American President Lines, Limited (APL), and Stoughton Composites, Limited Liability Company, formed a joint venture, Ultralite Container Corporation, to make intermodal shipping containers with thin walls. (Intermodal containers are freight containers that can be hauled by ship, rail, or truck, and normally use a combination of these transportation modes to reach their destination.) APL contributed its knowledge of shipping requirements, plus about $4 million. Stoughton contributed its expertise in the design and manufacture of containers, plus manufacturing facilities. Stoughton was to design and make the containers. APL was to buy and sell some of them. The parties signed confidentiality agreements that prohibited each from using in its own business, or transferring to others, information disclosed by the other party as part of the joint venture. Ultralite produced and delivered the first containers, but APL believed that they were prone to delamination (separation of the foam insulation from the wall) and refused to pay. Meanwhile, Stoughton began using what it had learned in developing the intermodal containers to make and market over-the-road containers for its own business. APL asked a court to order Stoughton to stop using this information.

1.At issue, in this case, is the use that a joint venturer can make of the joint venture's property, which often consists of what one party learns in fulfilling its part of the deal. Although the joint venturers in this case were not competitors, they agreed to keep confidential what they disclosed to each other as part of the joint venture. Their dispute, however, involved knowledge that had been developed by one party alone. Should Stoughton be allowed to use this knowledge? Does it make any difference that the making of shipping containers was Stoughton's original business? What resolution would be the fairest?

2.What ethical considerations are involved in the rule that joint venturerslike partnershave a duty loyalty to the joint venture, at least to the extent of its business? Do you think that a joint venture would be a viable form of business organization if joint venturers were not subject to this duty?