Chicago Business Litigation Lawyer Blog
Contracts are ubiquitous. Every company is a party to numerous different contracts. Leases, purchase agreements, vendor agreements, supply contracts, and employment agreements are just a few of the contracts that a company typically enters in the normal course of business. The parties to a contract expect the other to live up to its obligations as set forth in the written contract. One important rule that many companies and business owners are not aware of, however, is that oral modifications to the terms of a contract can trump the written obligations in a contract, even if the contract expressly prohibits oral modifications.
The recent case of Miller UK Limited v. Caterpillar Inc. demonstrates the significant consequences of this rule. In Miller, the parties entered a written agreement in which Miller agreed that it would “not disclose to Caterpillar any confidential or proprietary information unless our two companies otherwise first agree in writing.” Subsequently, at a meeting between the companies, the parties orally agreed to keep any information shared at the meeting confidential. At that same meeting, Miller shared confidential and proprietary information with Caterpillar concerning technical specifications for a coupling system Miller had developed which allowed earthmover and excavator vehicles to attach shovels, buckets, and other attachments to their mechanical arms quickly without requiring the vehicle operator to leave its cab. Caterpillar later developed its own coupling system that was similar to Miller’s system.
Miller sued Caterpillar for breach of contract and violation of the Illinois Trade Secret Act (“ITSA”). A jury ultimately awarded Miller $16 million on its breach of contract claim and $74.6 million on its ITSA claim. After trial, Caterpillar sought to have the verdict vacated. Caterpillar argued that none of the information Miller shared at the meeting could be considered confidential because the parties’ written contract prohibited sharing confidential or proprietary information without first entering a written nondisclosure agreement. Consequently, Caterpillar argued, because the information was shared without such an agreement, Miller could not as a matter of law prove a trade secret misappropriation claim under ITSA—as proof that the plaintiff took appropriate steps to keep a trade secret confidential is a requirement of an ITSA claim. Continue reading ›