SANTA ANA, CALIF. - Bal Seal Engineering Co. Inc. of Santa Ana has settled its trade secret infringement case against American Variseal Corp. of Broomfield, Colo., by accepting a $10 million judgment in an out-of-court settlement, Bal Seal officials said. However, the president of American Variseal, Henning Jensen, said the company has admitted no wrongdoing ``and we strongly believe no trade secrets changed hands.''
The settlement, Jensen said, ``will have no financial impact'' on American Variseal, the company's parent, or on former Bal Seal employees named in the suit, as the liability in the case rests with people who no longer run the company.
American Variseal is a subsidiary of Busak + Shamban Inc., of Santa Monica, Calif., which assumed control of American Variseal from the former W.S. Shamban and Co. in 1992, Jensen said. Jensen also is chief executive officer of the parent firm.
The settlement includes a California Superior Court injunction on American Variseal prohibiting it from using or disclosing technology acquired from Bal Seal, including all derivative technology. The injunction also requires destruction of all American Variseal equipment and drawings related to Bal Seal's technology. The injunction was entered under seal in Superior Court in Orange County in late November.
Bal Seal's suit alleged that former Bal Seal employees John Simmons and David Cummings had disclosed Bal Seal's trade secrets to their new employer, American Variseal, in 1985.
Jensen said the technology in question was developed and patented by another company between 1967 and 1969 and has been available for use under the public domain since at least 1986. He said American Variseal ``asked and was given permission to produce'' the springs by that company well before 1986.
Bal Seal holds patents on and manufactures polytetrafluoro-ethylene seals with a canted-coil spring. The firm contends its design produces a more consistent spring force on the low-friction PTFE seal than competitors' designs in similar applications. The canted-coil spring seal is used in medical fluid handling and in chemical processing.
The lawsuit alleged American Variseal copied Bal Seal's design with information obtained from Bal Seal's former employees. The trade secret at stake was a manufacturing process developed in the early 1960s under the direction of Bal Seal's founder, Peter Balsells, which Bal Seal used to produce the highly specialized canted-coil spring.
``This case is illustrative of what a company must be prepared to do in terms of the commitment of time and resources in order to prevail in high stakes litigation,'' said Bal Seal's attorney, Dan Fuller, of Irvine, Calif.
