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| F, Jouffroy Premier Secret confié à Vénus Photographer Christophe Moustier Licnece Set out in Wikimedia Commons |
Inventors often need to discuss their inventions with others such as possible collaborators, product design consultants, business angels, manufacturers or potential licensees. When they do so, they are often advised to obtain the signature of the person to whom they disclose the invention ("the confidante") on a confidentiality or non-disclosure agreement ("NDA"). Such agreements require the confidante to use the information only for a specified purpose and either not to disclose the information at all or to disclose it only to designated personnel.
"In my judgment, three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene, M.R. in the Saltman case on page 215, must 'have the necessary quality of confidence about it.' Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it. I must briefly examine each of these requirements in turn."
Probably the most frequently found circumstance in which the imparting of information gives rise to an obligation of confidence is when the person confiding the information ("the confider") and the confidante enter a confidentiality agreement. It is not, however, the only circumstance. Another instance is where a client seeks advice from a solicitor or patent attorney. No NDA is required because it is obvious that the client is disclosing, and the solicitor or attorney is holding, such information in confidence.
In Coco, the judge said that the information must have the necessary quality of confidence about it. That means that the information must have some value in that its unauthorized use or disclosure must either benefit the confidante or harm the consider. The information must be secret or at least not generally known. It could be sensitive technical or commercial information or personal information such as the state of a celebrity's marriage. A third requirement is that the confider must take reasonable steps to prevent the information's disclosure or misuse perhaps by keeping the document containing the information under lock and key or in a restricted file on a computer.
Obligations of confidence are usually enforced by proceedings in the civil courts. In There's more to the Law of Confidence than NDAs 14 Oct 2019 I wrote:
"If, as sometimes, happens I am instructed to resist an application for an interim injunction where the applicant relies on an NDA I have a field day. First, I ask whether the information was ever confidential in the first place. Sometimes it is something that has been common knowledge in the industry since Adam was a boy. Other times there has been no attempt to keep the information secret. I was once negotiating terms of a licence which negotiations were taking place in serviced offices when I found the other side's supposedly confidential document in the publicly accessible ladies' loo. There is often room to dispute whether the confidentiality agreement was ever intended to apply to the information in question. One way or another, a halfway competent intellectual property specialist can drive a coach and horses through a bog-standard standalone non-disclosure agreement."
It is essential to specify in the NDA the information that is confidential, the occasion on which it is communicated, the documentation or media in which it is held, the persons to whom it can be disclosed, the purpose of the disclosure, the use to which the information can be put, the deadline for the return of the documents, media and any copies and so on.
In the above article, I suggested:"If you want to rely on the law of confidence, print a form in duplicate on no carbon required paper with boxes for:Every single confidential conversation and the delivery of every single document should be recorded and logged separately. If any of the conditions is breached, the confider should call the confidante at once. If it is still not put right the confider should consider legal action including possibly an interim injunction."
- The name and full postal address, job title, email, telephone and other contact details of the confidante and those of his or her employer if they are different.
- Identify the information to be delivered and the way in which it is to be passed (that is to say, private conversation, whether it is is a document and if so what it contains).
- An acknowledgement that the information has been disclosed in confidence.
- A finite period in which the confidante can contend that the information is not confidential at all and a rapid and cost-effective way of resolving such contentions such as expert determination or expedited arbitration.
- The use to which the information may be put.
- A deadline for the return of confidential documents and may have been made.
- Submission to the jurisdiction of the English courts.
Interim injunctions are not cheap to obtain because a lot of work has to be done by solicitors, patent attorney or other authorized litigators and counsel or other advocates in a very space of time. There is always a risk that the application may fail and the applicant will be required to contribute to the respondent's costs in addition to his or her own. But if the information is essential to the success of an enterprise there may be no other way.
For most startups and many other small and medium enterprises, the only way in which enforcement litigation can be funded is by obtaining before-the-event insurance. I have been urging inventors to take out such cover since 2005 (see IP Insurance 3 Sept 2005), I repeated my message every year until 2020 2020 when the Chartered Institute of Patent Attorneys published its own guidance on IP insurance to its members (see IPO Guidance: Intellectual Property Insurance 25 Feb 2020). I now refer inventors and all SME to CIPA's Advice on IP insurance which complements comprehensive Guidance on Intellectual Property Insurance from the Intellectual Property Office.
Last September I launched the Online Inventors Academy with a talk on Patents and Alternatives to Patenting. Although the audience was not large we had a very lively and informed discussion that exceeded the advertised time by a whole hour, Unfotunately the response to the next event was disappointing. As Christmas was approaching we decided to relaunch the Online Inventors' Club and the Online Inventors' Academy until the New Year. I will kick off the new season with a talk on confidentiality on 23 Jan 2025 at 18:00. Attendees can join by clicking this link.
Anyone wishing to discuss this article or the Online Inventors' Club or Academy generally should call me on 020 7404 5252 during normal UK office hours or send me a message through my contact page,
