Case: Coco v A N Clark (Engineers) Ltd [1969] RPC 41
Outcome: applied
agreed elements of the action for breach of confidence are, for present purposes, that: (i) the information in question must be confidential in character: it must have "the necessary quality of confidence about it": Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215; (ii) it must have been imparted in circumstances importing an obligation of confidence: Coco v A N Clark (Engineers) Ltd [1969] RPC 41 at 47; Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 40; and (iii) there must have been an actual or threatened unauthorised use or disclosure of that information: Smith Kline &amp; French Laboratories (Aust) Ltd v Department of Community Services and Health [1989] FCA 384 ; (1990) 22 FCR 73 at 87, 111-112; Prince Jefri Bolkiah v KPMG (a firm) [1998] UKHL 52 ; [1999] 2 AC 222. See generally, Dean, The Law of Trade Secrets and Personal Secrets (2 nd ed, 2002); Toulson and Phipps, Confidentiality (2 nd ed, 2006). The essential attribute of confidential information is what has been described as "relative secrecy": Franchi v Franchi [1967] RPC 149 , at 153; Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104 at 119. Whether this attribute exists in a given case will be often a question of degree and a variety of criteria have been invoked in varying contexts to sharpen the inquiry to be made: (i) is the information in question widely known, or publicly available in the relevant industry, trade, etc: Coco at 51; cf Ansell Rubber Co at 50; Titan Group Pty Ltd v Steriline Manufacturing Pty Ltd (1990) 19 IPR 353 at 381; (ii) has the confider made the information public by using it in its manufactured products and placing it on the market, or would the ascertainment of the information from the manufactured product by reverse engineering or otherwise require the expenditure of time, effort, money or experimentation: see eg Ackroyds (London) Ltd v Islington Plastics Ltd [1962] RPC 97 ; Aquaculture Corporation v New Zealand Green Mussel Co Ltd (1985) 5 IPR 357 at 379; (iii) did the confider produce or obtain the information only after the expenditure of time and/or money by way of research or in the application of skill and ingenuity; Saltman Engineering Co Ltd ; cf United Sterling Corporation v Felton [1974] RPC 162 ; Interfirm Comparison (Australia) Ltd , at 117; could another person acquire or duplicate the information only by going through a like process: Cranleigh Precision Engineering Ltd v Bryant [1966] RPC 81 at 89-90; Ansell Rubber Co at 49; (iv) what steps has the confider taken to preserve the secrecy of the information and to prevent it becoming public knowledge: Amber Size &amp; Chemical Co Ltd v Menzel (1913) 30 RPC 433 at 438; Dean, at [3.165]-[3.175]; (v) is the information intrinsically valuable or is it valuable to the confider or to a competitor or other interested party: Surveys &amp; Mining Ltd v Morrison [1969] Qd R 470 ; Measures Brothers Ltd v Measures [1910] 1 Ch 336 ; and (vi) would a reasonable person in all the circumstances recognise the information to be the "property" of the confider: Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 191; Printers &amp; Finishers Ltd v Holloway (No 2) [1965] RPC 239 at 255. There are two tests that have been employed commonly enough in commercial settings to determine whether a duty of confidence arises by reason of the subject matter and the circumstances in which the subject matter has come into the hands of the person said to be subject to the duty. The first is the "reasonable person" test and derives from Megarry J's judgment in Coco (at 48): If the circumstances are such that any reasonable person standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given in confidence, this should suffice to impose on that person the equitable obligation of confidence: see Dean, [3.275]; see also Toulson and Phipps, 3-007 3-010. This said, I equally am satisfied that there remained an area, albeit a circumscribed one, in which through experimentation and choice through "the application of the skill and ingenuity of the human brain": Coco , at 47 a product formula could be devised for the production of a 10% urea cream having distinctive, desired properties and that knowledge of that ratio would give a "head start" to use Mr Blake's description, to a person later seeking to produce a cream with such or similar properties. The same, I would add, could be said of a method of manufacture devised for a product with such an ingredient ratio, though this is not presently relevant. Notwithstanding that there was no express reference to confidentiality when the three documents were provided to AMC in 1996 and that the documents on their face made no claim to confidentiality, I am satisfied that Dr Keung would at the time have appreciated the sensitive character of the documents and that they were being supplied to him for a particular purpose and no other and that he could only use them for that purpose. Equally, the circumstances were such that any reasonable man standing in Dr Keung's shoes in 1996 would have realised upon reasonable grounds, as his Vietnamese sub-distributor anticipated, that the information was being given to him in confidence: Coco , at 48. Whichever test is applied, the conclusion is inevitable that the production formula was received by AMC in confidence. In the event that I made such findings, AMC has conceded that (i) the information was provided to Sphere/Tabco by AMC; (ii) Mr Wait used the formula (only in part) to provide a quotation for the manufacture of a 10% urea cream; and (iii) he used the formula (only in part) as a basis for manufacturing a 10% urea cream. It is said, as well, that in the trials and production of commercial batches, there were differences in the ingredients and ratios used. My only comment on the concession is that I consider it rather underplays the use made of the formula by Mr Wait. He was at Dr Keung's insistence keeping close to the formula, though some adjustments were made before commercial quantities were produced. I do not accept AMC's submission that Sphere did no more than use the formula as a reference point for manufacturing a 10% urea cream. This brings me to the contentious subject of remedy. That sought is an account of the profit made on the sale of the Sphere manufactured products containing urea cream. Damages have been disclaimed.