649 F.3d 31
1st Cir.2011Background
- Contour and Chance entered a 1995 NDA (20-year term) protecting Contour's Confidential Information and prohibiting derivation of the Product.
- Chance manufactured Contour’s products for almost 15 years under the NDA, keeping Contour’s information confidential.
- In 2009, Chance copied two Contour mice and used Contour’s production tooling to make knock-offs.
- Contour sued in New Hampshire federal court for trade secrets misappropriation and breach of contract; a preliminary injunction was granted in 2010.
- After a six-day trial in 2011, a jury awarded Contour $7.7 million for misappropriation and NDA breach; permanent injunction pending.
- Appellate issue focused on the NDA’s scope/breadth and whether extrinsic evidence should illuminate mutual intent; district court noted it could enter permanent relief post-trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| NDA breadth and protection scope | Contour contends NDA protects broad Product-related information and derived products. | Chance argues NDA is vague/ambiguous and should be read narrowly to cover only pre-1995 mice. | NDA breadth adequately supports relief; contract interpreted as a whole with extrinsic evidence. |
| Ambiguity and use of extrinsic evidence | Extrinsic evidence supports Contour's interpretation of mutual intent. | Extrinsic evidence is improper to expand NDA beyond its plain terms. | District court properly considered extrinsic evidence to resolve ambiguity. |
| Proper basis for preliminary injunction | Likely success on merits, irreparable harm, and balance of equities favor relief. | Relief should be limited; issues await trial. | Preliminary injunction proper based on record; relief vindicated by later jury verdict. |
| Post-trial relief before final judgment | District court should proceed with permanent relief after trial. | Appeal divests or limits district court’s authority to grant permanent relief. | District court may continue proceedings and enter permanent relief notwithstanding appeal, with limited exceptions. |
Key Cases Cited
- Naser Jewelers, Inc. v. City of Concord, 513 F.3d 27 (1st Cir. 2008) (irreparable harm and other factors for preliminary injunction)
- Birch Broad., Inc. v. Capitol Broad. Corp., 161 N.H. 192, 13 A.3d 224 (N.H. 2010) (interpretation of contracts with extrinsic evidence relevant to intent)
- Ex parte Nat'l Enameling & Stamping Co., 201 U.S. 156 (Supreme Court 1906) (trial may proceed in lower court during appeal from interlocutory order)
- Ry. Labor Execs. Ass'n v. City of Galveston, 898 F.2d 481 (5th Cir. 1990) (permitting permanent relief while appeal pending is standard practice)
- Smith v. Illinois Bell Tel. Co., 270 U.S. 587 (Supreme Court 1926) (illustrative precedent on injunctions and trial proceedings)
- In re Estate of Ferdinand Marcos Human Rights Litig., 94 F.3d 539 (9th Cir. 1996) (collecting cases on related procedural posture)