"He may, without losing his protection, communicate it to employees involved in its use.  He may likewise communicate it to others pledged to secrecy . . . .  Nevertheless, a substantial element of secrecy must exist, so that except by the use of improper means, there would be difficulty in acquiring the information."

Restatement of Torts, § 757 Comment b (1939).  We conclude that a holder may divulge his information to a limited extent without destroying its status as a trade secret.  To hold otherwise would greatly limit the holder's ability to profit from his secret.  If disclosure to others is made to further the holder's economic interests, it should, in appropriate circumstances, be considered a limited disclosure that does not destroy the requisite secrecy.  The only question is whether we are dealing with a limited disclosure here.  Prior case law provides no guidance on what constitutes limited disclosure. Metallurgical cites Hyde Corp. v. Huffines, 158 Tex. 566, 314 S.W.2d 763, 117 U.S.P.Q. (BNA) 466 (Tex.), cert. denied, 358 U.S. 898 (1958), and [another case] in contending that subsequent disclosure of a trade secret does not free one from the constraint of a prior confidential disclosure.  In both of these cases, however, publication of the trade secret by its holder followed an improper use by one in whom the holder had confided.  This factual difference renders these cases inapposite.

Looking instead to the policy considerations involved, we glean two reasons why Metallurgical's disclosures to others are limited and therefore insufficient to extinguish the secrecy Metallurgical's other evidence has suggested.  First, the disclosures were not public announcements; rather, Metallurgical divulged its information to only two businesses with whom it was dealing. . . .  Second, the disclosures were made to further Metallurgical's economic interests.  Disclosure to Consarc was made with the hope that Consarc could build the second furnace.  A longstanding agreement gave La Floridienne the right, as a licensee, to the information in exchange for royalty payments.  Metallurgical therefore revealed its discoveries as part of business transactions by which it expected to profit.

Metallurgical's case would have been stronger had it also presented evidence of confidential relationships with these two companies, but we are unwilling to regard this failure as conclusively disproving the limited nature of the disclosures.  Smith correctly points out that Metallurgical bears the burden of showing the existence of confidential relationships.  Contrary to Smith's assertion, however, confidentiality is not a requisite; it is only a factor to consider.  Whether a disclosure is limited is an issue the resolution of which depends on weighing many facts.  The inferences from [*1201] those facts, construed favorably to Metallurgical, is that it wished only to profit from its secrets in its business dealings, not to reveal its secrets to the public.  We therefore are unpersuaded by Smith's argument.

"One who discloses or uses another's trade secrets, without a privilege to do so, is liable to the other if . . . (b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him.  * * *

"A breach of confidence under the rule stated in this Clause may also be a breach of contract which subjects the actor to liability . . . .  But whether or not there is a breach of contract, the rule stated in this Section subjects the actor to liability if his disclosure or use of another's trade secret is a breach of the confidence reposed in him by the other in disclosing the secret to him."

"One who discloses or uses another's trade secret, without a privilege to do so, is liable to the other if . . . (c) he learned the secret from a third person with notice of the facts that it was a secret and that the third person's disclosure of it was otherwise a breach of his duty to the other . . . .

"One has notice of facts under the rule stated in this Section when he knows of them or when he should know of them . . . .  He should know of them if, from the information which he has, a reasonable man would infer the facts in question, or if, under the circumstances, a reasonable man would be put on inquiry and an inquiry pursued with reasonable intelligence and diligence would disclose the facts."

Smith's liability can arise, however, only if it in turn used the secrets gained from Bielefeldt.  "Use," as it turns out, is not so easily defined.  Smith claims that it never used any secrets gained because its inability to procure substantial quantities of scrap carbide prevented commercial operation of the furnace Fourtek provided.  Lykes-Youngstown, 504 F.2d 518, guides us in determining commercial use.  We must first recognize the unfortunate blurring of analyses in that case.  The Lykes-Youngstown court's discussion of commercial use was in the context of inquiring whether damages might be available.  It is preferable, of course, to divorce these concepts.  Commercial use is an element of the tort as announced in § 757 of the Restatement; while the nature of the use may be relevant in determining the proper extent of damages, its existence must also be shown to establish wrongdoing in the first place.  Despite this confusion, Lykes-Youngstown provides useful analysis.

Metallurgical looked to that case in arguing that the law provides a liberal definition of "commercial use."  Lykes-Youngstown does indeed state a broad definition; "any misappropriation, followed by an exercise of control and dominion . . . must constitute a commercial use . . . ."  Lykes-Youngstown differs from our case, however, in one very important respect.  It was a case in which "the trade secret itself was what was to be sold . . . ."  The court there explicitly contrasted a case like ours, "where the trade secret is used to improve manufacturing, and subsequently manufactured items were sold at a profit . . . . "  Although the court made this distinction in determining the proper method of computing damages, we think it also applies logically to developing a definition of "use."  The discussion in Lykes-Youngstown following this distinction is therefore inapposite to our case, for which we instead employ the everyday meaning of the term.  If Smith has not put the furnace into commercial operation to produce carbide powder it can then use, then no commercial use has occurred.  Because Metallurgical failed to provide any evidence that Smith has so far benefitted from any misappropriation, directed verdict in Smith's favor was proper.  Should it in future seek to profit from use or sale of the furnace, a new fact situation will be presented.

"The proper measure is to calculate what the parties would have agreed to as a fair price for licensing the defendant to put the trade secret to the use the defendants intended at the time the misappropriation took place.  In calculating what a fair licensing price would have been had the parties agreed, the trier of fact should consider such factors as the resulting and foreseeable changes in the parties' competitive posture; the prices past purchasers or licensees may have paid; the total value of the secret to the plaintiff, including the plaintiff's development cost and the importance of the secret to the plaintiff's business; the nature and extent of the use the defendant intended for the secret, and finally whatever other unique factors in the particular case might have been affected by the parties' agreement, such as the ready availability of alternative process."

1.   [court's footnote 8]  A possible response to this argument is that, while the tort of misappropriating a trade secret is theoretically distinct from a cause of action on the contract, in this case the tort is swallowed by the subsequent contractual agreements; therefore, the response would run, the parol evidence rule remains applicable in governing the admissibility of evidence.  To accept this position, however, would require us to deny in the first place to Metallurgical a cause of action based on breach of confidence.  Because the entire dispute would be contractual, duties imposed by tort law would become irrelevant.  This consequence is contrary to the Restatement's philosophy that contractual duties are irrelevant in dealing with a breach of confidence.  As discussed earlier, the language of Huffines strongly emphasizes the importance of providing tort liability as a way of promoting business honesty and commercial fairness.  Influenced by such emphatic statements, we are unwilling to let this cause of action die because of the presence of contracts.  Instead, we acknowledge the possible importance of any agreements in proving or disproving a requisite element(s) of the tort and providing an independent basis for a contractual cause of action.