LAW 536

Course Learning Outcomes

• Appreciate and understand the rationale for the law of breach of confidence
• Apply the principles involved in determining obligations, and ingredients for confidential
information
• Appreciate and understand categories of information that can be protected and the
meaning of confidentiality

Week 9

Breach of Confidence

INTRODUCTION TO CONFIDENTIAL INFORMATION, NATURE OF

OBLIGATION

Breach of confidence refers to circumstances where the information that has been
released in confidence to a party, has been used without permission, either for
himself (the recipient of the information in confidence) or by way of disclosure to third
parties.

Breach of confidence, as an action that could be pursued is important for intellectual

property in a various range of instances. Generally, when a subject matter involves
on-going discussion or negotiation, as well as work being in progress or being carried
out continuously, protection of the information is important and as such it needs to be
handled confidentially. This may be at the stage where research and development is
being carried out, as well as when a prototype is available, or when negotiation is
being carried out to secure grants prior to commercialization of a work or post
commercialization. In sum, the importance can be seen as not limited to only a
specific set of circumstances

The case Coco v A.N. Clark (Engineers) Ltd: “The equitable jurisdiction in cases of
breach of confidence is ancient: confidence is the cousin of trust. The Statute of
Uses, 1535, is framed in terms of “use, confidence or trust;” and a couplet, attributed
to Sir Thomas Moore Lord Chancellor, avers that
“Three things are to be helpt [held up] in Conscience;
Fraud, Accident and things of Confidence.”
(Megarry J)

Historically, an action for breach of confidence is an equitable remedy. Over the

years, it has developed to involve actions to also be taken based on torts.

In the case of Abernethy v Hutchinson, an action for breach of confidence was

successful to stop the unauthorized reproduction of lectures that were delivered by
an eminent surgeon at the St. Bartholomews Hospital to a limited number of
students.

CONTRACTUAL OBLIGATION – EXPRESS OR IMPLIED AGREEMENT, EQUITABLE

OBLIGATION

In situations involving the contract of employment, the courts may imply certain
limited obligations on the use of information by a former employee, involving the
information that has been acquired during the said employee’s employment.
 In the case of Faccenda Chicken v. Fowler, a claimant who sells fresh chickens
from refrigerated vans attempted to prevent a former employee from participating in a
competing venture.
The contract of employment for the said former employee contained no restrictive
covenant. In view of this, the COA decided based on the implied post termination
obligations. In order to decide whether an information amounts to trade secret, the
court should consider 4 factors:
(1) The nature of employment
How close the employee is to the employer’s trading activities. This is because the
information that was only made available to trusted employee is more likely to
constitute a trade secret than information disclosed to the shop-floor workers.
(2) The nature of information
To be capable of protection, the information must be defined with some degree of
precision.
(3) Whether the employer impressed on the employee the confidentiality of the
information.
If the information was specifically designated as a trade secret by the employer, it is
more likely to be treated as such by courts.
(4) Whether the information can easily be isolated from other information.
Whether the confidential information can easily be separated from the knowledge,
expertise and skill which the employee is free to use or disclose.

THE INGREDIENTS FOR BREACH OF CONFIDENCE, THE REQUIREMENT FOR THE

INFORMATION TO BE CONFIDENTIAL

The case of Coco v A.N. Clark (Engineers) Ltd established the requirements for an
information to be regarded as confidential. These requirements are:
● The information itself has the necessary quality of confidence
● That information must have imparted in circumstances importing an obligation
of confidence; and
● There must be an unauthorized use of the information to the detriment of the
party communicating it (damage suffered)

In the case of Saltman Engineering Ltd v Campbell Engineering, an engineering

drawing was handed to the defendant to make leather punches. It was held that if the
defendant is proven to have used confidential information that was obtained directly
or indirectly from the plaintiff without consent, either express or implied, he will be
guilty of an infringement of the plaintiff’s rights.

CATEGORIES OF INFORMATION THAT CAN BE PROTECTED, THE MEANING OF

CONFIDENTIALITY

There are a number of categories of information, that the law recognised as having the
element of confidence:

1) Trade secret
In the case of Coco v A.N. Clark (Engineers) Ltd, it involved the ‘Coco’ moped that has
special engine parts. The claimant had negotiations with the defendants in anticipation of
manufacturing the moped. The negotiations were unsuccessful. Defendants later
manufactured their own moped, that have piston and carburetor similar to the ‘Coco’ moped.

In the case of Saltman Engineering v Campbell Engineering, the designs of drawings was
the subject of the action for breach of confidence.
2) Employers secret
See the case of Faccenda Chicken v Fowler

The nature of the employee’s obligation, has been described in the case of Printers &
Finishers v Holloway: “the only appropriate test will be if the information in question can be
regarded as a separate part of the employee stock of knowledge which a man of ordinary
intelligence would recognize to be the property of his employer and not his own to do as he
likes with” (Cross J)

3) Contractual matters
Obligation of confidence can be construed as implied obligation as well as an express
obligation. The basis of obligation has been discussed in the case of Saltman Engineering
Co. Ltd & Ors v. Campbell Engineering Co. Ltd, where the obligation can be construed as
implied, if the contract is silent regarding an obligation of confidence. Lord Green: - “…It
seems to me that the existence of a confidential obligation in relation to these drawings…is
abundantly proved…If a defendant is proved to have used confidential information directly or
indirectly obtained from a plaintiff, without the consent, express or implied of the plaintiff, he
will be guilty of an infringement of plaintiff’s right…”

4) Governmental secret
“Crossman Diaries” case – Attorney-General v Jonathan Cape Ltd: the case involved
cabinet proceedings.

“The Spycatcher” case – Attorney General for the United Kingdom v Heinemman
Publishers Australia: involves the disclosure of government secret in spying procedure.
Brennan J stated “[a court] should refuse to enforce an obligation of confidence in an action
brought for the purpose of protecting the intelligence secrets and confidential political
information of a foreign government.”
Two bases where the Court may refuse to enforce obligations of confidence:
1) Eventhough an obligation of confidence was created by the law of the foreign
government, it would be against the public policy of the forum state [*the state where the
legal action is taking place] to enforce the obligation
2) The Court denied “the capacity of the foreign law to govern the transaction which gives
rise to the claimed obligation”

Commonwealth of Australia v John Fairfax & Sons and Others: the case involved
government document regarding the issue of East Timor. Mason J stated that a
governmental plaintiff is required to prove that the intended disclosure of the information
would be detrimental to the public, in order to fulfill the elements of an action for breach of
confidence. “[T]he court will determine the government’s claim to confidentiality by reference
to the public interest. Unless disclosure is likely to injure the public interest, it will not be
protected.”

5) Marital secrets
Argyll v Argyll: the case involved the intention of the husband to publish intimate details of
the relationship between him and his wife in a national newspaper. It was held by the court
that “the communication between husband and wife during marriage were protected against
breach of confidence.”

Prince Albert v Strange: the case involved Queen Victoria’s etchings. Lord Cottenham held
that “[the] case by no means depends solely upon the question of property, for a breach of
trust, confidence or contract, would of itself entitle the plaintiff to an injunction.”

6) Literary and artistic secret

Fraser v Thames TV: an idea for television series was communicated to the defendants.
Thames promised not to use the idea without allowing the plaintiffs to act in the series.
Defendants developed the idea into series, and the plaintiffs were not involved. Action
against the defendants for breach of confidence was successful.

7) Personal secret

Dear All, this material is prepared for your reference. Dissemination or sharing is not allowed.
My hope is that it could assist you in your learning.

Best wishes,