What would happen if someone wanted to sell something affected by a confidentiality agreement?

Question

For example Bob makes an invention. Joe comes along and argues that Bob's invention infringes on some of his intellectual property. They agree to a settlement where confidentiality is required. What would happen if Bob wanted to sell his invention? Would it make a difference if it was a company instead of an individual?

Wouldn't a buyer need to know the details of the settlement so they could comply with it? I am guessing such settlements normally would contain terms like "You will not infringe any further than what you have already (and you will pay us $XYZ for us not to take you to court)."

For example if someone buy's the company from Bob, then Joe comes back and tries to sue for the same thing again, if the settlement agreement was made confidential and couldn't be transferred to the new owner, how could they defend themselves from being sued again for what the previous owner had reached a settlement for?

Answer 1

If selling it does not break the terms of the agreement it can be sold

If it does, it can’t.

If future sales are an issue then it’s incumbent on the parties to deal with it.

It should be noted that this agreement on its own does not bind third=parties including this hypothetical buyer. For them to be bound their sales contract would have to incorporate the relevant terms. If consumer protection law applies to the sale, it may be that some terms cannot lawfully be included.

Answer 2

how could they defend themselves from being sued again for what the previous owner had reached a settlement for?

That would be tantamount to --or an attempt of-- double recovery, which is prohibited by law. The scenario of being sued again suggests that Joe's later lawsuit would have to be either dismissed on grounds of res judicata (if the previous matter was already decided), or consolidated with the ongoing proceedings on same or related matters.

If Joe sues the new owner, the discovery proceedings are likely to reveal the fact --or at least raise the suspicion-- that Joe already received compensation and/or settled the matter. Joe's right to recovery is per claim (more precisely, for a set of facts), not per party.

The owner's suspicion that Joe had this matter already solved might prompt the owner to conduct discovery on the settlement. A settlement's confidentiality may be stricken to the extent it is material to the claims at issue.

In the event that Joe opposes a subpoena and/or other necessary discovery on the settlement, and Joe does not comply with a court order to that effect, Joe at some point will have to choose between maintaining confidentiality or be sanctioned for civil contempt. The sanction(s) may include --without being limited to-- dismissal of Joe's complaint or an adverse inference of fact.

Would it make a difference if it was a company instead of an individual?

No. The principle that Joe's right to recovery is per claim (set of facts) and not per party implies that the type of party is irrelevant to the legal outcome of the case.