Confidential information: springboard injunctions

Background

To be protected by the law of confidential information, information must be confidential in nature, that is, not in the public domain. It must be disclosed in circumstances importing an obligation of confidence, and there must have been a breach of that confidence by the person receiving the information, to the detriment of the person imparting it.

The springboard doctrine applies to information with a limited degree of confidentiality, where the information could be ascertained by reverse engineering, or, by a process of compilation from public sources. The duration of a springboard injunction should be limited to the time it would take someone to reverse engineer or compile the sources.

A springboard injunction cannot be used to restrain continued misuse of confidential information once the information has ceased to be confidential (Vestergaard Frandsen A/S and others v Bestnet Europe Limited and others).

Facts

K was a large food business. B was a leading provider of fresh prepared foods. From the 1990s, K supplied B with edible infused oils. In 2010, B began to explore alternative sources of oils. In 2015, K discovered that B was about to manufacture oils.

It is common practice in the food industry for suppliers to provide their customers with product information so that the customers can satisfy themselves (and their own customers) that the product is safe and appropriately labelled. K had supplied this information to B, which it alleged B had then used in the development of its own oils.

K sued B for misuse of confidential information relating to the production of edible infused oils.

The High Court granted K an interim injunction preventing the importing, exporting, putting on the market or offering for sale any edible oil product infused with herbs or spices, the making of which was enabled or assisted by the use of the alleged confidential information.

Decision

The court held that B had misused confidential information in relation to the production of edible infused oils. It awarded a springboard injunction.

The fact that information could be obtained by reverse engineering did not of itself prevent it from being regarded as confidential if the reverse engineering would involve a significant amount of work. Someone wishing to match K's products, but lacking the information B had as to how K made them, would not be able to discover K's methods without substantial work or special labours. While it might be easy to understand the logic of it now that it had been devised, it could not be considered to be obvious, to be in the public domain, to be capable of being reverse engineered without considerable work or special labours, or, to be second nature to a developer. Here, the alleged confidential information had the necessary quality of confidence.

B had breached the obligation of confidence found to exist: it had used the confidential information and communicated it to third parties to assist in the development of a competing product, which had nothing to do with the purpose for which it had been supplied. It was irrelevant that B might not have been trying to replicate K's process exactly and had not ultimately done so. Information was used if it served as a starting point for a new design. The evidence indicated that K's information did not just provide a starting point, but influenced B's thinking throughout. It was unlikely that B's development work would have proceeded in the way it did, or that the end result would have been as similar to K's, if B had not been using the confidential information. So B had misused the confidential information.

A claimant who had established breach of confidence and a sufficient risk of repetition was generally entitled to an injunction. However, it was not appropriate to grant K a permanent injunction as this would put K in a better position than if there had been no misuse of its information, which would not be right. Given time, it would have been possible for B to replicate K's oils using information in the public domain.

The court estimated that a head start of a year would have been gained and that a springboard injunction should be granted until a year after the date by which B might have been expected to have remedied its safety issue in the absence of any injunction. The injunction would be in essentially the same terms as the interim injunction and would not prohibit B from undertaking development work.

Comment

The court followed Vestergaard in relation to the springboard doctrine and the duration of a final injunction where information is found to have a limited degree of confidentiality. The duration of the injunction was calculated pragmatically by estimating how much of a head start had been obtained through the use of the confidential information. A permanent injunction was not granted as that would have put K in a better position than if there had been no misuse of its information.

This decision illustrates how information can have the requisite quality of confidence when it can be obtained by reverse engineering if that would involve a significant amount of work or special labours. It also shows what can happen when the recipient of the information oversteps the limited use of it the recipient was originally given, as here it was provided solely for safety and regulatory purposes.

Case: Kerry Ingredients (UK) Ltd v Bakkavor Group Ltd and others [2016] EWHC 2448 (Ch).

First published in the December 2016 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.