Confidential Subject Matter: Examples from the UK

1. Confidential Subject Matter: Examples from the UK Lionel Bently University of Cambridge

2. Aim of Presentation • In the light of absence of international or regional harmonization of protection of trade secrecy • To present UK approach – shared also in most Common Law countries that once were colonies • To see what guidance other legal systems can offer (especially in light of changes) • To consider prospects for harmonized standards

3. General Approach to Subject Matter in ‘Trade Secrecy’ Regimes • Business or Commercial Information • Whatever Form • As Long as Secret • Valuable • In relation to which ‘owner’ takes reasonable steps to maintain secrecy

4. English Approach • Action for Breach of Confidence • Jurisdictional origins confused • 3 components: ‘necessary quality of confidence’ obligation of confidentiality detriment

5. Necessary Quality of Confidence • Type of information pretty much unlimited private information government information commercial information • ‘Trade Secret’ not a special concept (with one exception) • But, since Human Rights Act 1998 English courts modifying action to protect ‘private life’ as understood in Strasbourg jurisprudence on Art 8 ECHR • Dividing? Time to Divide?

6. Commercial Secrets • Information which is inherently secret (customer lists , suppliers, pricing, profit-margins etc) But not everything at workplace is confidential: Tillery Valley v. Channel 4 [2004] EWHC 1075 • Creations: products, processes, recipes etc

7. Novelty and Originality • Coco v. Clark [1968] FSR 415: ‘there must be some product of the human brain which suffices to confer a confidential nature upon the information’ (claim failed) • Fraser v. Thames TV [1984] QB 44 ‘Unquestionably, of course, the idea must have some significant element of originality not already in the realm of public knowledge.’ • De Maudsley v. Palumbo [1996] FSR 447 (idea of all-night club ‘old’; ideas that large ‘lacked novelty’) • Cray v. Deltech [2003] EWHC 728 ‘The recipes… although not published to the world in full, are, to those skilled in the art of resin manufacture and design, very ordinary.’ (para.38)…A non-obviousness test? (also para. 54)

8. Are Basic Ideas Protectable? • Wheatley v Bell [1984] FSR 16 (SCt NSW) (business plan for advertising local businesses on ‘teledexes’ protected) • De Maudsley v Palumbo [1996] FSR 447: ‘Before the status of confidential information can be achieved by a concept or an idea it is necessary to have gone far beyond identifying a desirable goal. A considerable degree of particularity in a definite product needs to be shown to be the result of the mental process in question. That does not of course exclude simplicity.’ • Intel-sec[1999] 4 All ER 11, 31 (suggestion that flame detection could be developed was too vague to be capable of protection as a trade secret).

9. Sliding-scale Protection • Ideas and products which are of limited originality get reduced level of protection ‘springboard doctrine’ Cray Valley v. Deltech [2003] EWHC 728 para. 48 (if confidential, low level: a few days or a couple of weeks) • The defendant’s development of an idea impacts on remedies

10. Are Precautions Required? • In context of employment case-law, a factor in deciding whether information reaches higher standard of being a trade secret • Cray Valley [2003] Jacob J referred to US UTSA, and rejected Cray’s claim because it had allowed recipes for resins to be left at plant ‘even though anything of value, down to the paper cups, was taken.’ • No further development of criteria for determining ‘reasonable efforts’

11. Losing Confidence (I) • Mustad v Dosen (1928, HL) [1963] RPC 41 Dosen had been involved in invention of machine for making fish-hooks. M, assignee of confidentiality obligation, sought injunction against Dosen and his new employer. M patented the machine in UK. The CA and HL refused injunctive relief. Atkin LJ: ‘that which before might have been a trade secret, was a trade secret no longer’ Lord Buckmaster: ‘the secret as a secret had ceased to exist.’

12. Losing Confidence (II) • How widely must it be disclosed to fall into the ‘public domain’? HRH Prince of Wales v. Associated Newspapers [2006] ECDR 244(distribution of journal to 75) • Is accessibility sufficient? Franchi v Franchi [1967] RPC 149 (Belgian patent case) • Where? • How precisely must it be disclosed?

13. Reverse Engineering (I) Gurry, Breach of Confidence (1984) p. 77: ‘It seems settled that confidentiality is not destroyed by the mere marketing of a product, even if the product enables a member of the public to analyse it and so acquire a knowledge of its secrets. It is a question of fact in each case whether the marketing does make the secret generally available..[T]he secret will not be destroyed if an outsider would…have to take special labours in respect of the product in order to discover its secret.’

14. Reverse Engineering (II) Mars v. Teknowledge [2000] FSR 138 (owner entitled to dismantle, so encrypted information in claimant’s EPROM for coin machine was not confidential) Cray Valley [2003] EWHC 728 (clearly assumed to be legitimate eg para 54)

15. The Springboard Doctrine (I) • Terrapin v Builders Supply [1967] RPC 375 ‘a person who has obtained information in confidence is not allowed to use it as a springboard…and a springboard it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public.’ • Special restriction on confidant • An exception to Mustad v. Dosen?

16. Springboard doctrine (II) Or reflects idea of relative secrecy: Facts of Terrapin: publication was by marketing of building units and brochures. ‘The brochures are certainly not equivalent to the publication of the plans, specifications, other technical information and know-how….Therefore, the possessor of the confidential information…has a long start…’ Jacob J.’s example in Mars v. Teknowledge [2000]

17. Sprinboard Doctrine (III) • Potters Ballotini v. Weston-Baker [1977] RPC 202, 206: Does Not Last Forever • Calculating Limited Injunctive Relief – Bullivant v. Ellis [1987] FSR 172 • Or Damages? Coco v Clark [1968]

18. Springboard (IV): the latest doubts EPI Environmental Technologies Inc v. Symphony Plastic Technologies [2006] EWCA Civ, Buxton LJ “I for my part find it by no means straightforward to reconcile on the one hand the apparently blanket rule that any claim of breach of confidence must fail if the material in question is in the public domain … and on the other hand the "springboard" cases, that seem to inhibit use of even public domain material if it is conveyed in circumstances that aspire to confidence …”

19. The Breaching Confidant (I) • Does Mustad v. Dosen (1928) [1963] RPC 41 apply irrespective of how info came into public domain? • Cranleigh v Bryant[1965] 1 W.L.R. 1293– Mustad distinguished by Roskill J. as cases where confider published • Speed Seal v Paddington[1985] 1 W.L.R. 1327 adopted Cranleigh, and held a fortiori confidentiality was not lost when confidant published

20. The Breaching Confidant (II) • AG v Guardian (No 2) – Lord Goff questioning Cranleigh/Speed Seal “so far as concerns publication by the confidant himself, the reasoning in the Speed Seal case cannot, to my mind, be supported” • Environmental Technologies Inc v. Symphony Plastic Technologies [2006] EWCA Civ Jacob LJ, para. 49: “the question of whether or not and if so how far the law of confidential information can cover material in the public domain is difficult legally. It may well be fact sensitive -- for instance it may make a difference if it is the claimant himself who puts the information into the public domain ...”