Unit 7 – Consolidation IP CONFIDENTIALITY

What benefit is there?

Protects against unauthorised disclosure

How is obtained?

Implied

Arises automatically (no registration)

Express

By contract

How long does it last?

Indefinitely

Introduction

The law will uphold a person’s obligation to keep a secret, in certain circumstances

Not an IP right in the pure sense
Case law based

Arises from the equitable jurisdiction of the court to restrain unconscionable behaviour

Example of use – maintaining confidentiality before submitting a patent application (vital to avoid destruction of the invention’s novelty)

Well-guarded secret may be protected indefinitely, rather than simply for the limited period afforded to IP rights (e.g. 20 years for patents)

Case law relates to the express obligations of confidence are lacking and implied duties confidentiality have to be considered. BUT express obligations may and often should be imposed on key employees or independent contractors.

AG v Times Newspapers Ltd 1990 – express confidentiality agreement may not be upheld by the court.

London Regional Transport v Mayor of London 2003 - publication was in the public interest

Confidential info principle arises from the equitable jurisdiction of the court to restrain unconscionable behaviour, where such behaviour may result in damage to a person.

Prince Albert v Strange 1849 – Early example of the courts readiness to injunct TP recipients of confidential info

The elements of confidentiality

De Maudsley v Palumbo 1996 (the Ministry of Sound case) – affirmed the earlier test from Coco v AN Clark 1969:

Did the information have the necessary quality of confidence about it?
Was the information imparted in circumstances importing an obligation of confidence?
Was there any unauthorised use of the information?

Ideas or concepts cannot be protected, nor can information which is too vague preliminary development of a definite product needs to be shown
The idea must contain some element of originality

OUTCOME 1 – Analyse a clients information to decide whether it is protected

Does info have necessary quality of confidence about it?

De Maudsley – C’s ideas were too vague to constitute confidential info

In order to merit protection the ideas must contain an element of originality

Fraser and Others v Thames TV Ltd and Others 1984 – the idea must:

Contain some element of originality
Be clearly identifiable
Be of potential commercial attractiveness; and
Be sufficiently well developed to be capable of actual realisation

- Douglas v Hello 2007 - wedding photographs were considered matters in which a quality of confidence would arise. All guests were under a strict obligation of confidence regarding photography and this was enforced by the staff

- Faccenda Chicken – No confidentiality clause, D started own company using knowledge taken from old business. Implied confidentiality. The info D used wasn’t a trade secret so he could continue using his pricing and customer information. Trade secrets will be confidential post contract BUT confidential info will only be protected during the employment contract and employees are allowed to use info after employment is over.

- Roger Bullivant – A confidentiality clause. D took card index from old employer to start new co. This still wasn’t a trade secret. It was just more confidential info. Only confidential info that you as an employee could inevitably carry away in your head can be used after employment (D couldn’t have taken that amount of info in his mind in good faith) he took steps to physically copy the info. Springboard injunction only to last as long as D gained unfair adv which was 12 months (this was the time limit in the contract of employment). If D hadn’t copied it all and just used the bits he could remember this would have been fine.

4 classes of information

1. Trade secret

implied confidentiality both during and after employment

- Secret process of manufacture e.g. chemical formulae, special methods of construction. Other info of sufficiently high degree of confidentiality as to amount to TS (know-how of making products etc)

- EU draft directive on protection of trade secrets – provide clear and uniform level of protection across EU (not out yet)

2. Other confidential info

If needs to be in physical form then this will be protected to, if not then forms part of employee skill and knowledge (3)

e.g. customer lists taken in physical form or copied

3. Employees skill and knowledge

Naturally carried away by employee will NOT be protected

4. Trivial/public knowledge

Not protected in any situation

OUTCOME 2 – Was the alleged infringer under an obligation of confidence

Was the info imparted in circumstances importing an obligation of confidence?

Occasion where information imparted must be a business one not a social one
Confidentiality must be made clear
Did the person who obtained the info in circumstances where thy know or have reason to believe that they should not have it

De Maudsley - the claimant failed to explain that info was confidential, failing an essential element of the test (info was imparted in social circumstances so no obligation of confidence)
Shaw v API Group 2008 - failure to make confidentiality to clear caused the claimant’s case to fail
Fraser v Thames TV – pitching a TV idea (commercial circs) implied confidence
Vitof v Altoft 2006 – computer code, created in contemplation of incorporation of a company which would exploit the code commercially, was held to be imparted under an obligation of confidence
Requirements extends to persons who obtain information in circumstances where they know or have reason to believe they should not have it
- Douglas – photographer knew his actions were a serious breach of trust

OUTCOME 3 – Evaluate whether a disclosure amounts to a breach:

Was there any unauthorised use of the information?

If you can show a significant risk of unauthorised use then that is enough

competitor seeking to use info in competing business

De Maudsley C’s ideas and D’s use must overlap to a sufficient degree to constitute unauthorised use

Cray Valley v Deltech 2003 – no express undertakings of confidence by former employees, so could be no unauthorised use of the information because the information did not have the necessary quality of confidence. However, a claim for copyright did succeed

Moral of the story is to rely upon an implied duty of confidence – far better to inject certainty into the situation with the use of a written confidentiality agreement

Remedies and their availability

injunction

To prevent future disclosure of information
Once information has been released it is usually too late to receive an injunction. However, injunctions will be granted relating to confidential information that is of commercial value where:

There are two rival businesses, and not granting an injunction would give the wrongdoer an advantage – Speed Seal Products v Paddington – 1986
The springboard doctrine applies – where one business would gain an unfair advantage over its rivals because of unauthorised disclosure to it of commercial information (e.g. Terrapin v Builders Supply Co 1967, Roger Bulllivant v Ellis 1987). The Court will try to prevent such an advantage with an injunction where appropriate

- Can get injunctions against TP who have had confidential info passed on to them

Compensatory damages

Seagar v Copydex 1967

An account of profits

Peter Pan Manufacturing v Corsets Silhouette 1964

An order for delivery up

Or destruction under oath of the offending document or articles made by use of the information – Industrial Furnaces v Reaves 1970

4. Search and seizure order (without notice)

Whether the remedy is available?

Case law concept remedies available as a matter of the courts discretion not as of right. However, the courts strive for consistency

Vestergaard Frandsen v Bestnet Europe 2009 - guidance on how the courts should exercise discretion in granting the remedies sought:

The general principles involved - where C establishes D acted in breach of confidence and there is a sufficient risk of repetition, if no specific discretionary reasons to refuse an injunction, one should be granted, save in exceptional circumstances
Where the ‘springboard’ doctrine was involved – no authority that an injunction may be granted once the information has ceased to be confidential; publication of the confidential information ends the possibility of an injunction. Springboard injunction only to last as long as D gained unfair adv
Where the information only had a limited degree of confidence – e.g. if information is in the public domain, an injunction may be ordered only for a limited period
Whether an injunction could be granted to prevent a defendant from benefiting from a past misuse of confidential information – generally unclear that an injunction may be granted, as the primary remedy should be financial. Care should be exercised with such injunctions to ensure C is not put in a position better than if there had been no misuse. Duration should not extend beyond the period that D’s illegitimate advantage could be expected to last
Where a product is derived from, or manufactured using, confidential information – an injunction may be granted to restrain the manufacture or sale of such product, where the manufacture represents a continued use of the information, having regard to the extent an importance of...

#10475 - Unit 7 Confidential Information - International Intellectual Property

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