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Kerry Ingredients (UK) Ltd v Bakkavor Group Ltd [2016] EWHC 2448 (Ch)
The High Court examined the three elements of a breach of confidence claim – quality of confidence, circumstances importing a duty of confidence and unauthorised use – before reviewing the available remedies and granting a springboard injunction for a year.
There are many overlapping concepts between an employee’s contractual duty not to misuse confidential information acquired during the course of employment and the equitable duty of confidence. These overlapping concepts include the identification of confidential information and the scope of available remedies, in particular springboard relief. Employment lawyers can benefit from the study of non-employment cases involving claims for breach of confidence, such as this recent decision of Newey J in the Chancery Division.
The facts
This case concerns edible infused oils (basil-flavoured sunflower oil, for example). So begins the judgment, somewhat unpromisingly. Indeed, it is not entirely easy to follow the narrative in the judgment due – unsurprisingly, given the nature of the case – to the extensive redactions to safeguard the confidential nature of the evidence.
The information at issue in the case relates to the methods Kerry employs to produce its edible infused oils [4]. Kerry’s production method is designed to address food safety issues while also achieving good flavour and shelf life [15]. Kerry had supplied Bakkavor with infused oils for many years. In 2010, however, Bakkavor decided to explore alternative sources of infused oils [27], and decided to pursue the option of making infused oils within the Bakkavor group [38]. In doing so, Bakkavor used information which had been provided by Kerry and which Kerry claimed was confidential.
The High Court granted Kerry an interim injunction until trial prohibiting Bakkavor from making use of the alleged confidential information.
The law
In Coco v A N Clark (Engineers) Ltd [1968] FSR 415 (at 419), Megarry J identified three elements as normally required if, apart from contract, a case of breach of confidence is to succeed [58]:
First, the information itself, in the words of Lord Greene MR 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.
Newey J examined each of these three elements in his judgment.
First, as to the quality of confidence, the fact that some members of the public may already know the information is not necessarily fatal to a breach of confidence claim [61]. It can also be possible to maintain a breach of confidence claim even though the information in question could be gleaned by reverse engineering [63]. However, ease of reverse engineering was amongst the factors that led the court in the employment case of Cray Valley Ltd [2003] EWHC 728 (Ch) to take the view that the information in question was not confidential [65]. Newey J concluded that the fact that information could be obtained by reverse engineering will not of itself prevent it from being regarded as confidential if at least the reverse engineering would involve a significant amount of work [67].
Second, as to circumstances importing an obligation of confidence, the core test is to be found in Arnold J’s judgment in Force India Formula One [2012] EWHC 616 (Ch) that [71]:
An equitable obligation of confidence will arise as a result of the acquisition or receipt of confidential information if, but only if, the acquirer or recipient either knows or has notice (objectively assessed by reference to a reasonable person standing in his shoes) that the information is confidential.
Third, as to unauthorised use, the fact that a defendant has not precisely replicated the relevant confidential information need not mean that he did not use it [72].
Remedies
The judge referred to the decision in Vestergaard Frandsen A/S v Bestnet Europe Ltd [2009] EWHC 1456 (Ch) for its “detailed and searching examination of the availability of injunctive relief for breach of confidence” [73]. In that case, Arnold J said:
in the absence of specific discretionary reasons for the refusal of an injunction, where the claimant has established that the defendant has acted in breach of an equitable obligation of confidence and that there is a sufficient risk of repetition, the claimant is generally entitled to an injunction save in exceptional circumstances.
The springboard doctrine can refer to circumstances in which “information may have a limited degree of confidentiality even though it can be ascertained from public sources” or where “an injunction may be granted to prevent the defendant from benefitting from past misuse of confidential information even if it is no longer confidential” [77]. Where information has a limited degree of confidentiality, the duration of the injunction should be limited to the time it would take someone starting from public domain sources to reverse engineer or compile the information [78].
The judge concluded that the information in question was confidential [95], [100], [105] and granted a springboard injunction for one year to cancel out the head start that Bakkavor had gained by its improper use of the confidential information [116].
The full judgment can be read here.
