#5395 - Breach Of Confidence - Intellectual Property Law

Breach of Confidence

Intellectual Property LLM

Notes

Breach of Confidence – The Basics 3

Classic Formulation 3

Necessary Quality of Confidence 4

Relative secrecy 4

Springboard Doctrine 5

Private Information 6

Obligation of Confidence 6

Direct Obligations 6

Contractual 6

Intrinsic Nature of the Relationship 7

Manner of Communication 7

Third Party Recipients 7

Strangers 7

Breach 8

Defence 8

Public Interest 8

Employees, Confidentiality & Trade Secrecy 9

General Considerations 9

UK Law 10

During Employment 10

Express Terms 10

Implied Duties 10

Duty not to compete 11

Duty to maintain confidentiality 11

Duty not to copy designs or customer lists 11

Duty Not to Compete 11

Post Employment 11

Surviving Termination 12

BIG ISSUE – RESTRAINT OF TRADE 12

Policy Questions 13

Implied Duties 13

Policy Questions 15

Garden Leave 15

Breach of Confidence – The Basics

Breach of confidence is an important adjunct to intellectual property rights. It can give additional protection in areas where copyright cannot. Copyright only protects expression, not ideas, and breach of confidence can step in and protect the ideas. Breach of confidence can also protect things that are not ‘works’ for the purpose of copyright, such as Green v BCNZ (format of a television show). Businesses rely much more on breach of confidence compared to patenting, since patenting involves publication, which in many cases would be inappropriate.

Breach of confidence doesn’t seem to have the same justification (that of disclosure) as the other parts of IP. This is a tension – one part of IP law (patents) says ‘disclose!’ and another part says ‘if you don’t, we’ll help you keep it secret’. So why do we have BoC?

1. Promises should be kept

2. Ideas of privacy

3. Contractarian – this is the law because this is what we would have agreed

4. Eliminates wasteful exposure on protection – Landes and Posner (2003)

5. Promote fair competition (Interfirm Comparison v Law Society of NSW)

The doctrinal basis for breach of confidence is disputed (see Bob Bone (1998)), which can make areas such as conflicts of law, or limitation periods, difficult, as well as establishing the liability for third parties, Bona Fide purchasers etc, and remedies. We could side with the Canadians, and argue that it's sui generis, or divide it up to make it more predictable, as they have done in the USA.

In the aftermath of the Human Rights Act 1998, there has been an increasing trend towards using this as a way to protect privacy (Wainwright v Home Office, Campbell v MGN), in an expansion of its usual setting. Most notably, there has been a scrapping of the requirement of there being a relationship between he parties. Even where the recipient has acquired the information from a legit public source, there can still be protection, where the recipient (ought to) know(s) that the information is fairly and reasonably to be regarded as private (Campbell v MGN). There has also been a wholehearted embodying of Articles 8 and 10 ECHR in the law. This has lead to distinct unease among some commentators – this is not really about breach of confidence any more, but more about the misuse of private information, but still within the Breach of Confidence Action. This clearly highlights the dynamic nature of this area, but also its inherent unpredictability.

In some cases, the Data Protection Act 1998 may provide an alternative cause of action. It failed in Campbell but may succeed in other ways (Murray v Express Newspapers).

Coco v A.N. Clark

Coco had designed a motor-scooter engine, and negotiated with Clarke to licence the design to them. The negotiations failed and Clarke went on to build a scooter engine. Coco alleged that this was a breach of a duty of confidence.

In order to be protected, there are 4 factors:

1. You need to show that the information has the necessary quality of confidence.

2. Secondly, that there is an obligation of confidence.

3. Thirdly, a breach of this obligation (left open whether this needs to cause detriment to the confider),

4. And finally that there are no defences.

The most important defence is disclosure in the public interest.

First thing that must be done is to precisely define the information for which protection is being sought. This is normally done as part of the claim, but may not be done in order to keep the information confidential. The court needs to know what the information is in order to determine whether it’s confidential, and to see whether there is an injunction available. There must be sufficient detail that the action is not speculative / an abuse of process, as in The Gadget Shop v TheBug.com, or Suhner v Transradio. The other reason for requiring specificity is that it makes it easier to enforce the obligations, and makes it easier to avoid infringing injunctions.

No limits on the form of the information. BoC reaches oral ideas or design drawings and, in one example in Australia, the genetic structure of a new form of nectarine plant, contained within the wood itself. However, the information must not be trivial in order to attract protection (McKennitt v Ash). See Douglas v Hello! (though note that this is obiter from a dissenting judge, who thought that Creation Records was wrongly decided, and the collection of objects was pure trivia). This is very rare – the courts are reluctant to label information as being trivial, and could probably never apply to governmental information, since the courts can’t gauge importance. Even addresses aren’t trivial (Mills v MGN) Also an exclusion of immoral information, but the courts should be very slow to apply this exception (Stephens v Avery), in the absence of a general consensus as to what is moral and immoral – the status of someone’s sexuality is not regarded as immoral.

Novelty and originality – combinations of information will count. Public domain information is not protected, but information that builds on public domain information may be, as long as there is sufficient produce of the human brain to confer a confidential nature upon the information, see Megarry J in Coco v Clark. There needs to be skill in the information – Ocular Sciences suggests that mere tenacity is insufficient, but the threshold seems quite low (see Talbot and Fraser). Nevertheless, some recent case law suggests that there is a qualitative restriction – see the obviousness of megamixes in Coulthard v Disco Mix preventing them from being protected

The information must not be vague, or it will not attract protection. Aspirations that do not have a ‘considerable degree of particularity in a definitive product’ (De Maudsley v Palumbo) will not be protected, and neither will business aspirations that are not (Secton v Delawood) ‘sufficiently developed to be capable of being realised’, as Harris J in the Victoria case of Talbot v General Television Corp elucidated. Obviously, a lot of this will depend on the way that information is normally treated by the industry in question. One suggested element of the enquiry is ‘attractiveness’, but as Knox J pointed out in Palumbo, this is otiose – ‘because if that element is missing it is hardly likely to be appropriated’.

Fraser v Thames TV

An all-girl rock band pitched an idea for a TV programme to a scriptwriter who revealed it to a producer, who made it.

Held to be a breach of confidence. The TV show was original – there must be a significant element of originality, but this could be done by giving a common idea a twist or slant.

De Maudsley v Palumbo

C had an idea for a nightclub revealed to the defendant at a dinner party – open all night, different areas for dancing drinking and chilling, an industrial warehouse feel, very high music quality, and top DJs. D went on to found the Ministry of Sound, and C argued this was in breach of confidence.

Rejected on the basis that the information was old, or vague, and lacking the necessary novelty to make it confidential. The claimant failed because the court wasn’t convinced that the information had the quality.

No requirement that the claimant takes reasonable precautions to keep the information secret, no evidence in the case law. In fact, relative secrecy (Prince Albert v Strange) allows a number of people to know without the information becoming incapable of being treated as confidential. This is a question of fact, not intention, so information can be confidential even if there is an intention to publish (Douglas v Hello!), and (per Laddie J in CMI v Phytopharm) is one of the most important restrictions.

Losing secrecy – more often where the debate is. Clear since Spycatcher that confidential information loses its confidence when it enters the public domain (Lord Goff). How does it enter the public domain? When it’s patented, for example.

Mustad v Dosen – patented information doesn’t retain its quality of confidence. What about foreign patent? Franchi v Franchi – a business idea / technical development lost its quality of confidence when it was published in a Belgian patent – the people interested in finding out about those sort of ideas would pay attention to those sort of things, so it was generally available to those interested in the UK. Information anywhere is information everywhere, but the test is not the same as for Patent Law (Green Lane Products v PMS International).

Reasonably wide circulation short of patenting – Prince of Wales v Associated Newspapers. Hong Kong journals circulated among friends and staff including some members of the media. This was a practice he had...