Trade Secrets

ConFold v. Polaris: When a Design Is Neither a Trade Secret Nor Covered by the NDA

Judge Posner explained why a container design disclosed in a bid — conceded not to be a trade secret and outside the parties' logistics-only nondisclosure agreement — was free for the recipient to use.

October 13, 2025
Returnable shipping containers stacked in a warehouse
ConFold's returnable-container design was disclosed in a competitive bid and conceded not to be a trade secret. Shutterstock
Educational content, not legal advice. This article explains general legal concepts. It does not create an attorney–client relationship. For your specific situation, consult a licensed attorney.

ConFold Pacific, Inc. v. Polaris Industries, Inc., 433 F.3d 952 (7th Cir. 2006), No. 05-1285, decided January 10, 2006, is a compact lesson in the negative space of trade-secret law — what happens to valuable information that is neither a trade secret nor protected by any other intellectual-property right. Writing for a panel that included Judges Kenneth Ripple and Ilana Rovner, Judge Richard Posner affirmed summary judgment for Polaris in a diversity suit governed by Wisconsin law, on appeal from the U.S. District Court for the Western District of Wisconsin. The opinion is valuable precisely because ConFold conceded its container design was not a trade secret. With that concession, the case became a clean illustration of the default rule: information outside the boundaries of trade-secret, patent, and copyright law is generally free for anyone to use.

The facts are a cautionary tale for vendors who disclose designs in competitive bidding. Polaris, the snowmobile and powersports manufacturer, wanted to switch from disposable to returnable shipping containers. ConFold, a startup, performed a “reverse logistics analysis” of Polaris’s shipping needs and the parties signed a “Mutual Non-Disclosure Agreement — Logistics Consulting Version.” Polaris then solicited container-design proposals, received nine (including ConFold’s), and rejected all of them. Years later, Polaris introduced a returnable container, made by a third party, that closely resembled ConFold’s submitted design.

At a glance

  • Case: ConFold Pacific, Inc. v. Polaris Industries, Inc., 433 F.3d 952 (7th Cir.), No. 05-1285
  • Decision: January 10, 2006 (Posner, J., for the panel; Ripple and Rovner, JJ.)
  • Court below: W.D. Wis. (summary judgment for Polaris); diversity jurisdiction, Wisconsin law
  • Concession: ConFold admitted its container design was not a trade secret
  • NDA holding: The agreement covered only the logistics analysis — its software, documentation, and consulting — not the later container designs
  • Default rule: Information that is not a trade secret and not protected by patent or copyright is generally free to use
  • Takeaway: Disclosing a design in a bid, without trade-secret status or a matching contract, surrenders control of it

The default rule when nothing else protects the information

The doctrinal heart of the opinion is its statement of the baseline. As Posner put it, “if information is not a trade secret and is not protected by patent, copyright, or some other body of law that creates a broader intellectual property right than trade secrecy does, anyone is free to use the information without liability.” That sentence is the reason ConFold lost. Having conceded its design was not a trade secret, ConFold needed some other legal hook — a contract, a recognized tort — to restrain Polaris. It had neither that fit.

The opinion is also a precise account of what a trade secret is, by way of contrast. Posner described a trade secret as “really just a piece of information … that the holder tries to keep secret by executing confidentiality agreements with employees and others.” Crucially, it is not a property right good against the world. In one of the opinion’s most-quoted lines, he observed that a trade-secret holder’s right “is not [a right good against the whole world], because it is perfectly lawful to ‘steal’ a firm’s trade secret by reverse engineering.” Trade-secret protection is relational — it binds those who acquire the information through breach of confidence or improper means — and it evaporates against anyone who obtains the information legitimately, including by independent discovery or reverse engineering.

ConFold’s problem was that it had voluntarily disclosed its design to Polaris in a competitive bidding process, without the design qualifying as a secret and without a contract that covered designs. Disclosure in that posture is not misappropriation by anyone; it is publication to the recipient.

The nondisclosure agreement covered the wrong thing

ConFold’s strongest remaining theory was breach of the nondisclosure agreement. It failed on the agreement’s own terms. The contract was titled the “Mutual Non-Disclosure Agreement — Logistics Consulting Version,” and its preamble referred to “proprietary software systems, documentation, and related consulting services.” The court read that language to limit the agreement’s protection to ConFold’s logistics-analysis work — the software and consulting it had performed — and not to extend to the container designs ConFold later submitted in response to Polaris’s separate request for proposals.

Two features of the analysis are worth underscoring for transactional lawyers. First, the design proposals came after the logistics engagement and were solicited through a different process; the NDA, drafted for the consulting relationship, simply did not reach them. Second, ConFold drafted the agreement. The court placed the consequences of the gap on the drafter: a party that writes a narrowly captioned, narrowly scoped confidentiality agreement, and then discloses other categories of information outside its terms, bears the risk that the disclosure is unprotected. The lesson is that an NDA protects the categories of information it actually describes — not everything the disclosing party would later wish it had covered.

The unfair-competition fallback

ConFold also invoked a misappropriation/unfair-competition theory drawn from the “hot news” line of cases. Posner walked through the elements such a claim requires — that the plaintiff generated the information at cost, that it is time-sensitive, that the defendant’s use amounts to free-riding, that the parties are in direct competition, and that the conduct would reduce the incentive to produce the information. ConFold could not establish them. The container design was not time-sensitive in the relevant sense, ConFold and Polaris were not competitors (one designs containers, the other makes powersports vehicles), and the broader theory threatened to create exactly the open-ended property right that trade-secret and IP law deliberately withhold.

The fallback’s failure reinforces the opinion’s central message. Courts are reluctant to use general unfair-competition doctrine to manufacture protection for information that the specific IP regimes — patent, copyright, trade secret — have left unprotected. The categories are not accidental gaps to be filled; they reflect a policy choice that some valuable information remains free to use.

Open questions

The opinion resolves ConFold’s case cleanly but leaves the surrounding terrain contested. How broadly should courts read a captioned, subject-limited NDA — does the “Logistics Consulting Version” label control, or merely inform, the scope when later disclosures are plainly related to the same commercial relationship? The opinion also does not chart the full boundary of the “hot news” misappropriation tort under Wisconsin law, an area where states diverge sharply. And it leaves unsettled how a vendor should protect a design disclosed in competitive bidding short of a patent application — through a design-specific NDA, an express reservation of rights in the proposal, or staged disclosure — questions the court flags by implication but does not answer.

Implications

  • Concede nothing about secrecy lightly. Once a plaintiff admits its information is not a trade secret, it must find another legal hook; the default is that the information is free to use.
  • Scope the NDA to the disclosure. A confidentiality agreement protects the categories it describes; designs disclosed outside its terms — especially in a later, separate process — may be unprotected.
  • Beware the bidding posture. Submitting a design in a competitive RFP, without trade-secret status or a matching contract, can surrender control of it to the recipient.
  • Reverse engineering is lawful. Trade-secret rights bind those who acquire information improperly; they do not prevent legitimate discovery, independent creation, or reverse engineering.
  • Don’t expect unfair-competition law to fill the gap. Courts rarely use general misappropriation doctrine to protect information the IP regimes leave unprotected.

Frequently asked questions

Why did ConFold’s misappropriation claim fail? ConFold conceded its container design was not a trade secret, and no patent or copyright protected it. Under the default rule, information outside those regimes is free to use, so Polaris’s adoption of a similar design — disclosed to it in a bid — created no liability.

Didn’t the nondisclosure agreement protect the design? No. The court read the “Logistics Consulting Version” NDA to cover only ConFold’s logistics-analysis work — its software, documentation, and consulting — not the container designs it submitted later in response to a separate request for proposals.

What should a vendor do to protect a design disclosed in bidding? Secure protection that fits the disclosure: a patent or design-patent application where appropriate, a confidentiality agreement that expressly covers submitted designs, an explicit reservation of rights in the proposal, or staged disclosure. A narrowly scoped NDA written for a different purpose will not do the work.

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