Medford trial pits Rust-Oleum against maker of Cerakote products

Published 1:00 pm Wednesday, September 25, 2024

NIC Industries, based in White City, was awarded $190 million in damages from Rust-Oleum in a case focused on trade secrets and proprietary information behind automotive headlight and trim products it once made for Rust-Oleum under the Wipe New brand. It now sells the products under its own brand name Cerakote.

The trade secrets behind a line of automotive trim and headlight restoration products made in Southern Oregon are at the center of an ongoing jury trial in the U.S. District Court in Medford that — at least by one expert witness’ conclusion — could lead to damages in the tens of millions of dollars.

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Lawyers representing Rust-Oleum Corp. Wednesday sought to discredit intellectual property analyst John A. Williams in the Medford courtroom by asking how much Williams was paid to be there by lawyers representing White City-based NIC Industries, best known as the maker of products using the Cerakote brand.

Williams testified he was being paid $8,200 per day for two days of trial, and had been paid roughly $100,000 per year for work in the contract dispute lawsuit.

“Litigation is very expensive,” Williams said.

Williams and his cross-examination was the final day of testimony in a trial that, as of Wednesday, had lasted five days largely focusing on the use of a specific polymer NIC Industries uses for wipe-on applications in products such as its Cerakote-branded headlight restoration and ceramic trim coat restoration products.

A search online shows Cerakote products are on shelves at Walmart, AutoZone, Lowe’s and other major retailers across the country.

In the early 2010s, however, relevant polymers from the White City company were used in products such as headlight kits under the brand name Wipe New. Originally, it was through a sales agreement with a company known as Wipe New LLC, but Rust-Oleum took over the sales agreement in late 2015.

NIC Industries and Rust-Oleum ended their contract in late 2017.

By August 2018, however, NIC Industries sent a cease and desist order claiming that Rust-Oleum had reverse-engineered its products, according to a complaint filed in September by Rust-Oleum.

The Illinois-based protective paint company, for its part, has separately alleged that NIC Industries contacted Rust-Oleum employees “unilaterally and without invitation” to obtain information about Wipe New after the contract ended.

At trial Wednesday morning, lawyer Gregg Brown representing Rust-Oleum asked Williams what he believed is the trade secret in this case.

“In short, it was the NIC formulas that were exchanged between Rust-Oleum,” Williams said.

Williams’ report drew a conclusion that “tens of millions of dollars” in damages may be owed to NIC Industries. Brown, however, pressed Williams on what he saw as a lack of audited financial statements.

“We’re not valuing NIC’s whole business,. We’re valuing NIC’s formulas,” Williams testified.

The Medford trial is expected to go into a sixth day Thursday, where lawyers will iron out the final instructions to be issued to the jury before presenting closing arguments.

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