• April 25, 2011

Seriously, fatty-free acid ruminant energy supplements are big (multi-million $$) business.  So when one manufacturer, Milk Specialties Company (MSC), bought some of the assets of a competitor Origo, another supplement maker (which had suffered a fire at its Ohio “dark-colored” supplement manufacturing facility), MSC wanted a non-compete so it could be sure to gobble up all of Origo’s business…

Unfortunately for MSC, apparently, Origo not only made “dark-colored” supplements — a business that it walked away from — but also made “light-colored” supplements, which it fully intended to go on producing.

Say what?!  Do pigs and other ruminants differentiate between the color of their supplements?!?  Who cares about the color, MSC implicitly argued in its motion for temporary restraining order (“TRO”) to stop Origo from making any free-fatty ruminant energy supplements.  (MSC argued that “dark-colored” was an immaterial aspect of the parties’ contract.)

Sr. U.S. District Court Judge Richard H. Kyle (D. Minn.) denied MSC’s motion for a TRO.  The agreement specifically said “dark-colored supplement.”  If the words are to be given meaning, Origo retained the right to make and sell the light-colored supplements.

The practice pointer:  when negotiating contracts, pay attention to every word and delete words that you believe have no meaning.  If MSC had deleted “dark-colored” in the contract negotiation, it seems they would have either (1) won this case (which Judge Kyle, going through the “Dataphase factors,” predicted is unlikely), or (2) MSC would not have been able to enter into the deal in the first place because it would have smoked out Origo’s “light-colored plan” (which, presumably, would have materially changed the terms for which Origo would do the deal).

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