Automotive suppliers and other manufacturers frequently have to share their valuable intellectual property with third parties. A supplier might need to share CAD files with another supplier to ensure that the finished product works, or a business that has designed a product may outsource the manufacturing to a business that can better handle production. Parties to such arrangements frequently sign a confidentiality agreement forbidding disclosure or unauthorized use of the design before proceeding with their arrangement. But is the confidentiality agreement ironclad at that point?
Not necessarily. In nClosures, Inc. v. Block & Co., the Seventh Circuit Court of Appeals, applying Illinois law, held that a confidentiality agreement entered into between a product designer and manufacturer was unenforceable, because the owner of the confidential information had not taken reasonable steps to protect its confidentiality. Continue reading this entry