Negotiating exclusivity provisions in agency agreements can often be difficult. Companies want to broadly prevent agencies from working for competitors, while agencies are reluctant to cut off other sources of work. In most cases, though, once the parties have settled on the terms, the relationship moves forward and any disputes are resolved amicably behind the scenes. A recent lawsuit filed by Mars Wrigley against a promotions agency demonstrates that’s not always the case, though.
The agreement between the parties includes a provision that prevents the agency from working for a competitor without Mars’ express approval. Last year, however, Mars employees learned that the agency had answered an RFP and won a contract with a competitor without seeking approval. Mars believes this couldn’t have happened without the use of their confidential information and, to make matters worse, that two representatives with experience working for Mars have been assigned to the new account.
Mars alleges that it tried to get more information from the agency by invoking its audit rights under the agreement, but that the agency refused. And Mars reports that it sought to resolve the dispute amicably, as required by the agreement, but that those efforts have failed. The lawsuit asserts three counts of breach of contract and seeks an order requiring the agency to protect Mars’ confidential information and work product.
At this point, we only have one (heavily redacted) part of the story, and we don’t know whether either party did anything wrong or whether there are lessons to be learned here. But this case may serve as a good reminder to think carefully about exclusivity and confidentiality provisions in your agency agreements.