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Breach Of Confidence Notes

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Breach of Confidence Intellectual Property LLM Notes


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LLM IP Lecture Notes

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).

Classic Formulation 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.


Necessary Quality of Confidence 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, 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.

Relative secrecy 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


LLM IP Lecture Notes

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 done regularly. Between 50 and 75 people received copies. This information retained its quality of confidence. The people to whom it was given would understand it was limited circulation only, so it retained its confidential quality. How precisely must the correspondence be between the generally accessible information and the information claimed to be confidential? This divided HL in Douglas v Hello! - the authorised photos of the wedding were snap published very quickly in order to beat Hello! to the presses. Lord Nicholls thought that this was crucial - these photos were not confidential. The majority, on the other hand, said that the official photos didn't put the info into the public domain - the information was that contained in each and every visual image of the wedding. Partial disclosure only leads to that part of the information being deprived of its confidentiality. There may also be a question as to what extent the disclosure would harm the patent, in order to test its confidentiality (Spycatcher).

Springboard Doctrine The action for breach of confidence can protect public domain information where one party uses information that they obtain in confidence to springboard themselves above competitors, and benefitting from the breach. This has been articulated by Lord Denning in Seager v Copydex, and Roxburgh J in Terrapin v Builders Supply. This seems like it has its basis in economics - there is a public interest in firms not benefitting from information in the public domain if they can do so without paying for it. This is about upholding the integrity of confidential relationships and fair relations between competitors. This is normally about head starts, and so monetary, not injunctive relief is normally given. This applies especially to things like customer lists - Roger Bullivant v Ellis, where the information is in the public domain but in parallel to the confidential form. Terrapin v Builders Supply Agreement to make and supply some pre-fabs came to an end. The plans had been revealed to defendant. When the contract came to an end, defendant began to compete with claimant using the information. C brought an action for BoC and D argued that you've been making these everywhere. Limited injunctive relief was granted - can't use information gained in confidence as a springboard, and the information retains its confidence even when accessible by the public. Information that D has is pure, but the pre-fabs could be dismantled, and this would take labour and effort to do so. This doctrine recognises that the information remains relatively secret, but where it can be accessed and generated by legitimate means, the appropriate form of relief is limited relief, forcing the defendant to wait for the period of time that it would have taken to get the information by legitimate means.

6 Reverse Engineering - does this mean that the information is no longer confidential? On the other hand, if there is lots of effort required to get the information, is it available to the public?
Mars v Teknowledge - when products are placed on the market, then they lose their quality of confidence, because they could be reverse engineered. Better reading is that you don't come under an obligation of confidence when you obtain information by reverse engineering - you exert the effort through legitimate means of dismantling a product. The decision doesn't agree with this reading, though. The tension between pure information and information capable of being accessed by the public seems to strike to the heart of the springboard doctrine, which acknowledges that information can be private in some senses and public in other senses. Reading it this way leaves it ripe for criticism in light of Franklin v Giddins (Aus), where a literal fence was sufficient. Public information can become secret - the test for public domain is more flexible here than for patent law. For example, in Schering Chemicals v Falkman, the public was deemed to have forgotten the salient facts that the documentary dredged up. Consequently, the reviving of the detrimental matters was not condoned by the fact that the facts were already known, as Shaw LJ articulated.

Private Information Since HRA 1998, the courts have extended the action to cover private information too. This is all about where C has a reasonable expectation of privacy over the information. This means three things:

1. Requirement of non-trivial doesn't apply - if there is a reasonable expectation of privacy, the information is protected.

2. The test regarding disclosure is different - the information can still be private even when it is so widely disclosed that it would not be regarded as confidential - see Campbell v MGN, Douglas v Hello!

3. There is a tension regarding public figures in public places (see von Hannover). What exactly a reasonable expectation relies on depends on the facts of the case. However, broadly, it covers (Murray v Express Newspapers) the nature of the activity, the place where the claimant was, the nature and purpose of the intrusion, whether the observer was aware of C's lack of consent, and how the information came into the publisher's hands.

Obligation of Confidence Various sources of obligation - can be contractual, but don't have to be - courts have found implied (equitable?) obligations.

Direct Obligations These relationships are between the subject and the defendant.

Contractual These may be express or implied. An express contract might be an employment contract, whereas an implied contractual term might be due to the relationship being "of the right type", such as banker and customer, or professional advisor and client. Cases involving information disclosed during the course of operation of a contract are generally argued under the law of confidence, not the law of contract (see Ackroyds London v Islington Plastics). However, it is important to remember that an express contractual term might be void, such as the prohibition on software compilation that lots of distributors have. This is not binding.

Intrinsic Nature of the Relationship There might be an obligation of confidence as a result of a fiduciary relationship, or maybe a personal relationship (Barrymore v News Group Newspapers), though not transient or


LLM IP Lecture Notes

commercial sexual relationships (Theakston). The interaction between breach of confidence and the law on fiduciary relationships is not clear. Some say that all confidential relationships are fiduciary relationships (AG v Blake (CA)), but this is weird - not all employees are fiduciaries normally. It's better to separate them. One of the reasons for this is that currently, Constructive Trusts can only be awarded for a breach of fiduciary duty.

Manner of Communication The question here is whether a reasonable recipient would have realised that the information was given to them in confidence. Coco v Clark - reasonable person standing in their shoes would understand the information was being given in confidence. Developed in the Force India case, objectively assessed by reference to the reasonable man. Some people say that the key test is whether the information was disclosed to the recipient for a limited purpose (Barrymore sees this applied in personal relationships), but this has diminished a bit, though this should play into the assessment, and is a presumption, certainly. However, the language of limited purpose is not sufficiently precise to help in understanding when an obligation of confidence arises. However, there is still agreement with Coco v Clark that where parties are dealing in a commercial context and information is disclosed for a limited purpose, it is a useful way of understanding when a reasonable person will understand when the information is given in confidence. There may be a place for subjective reasoning too, as in Carflow v Linwood.

Third Party Recipients Where there is a recipient outside the initial relationship of confidence, we need to know when they're bound. This is about the circumstances of communication from the confidant to the third party. It's probably down to the traditional trust requirements - where there is no good faith relating to the information, the recipient should be bound by the relationship of confidence. The focus should be on the facts of the case (Wheatley v Bell, but cf AG v Blake). Some situations:

1. Knowledge of confidential status = normally bound. Konlwedge here includes constructive knowledge for gross negligence, but stupidity too, probably (Fraser v Thames).

2. Later discovery of status of information binds the third party (English and American v Herbert Smith - information was innocent when received, later unconscionable because of knowledge).

3. Bona Fide Purchaser - the courts may grant an injunction, but not damages, see Valeo Vision v Flexible Lamps.

4. Position of the communicator is not relevant. If an innocent Third Party tells a Third Party with knowledge, the latter is bound, though the former is not (Prince Albert v Strange). There was maybe an assumption of wrongdoing, though.

Strangers What about strangers? Where there is no bilateral relationship, and no agreement between the parties? There are two ways in which the stranger can come under a duty - either through some kind of illegal conduct, or through knowledge. Douglas v Hello! - Hello owed a duty of confidence, so HL in its decision must have assumed that Thorpe (the photographer) must have owed a duty, from the notice (knowledge) that the information was confidential. In Francome v MGN, the illegal conduct was important (phone tapping). Knowledge was examined in AG v Guardian (No 2), per Lord Goff, and the question arose in Shelley Films v Rex Features. Shelley Films v Rex Features A photographer made their way onto a film set and took photos of Robert de Niro as Frankenstein. The focus was on the photographer's knowledge; since they must have seen relevant signs, they came under a duty of confidentiality. To whom is it owed? In Douglas v Hello!, Thorpe held to owe a duty also to OK magazine. Why?
Because they must have known about the exclusivity arrangements, and in those circumstances it

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