available industry knowledge; (c) arguing that the ±0.3% margin is within normal manufacturing variability and does not support an inference of copying. We should prepare Dr. Vasquez for these challenges and ensure that her final report addresses them proactively.

Additionally, we should investigate whether Harlow can produce any credible documentation of an independent development effort — laboratory notebooks, formul

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
Date: February 12, 2024
To: Catherine Bloom, Partner, intellectual Property Group, Calderwood & Harkness LLP
From: Omar Siddiqui, Lead Associate, and Christy Bauer, Working Associate, intellectual Property Group, Calderwood & Harkness LLP
Re: Trade Secret Identification and Reasonable Measures Analysis — CPS-BC-1147 Barrier Coating Formulation; Crestline Packaging Solutions LLC v. Harlow Chemical Supply Inc.
Matter No.: 1006-00004
This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected by the work-product doctrine. Do not distribute outside the engagement team without prior approval.
I. Executive Summary
The purpose of this memorandum is to analyze whether the proprietary barrier coating formulation designated CPS-BC-1147, developed and owned by Crestline Packaging Solutions LLC ("CPS" or the "Client"), qualifies as a protectable trade secret under both the federal Defend Trade Secrets Act ("DTSA"), 18 U.S.C. §§ 1836–1839, and the Ohio Uniform Trade Secrets Act ("OUTSA"), Ohio Rev. Code §§ 1333.61–1333.69. This analysis is undertaken in anticipation of the filing of a complaint and motion for temporary restraining order against Harlow Chemical Supply Inc. ("Harlow"), Gerald W. Norris, and Kenneth Fielding.
Conclusion. Based on the facts gathered to date, it is our assessment that CPS-BC-1147 meets the statutory definition of a trade secret under both the DTSA and the OUTSA. Specifically, the formulation derives independent economic value, both actual and potential, from not being generally known to, and not being readily ascertainable through proper means by, other persons who can obtain economic value from its disclosure or use. Furthermore, CPS undertook reasonable measures to maintain the secrecy of the formulation, including partial disclosure protocols, physical segregation of the most sensitive formulation components, and comprehensive contractual protections embodied in the Toll Manufacturing Agreement between CPS and Harlow.
This memorandum is organized as follows: First, it identifies the specific information constituting the claimed trade secret with the degree of particularity that will be required in litigation. Second, it catalogs the reasonable measures CPS undertook to maintain the secrecy of the formulation. Third, it flags potential weaknesses in CPS's position that opposing counsel may exploit, and evaluates the strength of available counter-arguments. Fourth, it recommends further factual development that should be completed prior to filing the complaint, which is targeted for on or about February 26, 2024, in the United States District Court for the Southern District of Ohio, Eastern Division.
We are prepared to discuss this memorandum at your earliest convenience and to begin drafting the complaint and TRO briefing upon your authorization.
II. Background
A. The Client — Crestline Packaging Solutions LLC
Crestline Packaging Solutions LLC is an Ohio limited liability company with its principal place of business at 4800 Scioto Industrial Parkway, Columbus, Ohio 43228. CPS is a manufacturer of specialty barrier coatings, laminates, and packaging substrates serving the food, pharmaceutical, and industrial packaging industries. The company maintains production facilities in Columbus and operates pilot-line and quality-assurance laboratories on the same campus.
CPS's annual coatings production volume is approximately 38 million pounds. For fiscal year 2023, CPS reported total revenue of approximately $214.7 million and earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately $31.2 million. The company employs approximately 620 individuals, including a dedicated research and development team of approximately 30 scientists, chemists, and laboratory technicians.
CPS is a portfolio company of Ridgepoint Capital Partners LP, a Delaware limited partnership headquartered at 1900 Euclid Avenue, Suite 3400, Cleveland, Ohio 44115. Ridgepoint is a Cleveland-based middle-market private equity firm that acquired CPS in 2019 for approximately $285 million in enterprise value. The Managing Partner of Ridgepoint Capital is Thomas Alderman, and the Operating Partner overseeing the CPS investment is Sarah Engel. Ridgepoint's ownership structure and its investment thesis for CPS are relevant insofar as they underscore the significant economic value of CPS's proprietary formulations to both CPS and its equity sponsors.
Key CPS personnel relevant to this matter include:
•  David Kessler, Chief Executive Officer
•  Dr. Margaret Yuen, Vice President of Research & Development
•  Rachel Sung, General Counsel
•  Brian Novotny, Sales Director
B. The Defendant — Harlow Chemical Supply Inc.
Harlow Chemical Supply Inc. is an Indiana corporation with its principal place of business at 1120 Commerce Boulevard, Terre Haute, Indiana 47802. Harlow operates as a contract (toll) chemical manufacturer serving the coatings, adhesives, and sealants industries. Harlow maintains blending, packaging, and warehousing facilities at its Terre Haute location, where it provides toll manufacturing services for third-party customers who supply proprietary formulations and, in some cases, proprietary raw materials.
Harlow's estimated fiscal year 2023 revenue was approximately $87.3 million. The company employs approximately 210 individuals. Harlow is a privately held company; its sole shareholder is Gerald W. Norris, who also serves as CEO.
Key Harlow personnel relevant to this matter include:
•  Gerald W. Norris, CEO and Sole Shareholder
•  Kenneth Fielding, Vice President of Technical Operations
•  Amanda Trent, Sales Director
Harlow is represented in this matter by the law firm of Voss Gentry & Whitaker LLP, located at 300 North Meridian Street, Suite 2500, Indianapolis, Indiana 46204. The lead attorney is Brian Whitaker, Partner, with Danielle Pacheco, Associate, also assigned to the matter.
C. Development of CPS-BC-1147
CPS-BC-1147 is a water-based, high-performance barrier coating designed for application to food-grade paperboard packaging substrates. The coating provides moisture-vapor barrier, grease barrier, and oxygen barrier properties in a single application, which represents a significant technical achievement in the packaging coatings industry. The formulation allows CPS's customers — primarily converters and paperboard manufacturers — to replace multi-layer barrier systems (which often incorporate non-recyclable plastic films or fluorinated chemistries) with a single-coat, water-based solution that is both high-performing and compatible with recycling streams.
CPS-BC-1147 was developed by CPS's R&D team under the direction of Dr. Margaret Yuen over a period of approximately 24 months, from January 2015 through December 2016. The development effort involved extensive bench-scale formulation trials, pilot-line coating trials, accelerated aging and performance testing, and regulatory compliance testing to confirm suitability for food-contact applications under applicable FDA regulations (21 C.F.R. Parts 174–178).
CPS's total research and development investment in CPS-BC-1147 was approximately $3.8 million. This figure encompasses the cost of specialized laboratory equipment, raw material procurement for formulation trials, personnel costs (including dedicated time of senior chemists and laboratory technicians), pilot-line testing runs, and the cost of FDA compliance and food-contact safety testing conducted by third-party laboratories.
Since its commercial introduction in early 2017, CPS-BC-1147 has become CPS's highest-revenue coatings product and a cornerstone of the company's competitive positioning. In fiscal year 2023, CPS-BC-1147 accounted for approximately 22% of CPS's total coatings revenue, or approximately $47.23 million ($214.7 million × 22%). The product's commercial success was a material factor in Ridgepoint Capital's decision to acquire CPS in 2019 and remains central to CPS's valuation and growth trajectory.
D. The Toll Manufacturing Agreement
To supplement its Columbus production capacity during a period of growing demand, CPS entered into a Toll Manufacturing Agreement ("TMA") with Harlow, dated March 15, 2017. Under the TMA, Harlow agreed to blend and package CPS-BC-1147 at Harlow's Terre Haute facility using raw materials and CPS-supplied proprietary concentrates, in accordance with CPS's specifications and under CPS's quality oversight.
The TMA contained several provisions specifically designed to protect CPS's proprietary information:
Section 7 — Confidentiality and Non-Disclosure. This section required Harlow to maintain the confidentiality of all CPS proprietary information disclosed in connection with the tolling relationship. Harlow was obligated to restrict access to CPS proprietary information to only those Harlow personnel who had a need to know for purposes of performing the tolling services. Harlow was expressly prohibited from disclosing CPS proprietary information to any third party without CPS's prior written consent.
Section 8.2 — Reverse-Engineering Prohibition. This section expressly prohibited Harlow from analyzing, decompiling, reverse-engineering, or otherwise attempting to derive the composition of CPS Concentrate A or any other CPS proprietary material provided under the TMA. This prohibition was a critical safeguard, as CPS Concentrate A contained the five most sensitive constituents of the CPS-BC-1147 formulation, which were withheld from Harlow's knowledge.
Section 9.1 — Non-Compete. This section restricted Harlow from manufacturing, blending, selling, or offering for sale any barrier coating that was "substantially similar" to CPS-BC-1147 for a period of three years following the effective date of termination of the TMA.
Section 9.3 — Customer Non-Solicitation. This section prohibited Harlow from directly or indirectly soliciting, contacting, or attempting to divert any customer of CPS for the purpose of selling any product that competed with CPS-BC-1147, for the same three-year post-termination period.
CPS adopted a deliberate partial-disclosure strategy in connection with the tolling relationship. Of the 14 distinct chemical constituents that comprise CPS-BC-1147, CPS disclosed only 9 to Harlow, along with general proportional ranges (rather than precise weight percentages) for those 9 constituents. The remaining 5 proprietary additive components — which represent the most technically novel and competitively sensitive aspects of the formulation — were never disclosed to Harlow individually. Instead, CPS pre-blended these 5 constituents at its Columbus facility into a single additive concentrate designated "CPS Concentrate A." CPS Concentrate A was then shipped from Columbus to Harlow's Terre Haute facility in sealed, labeled containers for incorporation into the blending process. At no time was Harlow provided with the individual identities, proportions, or processing parameters for the components of CPS Concentrate A.
The tolling fee under the TMA was $0.38 per pound of finished product. In calendar year 2022, Harlow processed approximately 9.4 million pounds of CPS-BC-1147 for CPS, generating tolling fees to Harlow of approximately $3,572,000 (9,400,000 lbs × $0.38/lb). The tolling relationship was thus commercially significant to Harlow.
CPS terminated the TMA effective January 31, 2023. The termination was driven by CPS's successful expansion of its in-house production capacity at its Columbus facility, which rendered the Harlow tolling arrangement no longer necessary from a capacity standpoint. The termination was not precipitated by any known misconduct on Harlow's part at that time.
E. The Alleged Misappropriation
Approximately two months after the effective date of termination, in or about April 2023, Harlow began marketing a new barrier coating product under the trade name "ShieldCoat Pro 900" to the food-grade paperboard packaging industry — the same market segment served by CPS-BC-1147.
CPS first became aware of Harlow's competing product on June 12, 2023, when CPS's Sales Director, Brian Novotny, received information from Mapleridge Paper Corp. — a longstanding and significant CPS customer — that Harlow's Sales Director, Amanda Trent, had approached Mapleridge and offered ShieldCoat Pro 900 as a direct replacement for CPS-BC-1147, at a price approximately 15% below CPS's prevailing pricing.
Between June and November 2023, CPS undertook an internal investigation and confirmed that Harlow's Amanda Trent had contacted at least four additional CPS customers to offer ShieldCoat Pro 900, including:
•  Pinnacle Flexible Films LLC
•  Orion Paperboard Inc.
•  Great River Packaging Co.
•  TerraFold Industries LLC
CPS's investigation further revealed evidence suggesting that Harlow's development of ShieldCoat Pro 900 was the product of deliberate misappropriation rather than independent development. Specifically, CPS learned that in September 2022 — approximately five months before the termination of the TMA — Harlow, at the direction of its Vice President of Technical Operations, Kenneth Fielding, sent a sample of CPS Concentrate A to Archer Material Sciences Inc., located at 9300 Harding Street, Indianapolis, Indiana 46221, for compositional analysis. This act was in direct violation of Section 8.2 of the TMA, which expressly prohibited Harlow from analyzing or attempting to derive the composition of CPS Concentrate A.
Additionally, upon information and belief, Kenneth Fielding retained batch production records, analytical test results, and process parameter logs generated during the tolling relationship beyond the scope permitted by the TMA's document-retention and return-of-materials provisions. These records, in combination with the compositional analysis of CPS Concentrate A, would have provided Harlow with all information necessary to reproduce the complete CPS-BC-1147 formulation.
On November 8, 2023, CPS, through its General Counsel Rachel Sung, retained Thornburg Analytics LLC, located at 7225 Research Park Drive, Cincinnati, Ohio 45237, to conduct a forensic chemical analysis comparing ShieldCoat Pro 900 to CPS-BC-1147. Thornburg Analytics is a nationally recognized analytical chemistry laboratory specializing in coatings and polymers forensic analysis. The engagement was led by Dr. Elena Vasquez, a Senior Analytical Chemist with over 18 years of experience in coatings chemistry.
Dr. Vasquez's preliminary forensic report, dated December 22, 2023, concluded that ShieldCoat Pro 900 matched CPS-BC-1147 in all 14 constituent chemicals within a margin of ±0.3% by weight. Dr. Vasquez characterized this degree of compositional concordance as "not achievable through independent development" and "consistent only with access to the complete formulation, including the identities and precise proportions of all constituent chemicals." The Thornburg report is a critical piece of evidence and will serve as the foundation for both the complaint and the TRO motion.
On January 18, 2024, Calderwood & Harkness LLP, on behalf of CPS, sent a cease-and-desist letter to Harlow Chemical Supply Inc. demanding that Harlow immediately cease all production, marketing, and sale of ShieldCoat Pro 900 and cease all solicitation of CPS customers. On February 5, 2024, Harlow's counsel, Voss Gentry & Whitaker LLP (Brian Whitaker), responded by letter denying any misappropriation and asserting that ShieldCoat Pro 900 was "independently developed by Harlow's technical team using publicly available information and Harlow's own proprietary expertise in barrier coating chemistry." The letter did not provide any specific details regarding the purported independent development process.
III. Legal Framework
A. The Defend Trade Secrets Act (18 U.S.C. §§ 1836–1839)
The DTSA, enacted in 2016, provides a federal private right of action for trade-secret misappropriation. The statute defines "trade secret" broadly. Under 18 U.S.C. § 1839(3), a trade secret includes:
all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if — (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.
The DTSA thus imposes two affirmative requirements for trade-secret status: (1) the owner must have taken "reasonable measures" to keep the information secret, and (2) the information must derive "independent economic value" from its secrecy. Both elements must be established by the plaintiff.
In addition, to invoke federal jurisdiction under the DTSA, the trade secret must be "related to a product or service used in, or intended for use in, interstate or foreign commerce." 18 U.S.C. § 1836(b)(1). This jurisdictional element is easily satisfied here. CPS-BC-1147 is manufactured in Ohio and sold to customers across multiple states, including but not limited to Ohio, Indiana, Michigan, Pennsylvania, Georgia, and Texas. Harlow's competing ShieldCoat Pro 900 product is similarly marketed and sold in interstate commerce.
The DTSA provides the following remedies for misappropriation:
Injunctive Relief. Under 18 U.S.C. § 1836(b)(3)(A), a court may grant an injunction to prevent any actual or threatened misappropriation, provided the order does not prevent a person from entering into an employment relationship and any conditions placed on such employment are based on evidence of threatened misappropriation and not merely on the information the person knows. An injunction may, in appropriate circumstances, condition future use upon payment of a reasonable royalty for no longer than the period of time for which such use could have been prohibited.
Damages. Under 18 U.S.C. § 1836(b)(3)(B), a court may award damages for actual loss caused by the misappropriation and damages for unjust enrichment caused by the misappropriation that is not addressed in computing damages for actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for the misappropriator's unauthorized disclosure or use of the trade secret.
Exemplary Damages. Under 18 U.S.C. § 1836(b)(3)(C), if the trade secret is willfully and maliciously misappropriated, the court may award exemplary damages in an amount not more than two times the amount of the damages awarded under subsection (b)(3)(B).
Attorneys' Fees. Under 18 U.S.C. § 1836(b)(3)(D), the court may award reasonable attorneys' fees to the prevailing party if the trade secret was willfully and maliciously misappropriated or if a claim of misappropriation was made in bad faith.
The DTSA also provides for ex parte seizure of property necessary to prevent the propagation or dissemination of the trade secret under 18 U.S.C. § 1836(b)(2). We note, however, that we are not pursuing an ex parte seizure in this matter. Instead, we intend to seek a temporary restraining order under Federal Rule of Civil Procedure 65(b), which we believe is sufficient to preserve the status quo and can be obtained on an expedited basis. The ex parte seizure remedy is extraordinary, and its use is disfavored by courts absent evidence that a defendant would destroy or conceal the trade secret upon receiving notice of the action. While we have concerns about the integrity of Harlow's document retention, we do not presently have evidence that would satisfy the heightened standard for seizure.
B. Ohio Uniform Trade Secrets Act (Ohio Rev. Code §§ 1333.61–1333.69)
Ohio has adopted the Uniform Trade Secrets Act, codified at Ohio Rev. Code §§ 1333.61–1333.69 ("OUTSA"). The OUTSA provides a complementary state-law cause of action for trade-secret misappropriation. Under Ohio Rev. Code § 1333.61(D), a "trade secret" is defined as:
information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following: (1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. (2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
The OUTSA definition is substantially similar to, and functionally equivalent with, the DTSA definition. Both statutes require the same two core elements: (1) independent economic value derived from secrecy, and (2) reasonable efforts to maintain secrecy. There are minor differences in statutory language — for example, the OUTSA uses "efforts that are reasonable under the circumstances" while the DTSA uses "reasonable measures" — but Ohio courts have not drawn any meaningful distinction between these formulations. See, e.g., Heartland Home Fin., Inc. v. Allied Home Mortg. Capital Corp., 258 F. App'x 860, 862 (6th Cir. 2008); State ex rel. Besser v. Ohio State Univ., 89 Ohio St. 3d 396, 399 (2000).
The OUTSA provides the following remedies:
Injunctive Relief. Under Ohio Rev. Code § 1333.62, a court may enjoin actual or threatened misappropriation. An injunction may be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time to eliminate any commercial advantage that otherwise would be derived from the misappropriation.
Damages. Under Ohio Rev. Code § 1333.63(A), a complainant may recover damages for the actual loss caused by misappropriation and for the unjust enrichment caused by the misappropriation that is not taken into account in computing actual loss. In lieu of measuring damages by other methods, the complainant may recover a reasonable royalty.
Exemplary Damages. Under Ohio Rev. Code § 1333.63(B), if willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subsection (A).
Attorneys' Fees. Under Ohio Rev. Code § 1333.64, the court may award reasonable attorneys' fees to the prevailing party if a claim of misappropriation is made in bad faith or if willful and malicious misappropriation exists.
We intend to assert claims under both the DTSA and the OUTSA. The claims are not mutually exclusive, and asserting both provides maximum flexibility with respect to remedies and preserves the ability to recover under state law if, for any reason, the federal claim is dismissed or narrowed.
C. Key Elements to Establish
To prevail on its trade-secret misappropriation claims under both the DTSA and the OUTSA, CPS must establish the following elements:
1.  The information constitutes a "trade secret." CPS must identify the claimed trade secret with "reasonable particularity" and demonstrate that the information falls within the statutory definition. Courts require that the plaintiff do more than make vague, general assertions — the plaintiff must describe the trade secret in sufficient detail to separate it from matters of general knowledge in the trade or of special knowledge of persons skilled in the trade. See DeRubeis v. Witten Techs., Inc., 244 F.R.D. 676, 681 (N.D. Ga. 2007); Sit-Up Ltd. v. IAC/InterActiveCorp., No. 05 Civ. 9292, 2008 WL 463884, at 11 (S.D.N.Y. Feb. 20, 2008). However, the plaintiff need not disclose the trade secret itself in its pleadings in a manner that would destroy the very secrecy it seeks to protect. See* 18 U.S.C. § 1835(b) (DTSA confidentiality provisions).
2.  The information has independent economic value from not being generally known or readily ascertainable. CPS must show that the secrecy of the information provides CPS with a competitive advantage or economic benefit that would be lost or diminished if the information were publicly known.
3.  The owner took reasonable measures to maintain secrecy. CPS must demonstrate that it implemented security measures, contractual protections, and other safeguards that were objectively reasonable under the circumstances. Perfection is not required; the standard is one of reasonableness. See Oakwood Labs. LLC v. Thanoo, 999 F.3d 892, 907 (3d Cir. 2021); Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102, 114 (3d Cir. 2010).
4.  The information was misappropriated. CPS must establish that Harlow acquired, disclosed, or used the trade secret by improper means or in breach of a duty to maintain its secrecy. Under both the DTSA and the OUTSA, "improper means" includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. 18 U.S.C. § 1839(6); Ohio Rev. Code § 1333.61(A). Violation of the contractual restrictions in the TMA constitutes a breach of a duty to maintain secrecy, which satisfies the misappropriation element.
Sections IV through VI of this memorandum address elements 1 through 3 in detail. Element 4 — the fact of misappropriation — is supported by the Thornburg forensic analysis, the evidence regarding Harlow's submission of CPS Concentrate A to Archer Material Sciences for compositional analysis, the retention of proprietary records by Kenneth Fielding, and the circumstantial evidence of customer solicitation in violation of Section 9.3 of the TMA. A detailed analysis of the misappropriation element will be provided in the separate memorandum supporting the TRO motion.
IV. Identification of the Trade Secret — CPS-BC-1147
A threshold requirement for any trade-secret claim is that the plaintiff identify the claimed trade secret with "reasonable particularity." This requirement serves two purposes: it ensures that the claim is not based on vague or overbroad assertions of proprietary information, and it enables the defendant and the court to evaluate whether the specific information at issue qualifies for trade-secret protection. See IDX Sys. Corp. v. Tidewater Systems Sys. Corp., 285 F.3d 581, 583 (7th Cir. 2002) (noting that a trade-secret plaintiff must "describe the trade secrets at issue with sufficient particularity to allow a defendant to ascertain at least the boundaries within which the secret lies"); Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 661 (4th Cir. 1993).
We set forth below the specific categories of information that constitute the CPS-BC-1147 trade secret.
A. The Formulation Itself
CPS-BC-1147 comprises 14 distinct chemical constituents combined in proprietary ratios pursuant to a defined manufacturing protocol. The trade-secret claim encompasses the following specific categories of protected information:
1.  Identity of the 14 Constituent Chemicals. The specific chemical identities (by chemical name, CAS number, and commercial-grade specification) of each of the 14 constituents that comprise CPS-BC-1147. While certain of these constituents are commercially available raw materials that are individually known in the coatings industry, the specific combination of these 14 particular chemicals in a single barrier coating formulation is proprietary to CPS and is not known to others in the industry.
2.  Precise Weight Percentages and Ratios. The exact weight percentages of each of the 14 constituents, as well as the ratios between specific component groups (e.g., the ratio of cross-linking agents to film-forming polymers, the ratio of surfactant to rheology modifier, and the loading level of barrier-enhancing additives). These proportions were optimized through extensive trial-and-error experimentation during the 24-month development period and represent a substantial body of non-obvious technical knowledge.
3.  Order-of-Addition Protocol. The specific sequence in which the 14 constituents are introduced during the blending process. The order of addition is critical to the performance characteristics of the finished coating; introducing certain constituents out of sequence can result in incomplete dispersion, phase separation, premature cross-linking, or other defects that degrade barrier performance. CPS's order-of-addition protocol was developed through numerous pilot-line trials and is not intuitive even to a skilled formulation chemist.
4.  Processing Temperatures. The defined temperature set points at each stage of the blending process. Certain constituents must be introduced at elevated temperatures to achieve proper dissolution or dispersion, while other constituents are temperature-sensitive and must be introduced only after the batch has been cooled to a specified range. The processing temperature profile is integral to the formulation and constitutes protected information.
5.  Shear Rates During Mixing. The defined agitation speeds and shear rates employed at each stage of the blending process. Shear rate affects particle size distribution, dispersion quality, and viscosity, all of which directly impact the barrier performance of the finished coating. CPS's shear-rate protocol was optimized through pilot-line testing and is not publicly available.
Critically, the CPS-BC-1147 formulation is not disclosed on any product technical data sheet, material safety data sheet (SDS/MSDS), patent application, issued patent, academic paper, conference presentation, or any other public filing or publication. CPS made a deliberate strategic decision not to pursue patent protection for CPS-BC-1147, in part because doing so would have required public disclosure of the formulation in the patent specification, and in part because the 20-year term of patent protection was viewed as insufficient given the expected commercial lifespan of the product and the difficulty of detecting infringement in a formulation context.
The specificity of the CPS-BC-1147 trade secret — a 14-constituent formulation with defined weight percentages, order-of-addition protocol, processing temperatures, and shear rates — satisfies the "reasonable particularity" standard applied by courts in trade-secret litigation. The trade secret is not defined in terms of vague concepts or general industry knowledge; it is a discrete, identifiable body of technical information that can be precisely articulated and distinguished from information that is publicly available. See Oakwood Labs., 999 F.3d at 905 (finding that a pharmaceutical formulation identified by specific ingredients, proportions, and processing parameters was described with sufficient particularity).
B. CPS Concentrate A
CPS Concentrate A is the pre-blended additive concentrate containing the 5 undisclosed proprietary constituents of the CPS-BC-1147 formulation. As described above, CPS designed the CPS Concentrate A system specifically to segregate the most sensitive and novel components of the formulation from Harlow's knowledge during the tolling relationship. Harlow received CPS Concentrate A as a single, opaque liquid concentrate, with no information regarding the identity, number, or proportions of its constituent chemicals.
The composition of CPS Concentrate A constitutes a trade secret both independently — as a standalone formulation — and as an integral component of the overall CPS-BC-1147 formulation. The 5 constituents contained in CPS Concentrate A include the barrier-enhancing additives and cross-linking agents that are principally responsible for the superior moisture-vapor, grease, and oxygen barrier performance that differentiates CPS-BC-1147 from competing products. The development of these additives and their optimization within the CPS-BC-1147 system represented the most technically challenging and resource-intensive aspect of the 24-month development effort.
C. Ancillary Technical Data
In addition to the formulation itself, the trade-secret claim encompasses ancillary technical data generated during both the development and commercial production of CPS-BC-1147, including:
•  Batch production records generated during the tolling relationship at Harlow's Terre Haute facility, which contain processing parameters (temperatures, agitation speeds, hold times, and addition sequences) as well as raw material lot numbers and quantities.
•  Analytical test results performed on finished batches, including viscosity measurements, solids content, pH, particle size distribution, and barrier performance testing (moisture-vapor transmission rate, grease resistance, and oxygen transmission rate). These results, viewed in combination with the corresponding batch production records, could enable a skilled formulator to reconstruct or optimize the formulation.
•  Process parameter logs documenting production-scale adjustments to blending conditions, which reflect CPS's accumulated manufacturing know-how.
•  FDA compliance testing data and pilot-line testing parameters generated during the development of CPS-BC-1147, which are not publicly available and which provide insight into the formulation's composition and performance characteristics.
While the formulation itself is the primary trade secret at issue, these ancillary data sets are relevant because they provide pathways by which a competitor with access to such data — as Harlow had during the tolling relationship — could reconstruct the complete formulation. Kenneth Fielding's alleged retention of these records beyond the scope permitted by the TMA is therefore a significant element of the misappropriation claim.
V. Independent Economic Value
Under both the DTSA and the OUTSA, a trade secret must derive "independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information." 18 U.S.C. § 1839(3)(B); Ohio Rev. Code § 1333.61(D)(1). This element requires a showing that the secrecy of the information provides the owner with a competitive advantage or economic benefit. The analysis below demonstrates that CPS-BC-1147 comfortably satisfies this requirement.
A. Revenue Attribution
CPS-BC-1147 is the single most commercially significant product in CPS's coatings portfolio. In fiscal year 2023, CPS-BC-1147 accounted for approximately 22% of CPS's total coatings revenue, which translates to approximately $47.23 million in annual revenue ($214.7 million × 22%). This figure represents direct, quantifiable economic value attributable to the formulation.
The product's revenue contribution has grown steadily since its commercial introduction in 2017 and is projected to continue growing as the food-packaging industry transitions away from fluorinated barrier chemistries (PFAS) and toward water-based alternatives. CPS's internal forecasts, which we should obtain from David Kessler or Rachel Sung, will likely show additional forward-looking economic value.
The revenue generated by CPS-BC-1147 also contributes materially to CPS's overall enterprise value — a factor that is relevant to Ridgepoint Capital's investment. At the time of Ridgepoint's acquisition in 2019, CPS was valued at approximately $285 million in enterprise value, and CPS-BC-1147's revenue and growth trajectory were identified as key value drivers. Any erosion of CPS's competitive position in the barrier coatings market directly impacts the value of Ridgepoint's investment.
B. R&D Investment
CPS invested approximately $3.8 million over approximately 24 months (January 2015 through December 2016) in the development of CPS-BC-1147. This investment encompassed the cost of specialized laboratory and pilot-line equipment, raw material procurement for extensive formulation trials (including the evaluation of numerous constituent chemistries that were ultimately rejected), personnel costs (including dedicated time of Dr. Yuen and multiple senior chemists and laboratory technicians), pilot-line coating trials at commercial scale, and FDA food-contact compliance testing performed by accredited third-party laboratories.
The magnitude of this R&D investment is relevant to the independent economic value analysis in two respects. First, it reflects the cost that would be required for a competitor to independently develop an equivalent formulation through legitimate means — a cost that CPS's competitors are able to avoid if they obtain access to the formulation through misappropriation. Second, it demonstrates that the information contained in the formulation is not trivial or readily ascertainable; it is the product of substantial, sustained investment in research and experimentation.
Courts have consistently recognized that significant R&D investment is probative of independent economic value. See, e.g., Motorola, Inc. v. Lemko Corp., No. 08 C 5427, 2012 WL 2339516, at 7 (N.D. Ill. June 19, 2012); Composite Marine Propellers, Inc. v. Van Der Woude*, 962 F.2d 1263, 1266 (7th Cir. 1992).
C. Competitive Advantage
CPS-BC-1147 provides CPS with a differentiated product offering in the food-grade packaging substrate market. The formulation's ability to deliver moisture-vapor, grease, and oxygen barrier properties in a single water-based application is a significant competitive differentiator, particularly in an industry that is increasingly seeking alternatives to multi-layer plastic laminates and fluorinated chemistries. This differentiation generates customer loyalty, premium pricing power, and a sustainable competitive position.
The economic significance of this competitive advantage is further illustrated by Harlow's conduct. The fact that Harlow was able to offer ShieldCoat Pro 900 — a product that, according to the Thornburg forensic analysis, is compositionally identical to CPS-BC-1147 — at a price approximately 15% below CPS's prevailing pricing, while presumably still earning a profit, demonstrates the economic advantage derived from access to the formulation without bearing the associated R&D costs. Harlow's ability to undercut CPS's pricing by 15% represents the quintessential type of economic harm that trade-secret protection is designed to prevent: a competitor obtains, through improper means, the fruits of another's investment, and then uses that information to compete unfairly on price.
D. Not Generally Known or Readily Ascertainable
The formulation of CPS-BC-1147 is not published in any patent, patent application, academic paper, trade publication, product technical data sheet, material safety data sheet, regulatory filing, or any other publicly available source. CPS made a deliberate decision not to patent the formulation, and no other party has published the formulation or any material portion thereof.
The Thornburg Analytics forensic analysis provides additional support for the conclusion that the formulation is not readily ascertainable by proper means. Dr. Vasquez's finding that ShieldCoat Pro 900 matched CPS-BC-1147 in all 14 constituent chemicals within ±0.3% by weight — a degree of concordance she characterized as "not achievable through independent development" — supports the inference that the formulation cannot be derived from publicly available information or from general knowledge in the coatings industry.
Moreover, the combination of 14 specific chemical constituents in proprietary ratios, together with a defined order-of-addition protocol and specified processing temperatures and shear rates, represents a level of formulation complexity that cannot be reverse-engineered from the finished coating product alone. A competitor analyzing a sample of the finished CPS-BC-1147 coating through standard analytical chemistry techniques (e.g., FTIR spectroscopy, GC-MS, ICP-OES) might be able to identify certain constituent chemicals, but would face significant challenges in determining (a) the precise proportions of all 14 constituents, (b) the order in which they were added, (c) the processing temperatures at each stage, and (d) the shear rates employed during mixing. These processing parameters leave no direct chemical signature in the finished product and are not ascertainable through post-production analysis. See Mangren Research & Dev. Corp. v. Nat'l Chem. Co., 87 F.3d 937, 943 (7th Cir. 1996) (finding that a chemical formulation constituted a trade secret where the formula could not be determined merely by analyzing the finished product).
VI. Reasonable Measures to Maintain Secrecy
Both the DTSA and the OUTSA require that the owner of a trade secret take "reasonable measures" (DTSA) or "efforts that are reasonable under the circumstances" (OUTSA) to maintain the secrecy of the information. This element does not require that the trade-secret owner take every conceivable precaution; rather, it requires that the owner implement measures that are objectively reasonable in light of the circumstances, including the nature of the information, the size and resources of the owner, and the context in which the information was disclosed. See Oakwood Labs., 999 F.3d at 907; Bimbo Bakeries, 613 F.3d at 114; Compulife Software Inc. v. Newman, 959 F.3d 1288, 1313 (11th Cir. 2020).
CPS's secrecy measures are cataloged below.
A. Partial Formulation Disclosure Under the TMA
CPS adopted a deliberate, stratified disclosure strategy in connection with the Harlow tolling relationship. Of the 14 distinct chemical constituents that comprise CPS-BC-1147, CPS disclosed only 9 to Harlow. Even for those 9 constituents, CPS provided only general proportional ranges — not the precise weight percentages — necessary for Harlow to perform quality-control checks and handle raw materials safely. The remaining 5 proprietary constituents were withheld entirely from Harlow's knowledge and were supplied only in pre-blended form as CPS Concentrate A, which was manufactured at CPS's Columbus facility and shipped to Harlow in sealed, labeled containers.
This approach ensured that Harlow never possessed the complete formulation. Even with knowledge of the 9 disclosed constituents and their general ranges, Harlow could not have reproduced CPS-BC-1147 without the 5 undisclosed constituents contained in CPS Concentrate A. The partial-disclosure strategy was deliberately designed by Dr. Yuen and approved by CPS's management team as a trade-secret protection measure.
Courts have consistently held that partial disclosure to business partners under appropriate contractual restrictions does not defeat trade-secret protection. See Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009) ("A trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret."); Learning Curve Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714, 723 (7th Cir. 2003). The fact that CPS disclosed partial information to Harlow — while withholding the most sensitive components and protecting the disclosed information through contractual restrictions — is evidence of reasonable measures, not the absence thereof.
B. Contractual Protections in the Toll Manufacturing Agreement
The TMA between CPS and Harlow, dated March 15, 2017, contained multiple contractual provisions specifically designed to protect CPS's proprietary information:
Section 7 — Confidentiality and Non-Disclosure. This provision imposed a comprehensive confidentiality obligation on Harlow, requiring Harlow to (i) maintain the confidentiality of all CPS proprietary information disclosed in connection with the tolling relationship, (ii) restrict access to CPS proprietary information to only those Harlow personnel who had a need to know for purposes of performing the tolling services, (iii) refrain from disclosing CPS proprietary information to any third party without CPS's prior written consent, and (iv) use CPS proprietary information solely for the purpose of performing the tolling services under the TMA.
Section 8.2 — Reverse-Engineering Prohibition. This provision expressly prohibited Harlow from analyzing, decompiling, reverse-engineering, or otherwise attempting to derive the composition of CPS Concentrate A or any other CPS proprietary material. This prohibition was specifically directed at the risk that Harlow might attempt to use its access to CPS Concentrate A to learn the identities and proportions of the 5 undisclosed constituents.
Section 9.1 — Non-Compete Covenant. This provision restricted Harlow from manufacturing, blending, selling, distributing, or offering for sale any barrier coating that was "substantially similar" to CPS-BC-1147 for a period of three years following the effective date of termination of the TMA. The three-year post-termination period extends through January 31, 2026, and Harlow's launch of ShieldCoat Pro 900 in approximately April 2023 falls squarely within this restricted period.
Section 9.3 — Customer Non-Solicitation Covenant. This provision prohibited Harlow from directly or indirectly soliciting, contacting, or attempting to divert any customer of CPS for the purpose of selling any product that competed with CPS-BC-1147, for the same three-year post-termination period. Harlow's contacts with Mapleridge Paper Corp., Pinnacle Flexible Films LLC, Orion Paperboard Inc., Great River Packaging Co., and TerraFold Industries LLC — all CPS customers — constitute apparent violations of this covenant.
The existence of these contractual protections is among the strongest evidence of reasonable measures available under trade-secret law. Courts routinely cite confidentiality agreements, non-disclosure obligations, and restrictive covenants as hallmarks of reasonable secrecy efforts. See Oakwood Labs., 999 F.3d at 907 ("Requiring employees and business partners to sign confidentiality agreements is a paradigmatic example of a 'reasonable measure.'"); Bimbo Bakeries, 613 F.3d at 114; StoneCoat of Tex., LLC v. ProCal Stone Design LLC, 426 F. Supp. 3d 311, 334 (E.D. Tex. 2019) (finding that NDA provisions in supply agreements supported reasonable-measures element).
C. Internal Access Controls at CPS
Within CPS's own facilities, access to the complete CPS-BC-1147 formulation was restricted to authorized R&D and production personnel on a need-to-know basis. Dr. Margaret Yuen personally oversaw access to formulation documentation and managed the preparation of CPS Concentrate A. The complete formulation — including the identities and proportions of all 14 constituents, the order-of-addition protocol, processing temperatures, and shear rates — was not made available to CPS's sales team, administrative staff, or other personnel who did not require access to perform their job functions.
Based on our preliminary discussions with Rachel Sung, we understand that CPS maintained password-protected formulation databases accessible only to authorized users, that formulation documents were stored in restricted areas with limited physical access, and that the distribution of complete formulation records was limited to a small number of designated personnel. However, we do not yet have detailed documentation of these internal security measures, and we recommend confirming the specifics through interviews with Dr. Yuen and CPS's IT department, as described in Section VIII below.
The importance of documenting CPS's internal access controls cannot be overstated. While the contractual protections in the TMA and the physical segregation of CPS Concentrate A are strong evidence of reasonable measures, courts also look to the trade-secret owner's internal security practices in evaluating the reasonableness of its overall approach. See Compulife Software, 959 F.3d at 1313 (considering internal access restrictions, password protections, and employee agreements as factors in the reasonable-measures analysis). We need to be prepared to present a comprehensive picture of CPS's internal security infrastructure.
D. Physical Segregation of CPS Concentrate A
CPS Concentrate A was blended exclusively at CPS's Columbus, Ohio facility under the supervision of Dr. Yuen and authorized R&D/production personnel. The concentrate was packaged in sealed, labeled containers and shipped to Harlow's Terre Haute facility via tracked freight. At no point was Harlow given access to the raw materials, equipment, or processes used to manufacture CPS Concentrate A. The physical segregation of the 5 undisclosed constituents from Harlow's operations was a deliberate, affirmative, and meaningful secrecy measure that went beyond what many toll manufacturing relationships require.
This physical segregation approach effectively created a "firewall" between Harlow's knowledge and the most sensitive elements of the formulation. Even with access to the 9 disclosed constituents and their general ranges, and even with possession of CPS Concentrate A in its blended form, Harlow could not — through any legitimate means — determine the composition of the concentrate without violating Section 8.2 of the TMA. The fact that Harlow ultimately resorted to sending CPS Concentrate A to Archer Material Sciences for compositional analysis is itself evidence both of the effectiveness of CPS's segregation strategy and of the deliberateness of Harlow's misappropriation.
E. Significance of the $3.8 Million R&D Investment
While the magnitude of CPS's R&D investment is not, strictly speaking, a "measure" taken to maintain secrecy, it is relevant context for the court in evaluating whether CPS's overall approach was reasonable. A company that invests $3.8 million over 24 months in developing a proprietary formulation, and then implements partial-disclosure protocols, physical segregation of key components, and comprehensive contractual protections, presents a picture of an organization that treated its trade secrets with seriousness and care. Courts have recognized that the extent of a company's investment in developing proprietary information is relevant to the reasonableness inquiry. See Composite Marine Propellers, 962 F.2d at 1266.
VII. Potential Weaknesses and Risk Assessment
While we believe CPS's trade-secret claim is well-supported, candor requires identification of the potential weaknesses that Harlow's counsel may seek to exploit. We address each potential vulnerability below, together with our assessment of the available counter-arguments.
A. Scope of Disclosure to Harlow
Although CPS withheld 5 of the 14 constituents and supplied them only in pre-blended form as CPS Concentrate A, CPS did disclose the identities of 9 constituents and their general proportional ranges to Harlow. Defense counsel at Voss Gentry & Whitaker may argue that by disclosing even partial formulation information to a third-party toll manufacturer, CPS undermined the secrecy of the formulation and thus failed to take reasonable measures to protect it.
Counter-argument. This argument is unlikely to succeed. Partial disclosure to business partners is standard practice in toll manufacturing relationships and is, in fact, widely recognized by courts as a reasonable approach to balancing operational necessity with trade-secret protection. CPS disclosed only the information that was strictly necessary for Harlow to perform the blending and packaging operations, and it withheld the most technically novel and competitively sensitive components. Moreover, the disclosure was made under the protective umbrella of the TMA's confidentiality, reverse-engineering, and non-compete provisions. Courts have repeatedly upheld trade-secret protection in circumstances where partial disclosures were made to business partners under NDA or confidentiality agreements. See Faiveley, 559 F.3d at 118; Learning Curve Toys, 342 F.3d at 723; Westmark Enterprises, Inc. v. Michalski, 579 N.E.2d 214, 218 (Ohio Ct. App. 1990). Indeed, CPS's decision to limit the scope of its disclosure — rather than sharing the complete formulation — is itself evidence of reasonable measures.
B. Adequacy of CPS's Monitoring of Harlow
A more significant potential vulnerability is CPS's apparent failure to conduct audits, inspections, or other monitoring of Harlow's compliance with the TMA's secrecy provisions. Based on the facts known to date, CPS does not appear to have conducted any on-site inspections of Harlow's Terre Haute facility to verify that Harlow was complying with the reverse-engineering prohibition (Section 8.2), the access-restriction requirements (Section 7), or the document-retention limitations under the TMA.
This gap is underscored by the fact that Harlow was able to send CPS Concentrate A to Archer Material Sciences in September 2022 for compositional analysis — a clear and deliberate violation of Section 8.2 — without CPS's knowledge. Defense counsel may argue that CPS's failure to monitor Harlow's compliance demonstrates a lack of vigilance inconsistent with the requirement of reasonable measures.
Counter-argument. While the absence of monitoring is a weakness, it is not fatal. Courts have consistently held that a trade-secret owner is not required to take every conceivable measure to protect its trade secrets — only "reasonable" measures under the circumstances. See Oakwood Labs., 999 F.3d at 907; Compulife Software, 959 F.3d at 1313. The contractual prohibitions in the TMA, combined with the physical segregation of CPS Concentrate A, constitute objectively reasonable steps that were specifically designed to prevent the precise type of misappropriation that occurred. The fact that Harlow was able to covertly violate the reverse-engineering prohibition does not retroactively negate the reasonableness of CPS's measures any more than a burglary negates the reasonableness of a homeowner's locks. A trade-secret owner is entitled to rely on the contractual commitments of its business partners; the failure to foresee and prevent a deliberate, covert breach of those commitments does not amount to unreasonable conduct on the part of the trade-secret owner. See Turret Labs USA, Inc. v. CargoSprint, LLC, No. 19-cv-6793, 2020 WL 1330840, at *6 (S.D.N.Y. Mar. 23, 2020).
That said, we should develop the factual record on this point. If CPS did conduct any compliance checks — even informal ones, such as periodic inquiries to Harlow management regarding adherence to the TMA's confidentiality provisions — those facts should be documented and presented.
C. Post-Termination Return of Materials
We should verify whether the TMA contained a specific provision requiring Harlow to return or destroy all CPS proprietary materials — including batch production records, analytical test results, process parameter logs, and any remaining inventory of CPS Concentrate A — upon termination of the agreement. If such a provision exists, we should determine whether CPS enforced it and whether Harlow provided a written certification of compliance.
If CPS did not follow up on the return or destruction of proprietary materials after the January 31, 2023 termination, defense counsel may point to this as evidence of lax secrecy practices. Conversely, if CPS did request return or destruction and Harlow failed to comply — or if Harlow provided a false certification — that fact would significantly strengthen CPS's misappropriation claim and potentially support an allegation of willful and malicious conduct.
This is a factual gap that must be closed before filing. We have requested Rachel Sung to locate all correspondence between CPS and Harlow regarding termination and return of materials.
D. Internal Security Measures at CPS — Need for Further Documentation
As noted in Section VI.C above, we have limited documentation of CPS's internal access controls governing the CPS-BC-1147 formulation. While we understand from preliminary discussions that CPS maintained password-protected formulation databases, restricted physical access to formulation documents, and limited distribution to need-to-know personnel, we do not have copies of the specific policies, access logs, or employee agreements that would substantiate these assertions.
This gap is concerning because defense counsel may argue that CPS's internal security was inadequate, particularly if CPS cannot produce documentary evidence of its access controls. Courts evaluating the reasonable-measures element typically consider the totality of the trade-secret owner's security practices, including both external protections (contractual measures, physical segregation) and internal controls (employee NDAs, access restrictions, IT security). See Compulife Software, 959 F.3d at 1313.
We recommend obtaining the following documents and information from CPS as a priority:
(i) Copies of any employee confidentiality or non-disclosure agreements signed by CPS personnel who had access to the CPS-BC-1147 formulation;
(ii) IT access logs showing which individuals had access to the formulation database, and when such access was granted or revoked;
(iii) Internal policies or standard operating procedures governing formulation security, document classification, and handling of proprietary information;
(iv) Any visitor logs, badge-access records, or physical access controls for the R&D and production areas where CPS-BC-1147 is manufactured and where CPS Concentrate A is blended.
Dr. Yuen and Rachel Sung are the appropriate contacts for these materials.
E. Independent Development Defense
In its February 5, 2024 denial letter, Voss Gentry & Whitaker asserted on behalf of Harlow that ShieldCoat Pro 900 was "independently developed by Harlow's technical team using publicly available information and Harlow's own proprietary expertise in barrier coating chemistry." This is a predictable defense, and we should be prepared to rebut it comprehensively.
The Thornburg Analytics forensic report is the centerpiece of our rebuttal. Dr. Vasquez's finding that ShieldCoat Pro 900 matched CPS-BC-1147 in all 14 constituent chemicals within ±0.3% by weight is extraordinarily strong evidence that ShieldCoat Pro 900 was not independently developed. As Dr. Vasquez stated in her preliminary report, this degree of compositional concordance is "not achievable through independent development" and is "consistent only with access to the complete formulation." The statistical improbability of independently arriving at the same 14 constituents in the same proportions (within ±0.3%) — given the vast number of available raw materials and the near-infinite range of possible proportions — will be a compelling argument at trial and on a TRO motion.
However, we should anticipate that Harlow may retain its own expert to challenge the Thornburg analysis. Potential defense-expert arguments may include: (a) challenging Dr. Vasquez's analytical methodology or the accuracy of her measurements; (b) arguing that the degree of similarity is coincidental or the result of convergent engineering choices driven by publicly available industry knowledge; (c) arguing that the ±0.3% margin is within normal manufacturing variability and does not support an inference of copying. We should prepare Dr. Vasquez for these challenges and ensure that her final report addresses them proactively.
Additionally, we should investigate whether Harlow can produce any credible documentation of an independent development effort — laboratory notebooks, formul

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