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Intellectual Property Keyed to Merges
Smith v. Dravo Corp
Facts
Smith specially designed, built, sold, and leased steel freight containers of a uniform size, which greatly assisted the ship and shore handling and transportation of cargoes. At his death, Dravo Corp. (Defendant) showed an interest in buying some of the containers and possibly Smith’s entire business, known as Safeway Containers (Safeway) (Plaintiff). As agreed during negotiations for the sale of the business, Plaintiff provided Defendant with its patent applications, blue prints, and other confidential information. Defendant ultimately rejected Plaintiff’s offer, but began building containers that were different from Smith’s containers only in that they were narrower by four inches. As a result, Plaintiff’s containers became obsolete because they could not be used interchangeably with Defendant’s. Plaintiff sued, alleging that Defendant had breached its confidential relationship of trust and used the information obtained to its own advantage and to Plaintiff’s detriment. Defendant, in its defense, successfully claimed that Plaintiff had not obtained an express promise of trust and that the information conveyed was not secret since transactions were at arm’s length. Plaintiff appealed.
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