Protecting Confidential Business Information
9th February, 2021
Do you know what action you can take if your business’ confidential information is used unlawfully? The law in this area is well-established but is also complex and court decisions can be highly fact specific.
The High Court has re-affirmed the established legal principles in the recent cases of Quilter Private Client Advisers Limited v Falconer and Continuum (Financial Services) LLP [2020] EWHC 3294 (QB) and PJSC Uralkali v Geoffrey Rowley, Jason Baker (As Former Administrators of Force India Formula One Team Limited (In Liquidation)) [2020] EWHC 3442 (Ch).
Coco v A.N. Clark (Engineers) Limited [1968] F.S.R. 415 is the leading case relating to confidential information. Here it was held that the three elements essential to a claim for breach of confidence are; (a) that the information was of a confidential nature, (b) that it was communicated in circumstances importing an obligation of confidence and (c) that there was an unauthorised use of the information.
Quilter related to the departure of a financial planner from a financial advisory business. A key element of the dispute related to allegedly confidential information, including documents relating to client investment portfolios, which was downloaded by the Defendant onto a personal laptop around the time she had decided to leave the Claimant’s employment. The Court applied the Coco v A.N. Clark factors and concluded that the Defendant had breached her duty of confidence to her former employer.
Uralkali was a dispute arising from the administration of the limited company behind the Force India Formula One racing team. The administrators were looking to quickly complete a successful disposal, either by way of a rescue or a purchase of the business and assets. One interested party, Uralkali, told Mr Rowley, an administrator, that they were interested in exploring a rescue via a share purchase. Mr Rowley told Mr Lawrence Stroll, another interested party and the ultimate purchaser, that other parties were exploring a rescue by way of a share purchase. Uralkali brought a claim alleging that Mr Rowley had breached their confidence by saying this to Mr Stroll. The Court applied the Coco v A.N. Clark factors and decided that the general information that other parties were considering a rescue did not have the necessary quality of confidence.
The Courts are continuing to apply the factors established in Coco v A.N. Clark and this enables businesses to analyse potential breaches of their confidential information and consider the prospects of success of any claim. However, whilst the test for a breach of confidence appears to be well established, the outcome of a Judge’s application of the test is difficult to predict. As such, the best way to achieve a level of certainty is to ensure that restrictions on the use of confidential information are dealt with contractually before confidential information is disclosed.
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Nick ClarkeDispute Resolution and Insolvency Senior Partner and Head of Dispute Resolution and Insolvency |
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