The Southern District of New York in refusing to dismiss a breach of contract claim found that "use restrictions" in a non-disclosure agreement ("NDA") may limit the ability of the party receiving confidential information from pursuing an alternative opportunity. The defendant, a private equity investor, entered into an NDA with a broker seeking financing for a corporate client. Under the NDA, the defendant was permitted to use the confidential information covered thereby only for the purpose of determining whether to provide financing to the broker's client.
The broker charged that the defendant breached the NDA by wrongfully using confidential market information to engage in a third party transaction. The defendant argued that the NDA only applied to a transaction that actually involved the broker. In rejecting the defendant's position, the court found that the NDA imposed a very clear "definite obligation" (namely, not to use the broker's confidential information other than for the specific purpose of pursuing a transaction involving the broker and its client).
Goodrich Capital, LLC v. Vector Capital Corp., 11 Civ. 9247 (JSR) (S.D.N.Y. June 26, 2012