Briefing Note - Confidential Information and Public Disclosure

Information which is put into the public domain cannot be made confidential by agreement.

A recent case was brought by a US company that developed an ingredient which, when added to plastics, assisted their biodegradation. The company entered into an agreement with an English company under which the English company manufactured the ingredient and sold it. The contract was subject to a confidentiality agreement as one would expect.

The English company later marketed a very similar ingredient and this led to the lawsuit. The US company alleged that the English company had copied the formulation of its additive in breach of their agreement, misused confidential information provided to them and passed off its products as being associated with those of the US company.

The US company lost, on the basis that the ‘new’ ingredient marketed by the English company, whilst similar in composition, was not identical to that contracted for and the formula for it was in the public domain. It could not therefore be confidential. Information that is publicly available cannot be confidential and could not be made so simply because it was supplied in confidence. To accept the US company’s argument would mean that the UK company was the only one in the world not permitted to use the formula.

Leigh Ellis, a solicitor with Gillhams said: "While the logic in this decision may seem obvious, it has serious practical implications, the main one of which is to ensure that all valuable intellectual property is kept strictly secret and is not allowed to become public. Employees, directors, consultants and commercial partners (suppliers and customers) should, where appropriate, be requested to enter into a proper form of non-disclosure agreement, otherwise known as an ‘NDA’."

Gillhams regularly advise on protecting confidential information and are able to assist you protect your intellectual property and drafting appropriate NDAs.