James is a Partner and Head of the Dispute Resolution team and primarily handles commercial…View Profile View all
The High Court has just given a ruling in a case of misuse of confidential information. The case is of particular interest as it shows how information can still have the necessary quality of confidence when it could be obtained by reverse engineering if that would involve a significant amount of work or “special labours” on the part of the
The case involved a manufacturer and supplier of edible oils which had supplied confidential information to a customer for safety and regulatory purposes. The customer decided that it wanted to produce its own edible oils and made use of the information in developing its own process. An interim injunction had been granted at an early stage in the case and the judge in the final hearing in the High Court confirmed that injunction and extended it until 30 June 2017. In coming to the Court’s decision, the judge said that with hindsight it might be easy to understand the logic of how the product had been devised. However, the claimant’s information could not be considered obvious or in the public domain, or to be capable of being reverse engineered without great effort or to be of second nature to a developer.
The judge said that the defendant owed an obligation of confidence to the claimant because the information had been supplied for safety and regulatory purposes. A reasonable person ought to have realised that was the case and the information should not have been used by the defendant in its own product development. Not only had the defendant used it to develop the product, it had passed on the information to third parties to assist in the development of the competing product and that had nothing to do with the reason for which the information had been given to the defendant.
The judge was not persuaded by the claimant to grant a permanent injunction. The defendant had argued that such an injunction would put the claimant in a better position than if there had been no misuse of its information and that could not be right. The judge agreed; finding that the information had limited confidentiality. In time, the defendant could have reproduced the claimant’s oils using information in the public domain, without the confidential information; the defendant was aware of what the claimant’s products looked like and tasted and knew the ingredients from the information on their labels. The judge’s view was that given some time, the defendant could have achieved the result that it wanted without the misuse of the confidential information and therefore the length of the injunction should reflect how much of a head-start the defendant had obtained through its misuse of confidential information. The defendant was denied use of the product for about eight months