Eli Lilly & Co. v. Emisphere Techs., Inc.
United States District Court for the Southern District of Indiana
408 F. Supp. 2d 668 (S.D. Ind. 2006)
Under their collaborative agreement, Lilly (plaintiff) and Emisphere (defendant) shared confidential proprietary information to jointly develop oral delivery for specific Lilly compounds, and Lilly separately paid $4 million for an exclusive license to Emisphere's carrier technology for that same purpose, but Lilly employees secretly formed an undisclosed team to apply Emisphere's technology to other, unrelated Lilly compounds outside the agreement's scope and then filed a patent application incorporating Emisphere's carriers; Emisphere terminated both agreements upon discovering this, and Lilly sued for breach, arguing the secret research at most supported a patent-infringement claim, not termination.
Whether, in a collaborative contract that provides for open sharing of proprietary information, there is an implied covenant not to use that information outside the scope of the contract.