Potlatch: Lawsuit shouldn’t hurt $66 million expansion

Tuesday, Nov. 12, 2002 | 11:21 a.m.

SUN STAFF AND WIRE REPORTS

Potlatch Corp. said Monday that it was sued by consumer products giant Procter & Gamble Co. after Potlatch hired two key technical experts from P&G that would work at the company's North Las Vegas plant.

Cincinnati-based Procter & Gamble alleges that by hiring the experts, Potlatch, a wood products giant based in Washington state, is stealing its trade secrets.

But Potlatch said the dispute won't block a new tissue machine planned as part of a $66 million expansion of Potlatch's North Las Vegas plant, even though the two experts will be based there.

The lawsuit alleges that two former P&G employees have substantial knowledge of critical company trade secrets and confidential information relating to P&G's "Through-Air-Drying" paper-making technology and processes.

In a statement Monday, Potlatch said the Nevada tissue expansion project includes a 102-inch tissue machine that features technology under license from P&G and that P&G will assist in the 2004 start-up of the expansion project.

Potlatch said P&G had not previously objected to the hiring of the two employees, and said their employment with Potlatch had been discussed with a representative of P&G.

Spokane, Wash.-based Potlatch said it is studying the P&G complaint and would respond in an appropriate manner.

"We have a license to use the technology and we're actually paying a fee to P&G for the machine," said Potlatch spokesman Michael Sullivan. "We thought we had worked out a way of protecting P&G's trade secrets after we had hired the two employees. We were surprised by the suit, but we see no reason why it would interfere with the expansion."

The Cincinnati Post reported that the lawsuit, filed Friday in U.S. District Court in Cincinnati, involves trade secrets used by P&G to manufacture Bounty towels and Charmin tissue.

P&G alleged that the former P&G employees will have jobs at Potlatch that are virtually identical to the work they did at P&G.

P&G identified the employees in question as Larry Bonday and Richard Phillips and said they were paper machine managers at P&G's Albany, N.Y., plant, the Post said. The Cincinnati newspaper said Bounty and Charmin are big sellers for P&G, each bringing in more than $1 billion in revenue a year.