A Norwegian company, Isola, had for many years manufactured and supplied so-called uncoupling membranes for the German company Dural. Dural resold the membranes under its own trademark in Europe and the United States. In 2019, Dural engaged an Italian company, TeMa, to produce a copy of the product. From 2020 onwards, Dural began purchasing this product and reselling it under the same trademark.
In 2022, Isola terminated the supply agreement for cause. It argued that Dural had breached an obligation to purchase membranes exclusively from Isola and, in any event, had violated its duty of loyalty under the contractual relationship. Dural disputed that the termination was justified and brought a claim for damages before the courts.
The Supreme Court, which considered only the issue of whether the termination was justified, ruled in Dural’s favour. There was no basis for implying an exclusivity obligation on Dural, even though the agreement imposed an exclusivity obligation on Isola.
The Supreme Court further held that Dural had not breached its duty of loyalty under the contract. The long duration of the contractual relationship supported a somewhat heightened duty of loyalty. However, that duty could not be extended so far as to alter the commercial allocation of risks and burdens agreed upon by the parties. Isola’s membrane was neither patented nor otherwise legally protected by Isola, and Isola had not reserved any right to restrict Dural’s use of its trademark.
The Supreme Court also considered specifically whether Dural had been under an obligation to inform Isola at an earlier stage that it intended to change its “single-sourcing approach.” The Court concluded that this obligation had not been breached either.
The judgment contains a broader discussion of the scope of the duty of loyalty in contractual relationships, particularly in commercial contexts.
Source: Supreme Court
Atle Melø
amelo@melo.no
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