First Circuit: Company’s Vague Contract Insufficient to Prevent Supplier From Competing

by Lee Gesmer on September 5, 2012

A contract between a company and its supplier states that the supplier shall not “develop any other product derived from or based on” the company’s product.  Can the company enforce this provision against the supplier when the supplier develops a product that does not appropriate any trade secrets or novel features of the company’s product?

Not according to a decision of the First Circuit issued on September 4th.

Where the features of the product are well known in the art, and there has been no appropriation of novel features of the product, such a contract provision cannot be used to enjoin sales of the “derived” product: “a private contract may restrict copying of an idea that was not in the public domain at the time of contracting, but may not withdraw any idea from the public domain.”

Contour Design, Inc. v. Chance Mold Steel Co., Ltd. (1st Cir., Sept. 4, 2012)

Previous post:

Next post: