Contour Design Inc v. Chance Mold Steel Company Ltd
693 F.3d 102
1st Cir.2012Background
- Contour and Chance entered NDA and LOI in 1995; NDA restricted use/disclosure and derivative products, expiring 2015.
- Chance manufactured Contour mice from 1995 to 2009, including RollerMouse Free; Contour paid Chance over $40 million.
- Contour sued in 2009 for trade secret misappropriation and breach of NDA over preexisting products and the ErgoRoller.
- District court issued preliminary injunction; later district court entered permanent injunction ending 2015 for NDA breach and enjoined sale of preexisting products and ErgoRoller.
- First Circuit reversed, holding ErgoRoller improperly enjoined; affirmed injunction scope for other products and damages award; remanded.
- On appeal, issues focused on derivation/Confidential Information provisions and proper scope of the injunction and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ErgoRoller was properly enjoined as a derived product | Chance contends ErgoRoller derived from Contour’s product. | Contour argues ErgoRoller breached NDA by derivation from Free. | ErgoRoller not derived; injunction reversed as to ErgoRoller. |
| Interpretation of 'derived from' and 'confidential information' in NDA | Contour asserts broad derivation/concealment provisions prohibit ErgoRoller. | Chance argues NDA does not cover ErgoRoller as independent development and non-novel features. | Derivation and confidential info provisions do not support enjoining ErgoRoller. |
| Scope of injunction for other products beyond ErgoRoller | NDA breach supports continued injunction for Classic/Open/Professional. | Duration and scope may be excessive if not tied to NDA. | Injunction proper for other products; duration limited to NDA expiration. |
| Damages: lost profits instruction and award | Contour argued forfeiture of profits due to misappropriation. | Chance claimed instruction inappropriate; challenge not preserved. | No plain error; damages award affirmed. |
Key Cases Cited
- Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989) (preemption and public-domain considerations in IP-related contracts)
- Aronson v. Quick Point Pencil Co., 440 U.S. 257 (1979) (state contract law can govern non-patent intellectual property in private agreements)
- Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 217 F.3d 8 (1st Cir. 2000) (scope/enforcement of contract-based injunctions)
- Eaton Corp. v. Rockwell Int’l Corp., 323 F.3d 1332 (Fed. Cir. 2003) (derivation standard in patent context; relevance to NDA derivation concept)
- Siemens Med. Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., 637 F.3d 1269 (Fed. Cir. 2011) (lost profits standard in patent contexts; manufacturing capability considerations)