Confold Pacific Inc. v. Polaris Industries

United States Court of Appeals for the Seventh Circuit · Contracts

ContractsConfidentiality agreementsUnjust enrichmentsummary judgmentconfidentiality agreementnondisclosurecontract interpretationextrinsic evidence

Facts

ConFold, a company that wanted to produce returnable shipping containers, entered into a "Mutual Non-Disclosure Agreement — Logistics Consulting Version" with Polaris while ConFold and CAPS Logistics were conducting a reverse logistics analysis of Polaris's shipping needs. After the agreement was signed, Polaris solicited container design proposals from nine firms, including ConFold, but accepted none of them. Years later Polaris developed its own returnable container design and used containers made by a third party, and ConFold claimed Polaris's design was based on ConFold's submitted design. ConFold sued for breach of the confidentiality agreement and unjust enrichment, alleging Polaris used its design without paying for it.

Issue

Did the confidentiality agreement cover container design information submitted by ConFold, such that Polaris breached the contract by disclosing or using that design? If not, could ConFold still recover in unjust enrichment for Polaris's alleged use of an unpatented, non-trade-secret design?

Rule

A confidentiality agreement between sophisticated commercial parties is enforced according to its written scope, and information not mentioned in the contract and not germane to the project covered by the agreement is not brought within the agreement by vague references to future business. Even if a contract is minimally ambiguous, summary judgment remains proper where undisputed extrinsic evidence permits only one reasonable interpretation. As to unjust enrichment, use of information that is neither a trade secret nor protected by patent, copyright, contract, or other recognized law generally creates no liability, and a claim amounting to infringement of an unpatented design is preempted by patent law.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Milwaukee, NovaCrate Systems hired Erin Vale Consulting to perform a warehouse-flow study. The parties signed an agreement titled "Mutual Non-Disclosure Agreement — Operations Consulting Version," whose preamble referred to Erin Vale's proprietary software, reports, and consulting services relating to the study; six weeks later, during a separate vendor solicitation, Erin submitted a prototype pallet-rack design, which NovaCrate later showed to another manufacturer.

If Erin sues for breach of the confidentiality agreement based on disclosure of the pallet-rack design, which is the best answer?

Explanation. The majority enforced the agreement according to its written commercial scope. Where the title, timing, preamble, and integration language point to a consulting project, information neither mentioned in the contract nor germane to that project is outside the confidentiality duty. A later design submitted in a separate bid process is not pulled in merely because the parties hoped to do more business together. (Derived from Confold Pacific Inc. v. Polaris Industries (n.d.).)