Confidential Information - Relationship with
Intellectual Property and Contract Law

Copyright

Copyright law consists is a bundle of exclusive rights that permit the owner of copyright to prevent others reproducing their copyright work. Among the exclusive rights are the right to:

• to copy the work
• to issue copies of the work to the public
• to rent or lend the work to the public
• to perform, show or play the work in public
• to communicate the work to the public, and
• to make an adaptation of the work or do any of the above in relation to an adaptation.

Commonality between an unauthorised disclosure and copyright infringement may be found where the disclosure contains the actual copyright work in its material or recorded form. The protection granted the law of confidential information though is broader than this. It is the very information that is protected, and not simply the form that it takes. It is the substance of the disclosure and not a literal comparison of the expression of the copyright work with the disclosed material. Thus, reproductions of summaries, précis and opinions in respect of a copyright work may constitute an unauthorised disclosure of confidential information simply by communicating the contents to a third party, where the duty of confidence exists.

In this way copyright and unauthorised disclosures of confidential information are separate causes of action that may lead to legal proceedings, and must be assessed independently of each other.

Patent Law

The interplay between patent and confidential information is useful in the instance of a patentable invention that consists of integers that are susceptible to being ascertained by reverse engineering. In such a case, the patent application may, where possible be drafted to exclude disclosure of aspects that may be reverse engineered. In this way one combines the benefits of both means of protection. The monopoly granted by the patent remains in force and purchasers and competitors are unable to determine the missing link to completely reverse engineer the invention. For instance, suppose a new method of manufacturing an article may be improved by a particular mixture of alloys for strength. The mixture of alloys may remain confidential, provided it is not required to form part of the requirements for patentability, and not disclosed in the application. The focus is on the key integers of the invention. Confidential information may also be licensed separately from the patented invention.

Preservation of confidentiality during the creation of a patentable invention is key, particularly in the event that the idea is easily implemented. Equally, because there is no basis at law in protecting a mere idea once exposed to the public, a cause of action would not lie for someone else taking the idea and using it for their own purposes.

It is worth noting that the TRIPS Protocol creates a specific international right to prevent unauthorised disclosure acquisition or use “in a manner contrary to honest commercial practices” between international competitors (Article 10 of the Paris Convention 1967).

Confidential Information and Contracts

In the course of commercial transactions, to remove doubt from the relationship and to preserve hard-earned know-how, provisions dealing with confidential information are usually expressly incorporated into the contract. These provisions tend to mirror or extend common law protection, but in some instances go too far and amount to unlawful restraints of trade. To the extent that the contract deals with confidential information, it displaces the common law which includes, for instance, one where a fiduciary duty is owed by one party to another.

There are other considerations such as the Official Secrets Act, Treaty of Rome and Competition Act 1988 (where a distortion of competition may take place) that may impose obligations of confidence in ex-contractual circumstances.

Non-Disclosure Agreements

Contracts restricting the disclosure of confidential information commonly called Non-Disclosure Agreements ('NDA's'), generally have a point of reference, such as a product, service or some other subject. It is reasonable to expect the contract to provide how information relating to the product or service will be disclosed and used, along with an entire agreement clause and a jurisdiction clause. The entire agreement clause is designed to prevent some collateral arrangement being argued in the event of disputes, and the jurisdiction clause sets the forum in which contractual disputes will be heard. Such contracts are central in licensing ‘pure’ confidential information (know-how), and such agreements should certainly impose limitations purpose of the disclosure to the recipient of the information. It may be appropriate to incorporate anti-competition provisions in some cases.