Legal Question in Business Law in New Jersey

Proprietary Information

We are a small LLC doing environmental consulting. When we take an air or material sample, who owns the results of the lab tests prior to receiving payment from the client? Do we not have the right to withhold test results until payment is received? If we do own the results, are we free to release them to a third party?


Asked on 10/12/03, 11:37 pm

2 Answers from Attorneys

Bernard J. Berkowitz Berkowitz & Raiken

Re: Proprietary Information

Your questions are not easily answered without more backgroune. You need to formally obtain the serices of an attorney to get the proper answers to your question. At the very least you need to have your initial work order indicate the results are your property and will be withheld until payment is received and any release to third party, can't be done without a signed release from the person ordering the test. If you need more detailed information, please call me.

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Answered on 10/13/03, 9:54 am

Re: Proprietary Information

Your fact pattern raises a number of issues; for some of those issues I would need more detailed information to give you a completely accurate reply.

In regard to ownership, normally your work is your possession until you are ready to deliver it to another, unless you have a contract with your customer that says otherwise. A contract can be found in something as simple as a letter, a verbal agreement (under certain specific rules) or a Purchase Order, so please carefully examine all correspondence between you and the customer to make sure that you have not "bargained away" this right of possession.

The customer may argue that the samples, especially if they are soil or liquids removed from his property, belong to him. That position may well be enforceable, but it would only require you to return the samples (if they haven't been destroyed by testing) to the customer if he requests them.

As to releasing the test results to another, it would depend on who that third party was, why they wanted the results, how that release of information would affect your customer and what your intent was in releasing the data. Again, a real or deemed contract could control the conditions regarding the release of the test results.

I suggest that you protect yourself by preparing "standard form" one or two page engagement contracts which will resolve these issues before they become problems.

Good luck.

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Answered on 10/13/03, 3:15 pm


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