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Published online by Cambridge University Press: 02 January 2018
There has been considerable litigation concerning the law of confidence in recent years. This includes claims brought by private individuals to restrain the disclosure of medical information and personal secrets, actions by employers against employees to restrain unauthorised use of trade secrets and actions by the government in respect of state secrets. Unfortunately, although the existence of a jurisdiction to restrain breaches of confidence has long been established, there still remains some uncertainty as to the conceptual basis of the action. The conceptual uncertainty has not, however, prevented the courts from recognising the existence of the jurisdiction and establishing the basic criterion of the action.
1. See X v Y [1988] 2 All ER 648; W v Egdell [1990] 2 WLR 471.
2. See Stephens v Avery [1988] 2 All ER 477.
3. See Faccenda Chicken v Fowler[1987] Ch 117 and Balston Ltd v Headline Filters [1987] FSR 330.
4. See Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109.
5. The debate over the nature of the action is well known and longstanding. See generally; Jones, , ‘Restitution of Benefits Obtained in Breach of Another's Confidence’ (1970) 86 LQR 463 Google Scholar, North, , ‘Breach of Confidence: Is There a New Tort’ [1972–3] JSPTL 149 Google Scholar, Ricketson, , ‘Confidential Information - A New Proprietary Interest?’ Vol 11 Melb Univ LR 223 Google Scholar and Gurry, , Breach of confidence, 1984 at pp 25–61 Google Scholar. Contract aside, the theories have included property, tort, fiduciary obligations, trust and equitable principles of good faith. Whilst there is still some lingering uncertainty over the basis, (see esp Lord Goff in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 281) it would be fair to state that the majority view is that the action is founded on equitable notions of good faith. It follows that it is better to regard the cause of action as the law of confidential obligations rather than the law of confidential information simpliciter.
6. (1851) [9] Hare 241 68 ER 492.
7. No 58.
8. See Working Paper No 58 at para 40.
9. For a description of some of the devices now available to aid in espionage, see Report of the Committee on Privacy, Cmnd 5012 at chapters 18 and 19. See also, Hodkinson and Wasik, Industrial Espionage, Protection and Remedies, 1986.
10. See Malone v Commissioner of Police of the Metropolis [1979] 1 Ch 345 (telephone tapping) and Kaye v Robertson [1991] FSR 62 (flash photography and interviews) where the courts denied the existence of a legal right of privacy.
11. In private law actions confidential information can, largely for convenience, be categorised as follows: trade secrets, personal confidences, artistic and literary confidences. Gurry notes that the boundaries between the categories are not always easy to draw. He further points out that whilst the fundamental attribute of confidentiality is in each case inaccessiblity, this attribute has to be determined in reference to the different policy considerations that affect each category. Gurry, Breach of Confidence, 1984 at 89.
12. See generally, Coco v A. N. Clark (Engineers) Ltd [1969] RPC 41.
13. [1969] RPC 41 at 48. Later in his judgment at 50 Megarry also pressed into the service of equity, the officious bystander of contract law. Whilst the source of the obligation of confidence is the equitable notion of good faith and conscience, the matter is complicated by the fact that the courts have not hesitated to borrow famous legal personalities and principles from other branches. The reasonable man of tort law, the officious bystander of contract law, the bona fide purchaser for value without notice of property law have all surfaced to a greater or lesser extent in actions for breach of confidence. Accordingly, the action may be best classified as sui generis. See Gurry, Breach of Confidence, 1984 at chapter III.
14. See Talbot v General Television Corpn Pty Ltd [1981] FSR 1; Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109. There is still uncertainty over the degree of knowledge necessary for the imposition of an obligation of confidence on a third party. See Union Carbide Corpn v Naturin Ltd [1987] FSR 538.
15. [1979] 1 Ch 345.
16. Equitable obligations are not always dependent upon consensual relationships. A stranger to a trust who is found in possession of trust property will be compelled to hold the same on a constructive trust for the beneficiaries. See Pettit, , Equity and the Law of Trusts, 1989 at p 55 Google Scholar.
17. (1984) 156 CLR 414 at 438 See also Smith Kline and French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health 20 IPR 643.
18. [1990] 1 AC 109 at 281.
19. The case was then brought before the European Court of Human Rights which ruled that the English law infringed the right of privacy in the Convention. See Times, 3/8/84; Pub ECHR, Series A No 82. Telephone tapping is now governed by the Interception of Communications Act 1985.
90. [1979] 1 Ch 345 at 357.
91. Ibid, at 376.
22. It is also reminiscent of contributory negligence. The latter is not however a defence to liability but a mechanism for reducing the quantum of damages payable in tort actions.
23. [1984] 1 WLR 892.
24. Ibid, at 900.
25. Sometimes the licensee of a product may have received it under a term that no attempt is to be made to reverse engineer the secrets (black box agreements). In such a situation, reverse engineering will be breach of the licence arrangements and it is submitted will also result in equity imposing an obligation of confidence in respects of the secrets so discovered. See K.S. Paul (Printing Machinery) Ltd v Southern Instruments (Communications) Ltd[1964] RPC 118 and Gurry, Breach of Confidence, 1984 at 140. Similarly where confidential information contained in the source code of a computer program is discovered by decompilation, an obligation of confidentiality might arise if the decompilation process involves the production of infringing (copyright) copies.
26. See Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 272 per Lord Griffiths and also Lord Goff at 281. Query whether a third party who induces breach of confidence is liable in tort See Clerk and Lindsell, Torts, 1989, at 15–06 and Gurry, Breach of Confidence, 1984, at p 308. In the case of equitable obligations of confidentiality it may be that such a tort is unnecessary since equity will impose an obligation of confidence on the defendant. Similarly, it has been held that a person who induces a breach of trust is liable as constructive trustee. In Metall und Rohstoff v Donaldson Lufkin Inc [1988] 3 All ER 116, Gatehouse J at 127 poignantly noted that ‘Nothing is gained by inventing an unnecessary tort’. The decision was affirmed at [1989] 3 All ER 14. Where the obligation of confidence is contractual, there may be considerable grounds for overlap between the action in tort and in equity. Nevertheless there may be certain advantages to suing in tort for damages for the wrongful inducement See Gurry, op cit, at 292–296.
27. See ProfessorJones, Gareth, ‘Restitution of Benefits Obtained in Breach of Another's Confidence’ (1970) 86 LQR 463 Google Scholar, Gurry, Breach of Confidence, 1984, Ricketson, The Law of Intellectual Property, 1984, at 829.
28. 431 Federal Reporter, 2d Series 1012 (Court of Appeal, Fifth Circuit).
29. Hyde Corpn v Huffines 314 SW 2d 773.
30. Ibid, at 1015.
31. Ibid, at 1016.
32. See Bernstein v Skyviews & General Ltd [1978] QB 479 discussed below. Note also the remark of Lord Camden in Entick v Carrington (1765) 19 St Tr 1029 at 1066 that by the laws of England, the eye cannot be guilty of a trespass. Contrast the taking and carrying away of a person's papers. Will the law today be prepared to hold that the position is dillerent where the eye is aided by modern technology to see into places beyond the limits of ordinary sight? In some circumstances the taking of photographs might constitute copyright infringement.
33. Contrast the position in the United States which has long recognised a right to be let alone, a right of solitude and seclusion. This right has been held to be broad enough to cover eavesdropping upon private conversations by means of wiretapping. It also might cover peering into the windows of a home. The editors of Prosser and Keeton, Torts, 5th edn note at p 855 that a key issue in privacy actions is whether the intrusion is offensive or objectionable to a reasonable person and that the courts will pay particularly close regard to the means used to get access to private information. If they are abnormal, liability will usually follow. The approach taken in respect of improper takings of confidential information seems to be close to that taken for intrusion into privacy.
34. (1732) cited (1769) 4 Burr, 2303 at 2330.
35. Cmnd 5012 at 632.
36. (1769) 4 Burr 2303 at 2378.
37. Cmnd 8388 at 4.7.
38. [1913] 2 Ch 469 at 475.
39. [1982] Ch 431.
40. [1982] Ch 431 at 438.
41. (1889) 23 QBD 598, and see also Cadbury Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429 and Swedac Ltd v Magnet & Southern plc [1989] FSR 243. See also Dworkin, ‘Unfair Competition: Is the Common Law Developing a New Tort?’ EIPR, September 1979, 241–247. Professor Dworkin notes at 241 that, ‘The days are long past when it was generally agreed that the most effective way to cope with most problems was to give the courts wide jurisdiction. The very term “unfair competition” is paradoxical: law and business morality overlap and the courts must apply their own standards to determine which unethical and unfair activities constitute unlawful competition and which activities, though unethical (and in that non-legal sense unfair), must remain legally permissible. There are those who would argue that such tasks should not be undertaken lightly by the courts.’.
42. [1979] 1 Ch 344 at 376.
43. The decision is referred to in a short article in The Times, 12 February 1988.
44. If the plaintiff wishes to protect a trade secret from unauthorised takings which do not involve any illegality of means, he should take whatever reasonable (and lawful) self-help means as are necessary and, where possible, to seek patent protection.
45. [1978] Qd R 72.
46. Ibid, at 78.
47. Ibid, at 80.
48. Malone v Metropolitan Police Commissioner [1979] 1 Ch 344 at 373.
49. This is a factor stressed in the Dupont case. Shades of this can also be found in the decision in Faccenda Chicken v Fowler [1987] Ch 117 in that the Court of Appeal stated that warnings of confidentiality were relevant in determining whether the information was sufficiently confidential to warrant protection in the hands of ex-employees. An alternative approach is to treat ‘carelessness’ of the plaintiff as a factor in tailoring relief, see below.
50. Query the position where as a result of an illegal wire tap on X's telephone line, confidential information belonging to Y is obtained. If X was the target of the illegal means and the acquisition of the secrets of Y fortuitous, does Y have any rights against the defendant? It is possible that since the fundamental basis of equity's intervention is good faith and conscience, the use of the illegal wire tap should be sufficient to result in the imposition of the obligation of confidence. The wire tap is causally relevant and there is no doubt that the defendant is aware that Y does not intend him to receive the information.
51. [1989] 2 All ER 65, CA, [1991] 3 All ER 303, HL.
54. [1989] 2 All ER 65 at 69.
53. Winfield & Jolowicz, op cit, at 524.
54. In the Lonrho case, the defendants argued that the tort against the Secretary of State was incomplete as there was no evidence of any damage suffered by the Secretary of State as a result of the fraudulent misrepresentations. The Court of Appeal rejected this argument holding that apart from damage to the plaintiff it was unnecessary to prove that the third party suffered loss See [1989] 2 All ER 65 at 69 per Dillon LJ and Ralph Gibson LJ at 72. Whilst these decisions on illegality in the context of the economic torts are not binding on the equitable action in respect of surreptitious takings of confidential information, they are useful indicators of the issues and the approaches likely to be taken.
55. [1982] AC 173.
56. Winfield & Jolowicz on Tort, 1989 at 524. The action for conspiracy failed as there was no intent on the part of the defendants to cause loss to the plaintiff.
57. Note that Winfield & Jolowicz, op cit, argue at 525 that in unlawful means interference, it might still be open to a court to find liability where a defendant committed a statutory offence as the vehicle for the deliberate infliction of harm upon the plaintiff.
58. In the context of unlawful means interference see Chapman v Honig [1963] 2 QB 502and Acrow (Automation) Ltd v Rex Chainbelt Inc [1971] 1 WLR 1676.
59. See generally, Gurry, , Breach of Confidence, 1984 at pp 116–119 Google Scholar. See also Faccenda Chicken v Fowler [1987] Ch 117 and Thomas Marshall (Exporters) Ltd v Guinle [1978] 3 WLR 116 and note also Megarry J in Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41 who states at 47 that, ‘However secret and confidential the information, there can be no binding obligation of confidence if that information is blurted out in public or is communicated in other circumstances which negative any duty of holding it confidential.’ A similar position is also taken in Australia, see Dean, , The Law of Trade Secrets, 1990, at pp 120–121 Google Scholar.
60. See El Dupont deNemours & Co v Christopher 431 Federal Reporter, 2d Series 1012 at 1015.
61. [1978] Qd R 72.
62. Ibid, at 80.
63. Note that the Law Commission on Breach of Confidence, Cmnd 8388 has suggested, inter alia, at 6.46 that there should be a new statutory action available in cases where confidential information is acquired by the use of a device not specifically adapted for surreptitious surveillance provided that the person from whom the information is obtained was not or ought not reasonably to have been aware of the use of the device and ought not reasonably to have taken precautions to prevent the information being so acquired. In other situations where confidential information is improperly acquired, eg by the unauthorised taking, handling or interfering with anything containing the information, no recommendation was made to subject the imposition of an obligation of confidence to measures taken to safeguard against intrusion. The recommendations of the Law Commission are summarised below.
64. Ibid, at para 498 and chapter 19.
65. Ibid, chapter 21.
66. Cmnd, 8388, 1982.
67. Scot Law Com No 90.
68. Note however that the Computer Misuse Act 1990 has created a number of offences to deal with ‘hacking’ or unauthorised access to programs or data held by a computer. The ‘hacking’ offence in s 1 is founded on the actuss reus of causing a computer to perform any function with intent to secure access to any program or data held in any computer. Wasik notes that merely to read confidential computer output, data displayed on a screen and computer eavesdropping are not within the scope of the offence. See Wasik, , ‘The Computer Misuse Act 1990’ [1990] Crim LR 767 Google Scholar. The Act does not deal with civil liability. It is submitted that if the defendant commits an offence under the Computer Misuse Act, that offence will be an illegal act on which equity could intervene to impose an obligation of confidence. For statutory control of data bases, see the Data Protection Act 1984.
69. See generally, Dworkin, ‘Unfair Competition: Is the Common Law Developing a new Tort?’ EIPR, September 1979 at 241. Despite the passage of some 12 years, the question of whether there is a single unitary concept of unfair competition remains relevant and not much closer to final resolution.
70. Crofter Hand-Woven Harris Tweed Co Ltd v Veitch [1942] AC 435 at 445.
71. Winfield & Jolowicz, Tort, 1989 at 515.
72. For a general discussion of conspiracy to injure, see Winfield & Jolowicz, Tort, 1989 at 514–518 and Clerk & Lindsell, Torts, 1989, at 15–24. See also Jarman & Platt Ltd v Barget Ltd [1977] FSR 260 for a case where the action for conspiracy to injure in regards trade secrets failed because only one defendant was actuated by a predominant purpose to injure; the plaintiff was unable to prove that the other defendants had known of and countenanced that purpose.
73. [1982] AC 173. See above at n 55.
74. [1989] 3 All ER 14.
75. [1991] 3 All ER 303.
76. For the question of what constitutes unlawful means, see above. For a general discussion of conspiracy in the context of trade secrets see Gurry, Breach of Confidence, 1984 at 310–317. Gurry notes at p 314 that if conspiracy is proven, the scope of the protection should be commensurate with restraining the implementation of the object of the conspiracy. Relief could include mandatory orders for the return of converted documents and prohibitory injunctions to restrain the use of confidential information which they contained. He further notes that the common law offence of conspiracy to defraud is broad enough to cover agreements to obtain confidential information by deception. DPP v Withers [1974] 3 All ER 984. He concludes at 316 that, ‘Since an agreement to obtain confidential information by deception from public authorities is a criminal conspiracy, it follows that it will be a civil conspiracy to agree to effect this purpose, and, if damage results from the agreement to third parties, the third parties will have an action in tort.’ See also, Dean, The Law of Trade Secrets, 1990 at 357–367.
77. British Motor Trade Association v Salvadori [1949] Ch 556.
78. See Lonrho plc v Fayed [1989] 2 All ER 65.
79. See for example, Stratford (JT) & Son Ltd v Lindley [1965] AC 269 where Lord Reid noted that the activities of the defendant interfered not only with existing contracts, but also prevented the appellants from doing any new business with barge hirers.
80. In Lonrho plc v Fayed [1989] 2 All ER 65 the Court of Appeal on the back of a concession of the defendants accepted the existence of the tort although they were quick to point out that it was a new tort whose details had yet to be fully explored.
81. See Lord Diplock in Merkur Island Shipping v Laughton [1983] 2 AC 570 at 609–610 and Winfield & Jolowicz, Tort, 1989 at 522.
82. [1989] 2 All ER 65 at 69 and Woolf LJ at 73.
83. Lonrho plc v Fayed [1989] 2 All ER 65 at 73. Note the distinction between intention and motive or purpose.
84. Winfield and Jolowicz, Tort, 1989 at 522 and Dean, The Law of Trade Secrets, 1990 at 368.
85. [1984] 1 NZLR 354 at 360.
86. See Clerk & Lindsell, Torts 1989 at 15–19 for a fuller discussion of ‘intention’.
87. Lonrho plc v Fayed [1989] 2 All ER 65 at 69 per Dillon LJ citing with approval Oliver LJ in RCA Corpn v Pollard [1982] 3 All ER 771. See also Dworkin, , ‘Intentionally Causing Economic Loss—Beaudesert Shire Council v Smith Revisited’ (1974) Vol 1, Monash University Law Review, 4–33 Google Scholar.
88. Ibid, at 69.
89. Lonrho plc v Fayed [1989] 2 All ER 65 at 72 per Ralph Gibson LJ.
90. [1942] AC 435.
91. [1988] 3 All ER 464 at 472. Pill J also held that even if the right existed, it was not infringed by a competitor making false statements about himself. Further, he was unable to accept that there was a sufficient nexus between the defendants' alleged misrepresentation and the damage to the plaintiff's business.
92. See generally, Wacks, , ‘The Poverty of Privacy’ 96 LQR 73 Google Scholar. Note that Lord Denning has argued strongly in favour of the existence of a tort to protect privacy. See Denning, What Next in the Law, 1982 at 224.
93. [1979] 1 Ch 345.
94. [1978] I QB 479.
95. Ibid, at 438. In some circumstances the taking of a photograph might be copyright infringement.
96. Ibid, at 489.
97. [1991] FSR 62.
98. See Winfield & Jolowicz, Tort 1989 at 54.
99. Ibid. at 66.
100. See the Younger report on Privacy, Cmnd 5012 at 153.
101. See generally, Hodkinson and Wasik, Industrial Espionage, Protection and Remedies, 1986, Dean, The Law of Trade Secrets, 1990 at 95–97, Gurry, Breach of Confidence, 1984 at 162–169, Jones, , ‘Restitution of Benefits Obtained in Breach of Another's Confidence’ 86 LQR 463 Google Scholar esp at 482.
* I am grateful to Professor G. Dworkin and Dr F. M. B. Reynolds for their helpful comments on earlier drafts of this article. They do not necessarily agree with the views expressed in the article.