Misuse of Confidential Information

Confidential information is defined as information that meets the following criteria:

1. Confidential in Nature: The information must not be public knowledge or widely available.
2. Disclosed in Confidence: The circumstances of disclosure must clearly imply an obligation of confidence

If an obligation of confidentiality arises, our solicitors are here to help you. An obligation to keep information confidential can be imposed by:

• A contract;
• Implied because of the circumstances of the disclosure; or
• Implied because of the special relationship between the parties concerned e.g. employee/employer or solicitor/client.

The best way to protect confidential information is to enter into a stand-alone confidentiality agreement before the confidential information is disclosed.

Our Intellectual Property team can advise on the drafting and implementation of such confidentiality agreements.

Confidential information can be protected for as long as it remains confidential which, in theory, could be forever. However, there are a number of restrictions to this:

• Information which becomes out of date, and which ceases to have any commercial value;
• Confidentiality agreements which are time-limited;
• Time-limited restrictive covenants in an employee’s employment contract; and
• Technical information provided to public authorities for securing regulatory approval are typically time limited.

Where a document is read by the Court, or referred to at a public hearing, confidentiality in the information covered in that document will immediately be lost.

Examples of confidential materials which may be protected:

• Formulas not capable of analysis in the final product;
• Recipes which are not apparent from the final product;
• Processes;
• Business methods (until they are used in public);
• Financial and statistical information;
• Customer lists;
• Plans, sketches and drawings;
• Improvements to products or processes;
• New inventions whilst a patent application is pending;
• Business plans;
• Computer programs; and
• Discoveries, scientific theories or mathematical methods.

The remedies available for an action in misuse of confidential information  are account of profits, inquiry as to damages, injunctions and/or delivery up and destruction.

The usual measure of damages is that the defendant should compensate the claimant for the loss which the defendant has caused to the claimant.

In some circumstances, however, the damages payable can be calculated by reference to the fee the parties would have agreed would be payable by the defendant for the use of the confidential information in a hypothetical bargain.

The Courts have  shown a willingness to issue and continue injunctions in certain instances, particularly where a disclosing party uncovers the recipient’s intention to use the confidential information before the breach of confidentiality takes place. However, injunctions are of little or no use once the information has been disclosed or used.

We acted for a client whose identity was protected in respect of criminal proceedings during his childhood.

We successfully defended the case for our client by preparing cease-and-desist letters to an American website and various private individuals, demanding that they cease sharing our client’s personal information.

As a result, we obtained a successful result, and the confidential information was removed.

We advised a client on his exit from the in-house software development division of Balfour Beatty. Our client had, as part of his employment, worked on a software mapping tool which was used by Balfour Beatty internally for projects but which was not marketed externally to third parties.

Our client wanted to try and agree terms with Balfour Beatty to take a licence or enter into a joint venture in order to market the software externally.

We helped negotiate the client’s termination of employment, advised our client on his rights in relation to the intellectual property, identified the nature of his intellectual property and proposed potential structures for our client to have an ongoing relationship with Balfour Beatty.

Later, we advised our client in relation to court proceedings brought by Balfour Beatty for an injunction, damages and the destruction of the software.

Balfour Beatty alleged that our client was in breach of contract, in breach of confidence and had infringed copyright. Balfour Beatty withdrew its claim against our client at an early stage and we recovered our client’s costs.