SECTION 2B-6121. DUTIES FOLLOWING RIGHTFUL REFUSAL OF A COPY. After a rightful refusal of a copy, if the entire contract is rightfully cancelled, Section 2B-702 applies concerning the refused copy and other obligations. IHowever, if f the contract has not been canceled, the parties remain bound by all contractual obligations and . Whether or not the contract has been canceled, the following rules apply:

(1) Any use of the information or copies by the party refusing tender, or any disclosure of a trade secret or confidential information that violates with the agreement, constitutes a breach of contract and is wrongful against the other partylicensor. However, use for a limited time solely to avoid or mitigate loss is not inconsistent with the aggrieved party's licensee's refusal of the tender.

(2) An aggrieved party licensee in possession of refused copies or any copies made from them, shall return or deliver all copies and documentation to the tendering party licensor or hold them with reasonable care for disposal at thate party's licensor's instructions for a reasonable time. In addition , the following rules apply:

(A) The aggrieved party licensee shall follow any reasonable instructions for return or delivery received from the tendering partylicensor. However, instructions are not reasonable if the tendering party licensor does not arrange for payment of or reimbursement for the reasonable expenses of complying with the instructions.

(B) If the tendering party licensor does not give instructions within a reasonable time after being notified of refusal, the aggrieved party licensee may, in a reasonable manner to avoid or mitigate loss, store the copies and documentation and copies for the tendering party's licensor's account or ship them to that party e licensor with a right of reimbursement for reasonable costs of storage and shipment.

(3) An aggrieved party in possession of a refused copy licensee has no further obligations with respect to the information or copy ies and documentation that were refused. However, both parties remain bound by any obligations of nondisclosure or confidentiality or and any scope or other contractual use restrictions which that would have been enforceable had the performance not been refused.

(4) In complying with this section, an aggrieved party in possession of a refused copy licensee is held only to good faith and a standard of care that is reasonable in the circumstances. Conduct in good faith under this section does not constitute acceptance or conversion and is not the basis for an action for damages.

1. Cancellation and Refusal. Subsection (a) reflects that a refusal of a delivery of a copy may or may not lead to a cancellation of the entire contract. When it does result in cancellation, the rules of Section 2B-702 apply to the entire contract and all related materials. If the contract is not cancelled, this section applies and the parties remain bound by all contractual obligations, except of course, as altered by the breach itself.

2. No Right to Use. Subsection (1) limits the refusing person's right to use the information in its possession. In general, a refusing party has no right to continue to use the refused copies. Uses inconsistent with the terms of this section or the contract constitute a breach by the party engaging in the misuse.

The section does permit, however, limited uses for purposes of minimizing loss. That use does not extend to disclosure of confidential information or sale of the copies. It cannot be inconsistent with the refusal. This section asks courts to reach the balance discussed in Can-Key Industries v. Industrial Leasing Corp., 593 P.2d 1125 (Or. 1979) and Harrington v. Holiday Rambler Corp., 575 P.2d 578 (Mont. 1978) with respect to goods, but with an understanding of the nature of any intellectual property rights that may be involved here.

3. Handling Copies. Subsection (2) is adapted from current law in article 2. This section does not give the refusing party a right to sell goods, documentation or copies related to the intangibles under any circumstance. The materials may be confidential and may be subject to the overriding influence of the proprietary rights held and retained by the other party. As Comment 2 to current 2-603 states: "The buyer's duty to resell under [that] section arises from commercial necessity...." That necessity is not present in respect of information. The tendering party's interests are focused on protection of confidentiality or control, not on optimal disposition of the goods that may contain a copy of the information.

4. Confidentiality. Subsection (3) makes clear that, following refusal or revocation, both parties remain bound by confidentiality obligations with respect to the information. Unlike in reference to sales of goods, it is not uncommon that each party have some such information of the other and a mutual, continuing restriction is appropriate.