X Ltd. v Nowacki & Anor

A preliminary determination of rights should identify the legally protected information or work with sufficient precision to permit the remaining breach or infringement issues to be tried. Equity imposes confidence where information has the necessary quality and is communicated in circumstances importing an obligation of confidence. A compilation of publicly accessible material may remain confidential where its use gives an unfair springboard advantage, but protection lasts only for that advantage. Contractual confidentiality obligations depend on construction and may not survive termination. Copyright may subsist in original graphic works and in a wider graphic composition, although protection is limited to the original skill and labour embodied in the work.

The claimant wholesaler sought declarations concerning contractual rights, confidential information, copyright and design rights arising from its trading relationship with the defendants, a porcelain-manufacturing partnership. The court tried preliminary issues concerning the existence and scope of those rights before any specific breach or infringement issues.

The court considered two distributorship agreements, later purchase orders, post-termination correspondence, a further exclusivity agreement, categories of allegedly confidential information, back stamps, decorative patterns and moulds. The central questions included whether contractual obligations survived termination, whether the pleaded information had the necessary quality of confidence, and whether copyright subsisted in the identified works.

1. Preliminary issues. The court recognised difficulties in deciding confidentiality and copyright questions without knowing the precise alleged use or appropriation. Nevertheless, the parties had consented to that procedure, and the court determined the issues so far as possible.
2. Contracts. The 1996 Agreement was terminated by consent by June 2001. On construction, clause 11.1 did not survive termination. The letters of 5 September and 19 December 2001 recognised an equitable duty of confidence but did not create a new contract. The claimant’s standard Purchase Order terms were incorporated into the relevant post-termination contracts. The 2002 Agreement was duly entered into.
3. Confidence. Applying Coco v Clark [1969] RPC 41, equity protected information possessing the necessary quality of confidence and communicated in circumstances giving rise to an obligation of confidence. The identity of customers and end users, including the fact that a person identified on a product was a customer or end user, was confidential. Customer characteristics such as whether the customer was new or existing were confidential when combined with the customer’s identity.
4. Information assembled into a package may remain confidential despite its individual components being publicly discoverable. The defendant relying on the springboard principle had to provide evidence about discoverability and the time required to assemble the information. Protection had to be assessed for each category and lasted only for the period of any unfair advantage, following the discussion in Roger Bullivant v Ellis [1987] RPC 172.
5. The pleaded category concerning order details was too vague for a general declaration that all such details were confidential. The information relied upon had to be specified with particularity. The existence of a current business opportunity might be the real subject of protection, but that was not the pleaded category. The fact that a customer was new or existing was confidential only when linked to the customer’s identity.
6. The fact that the claimant subcontracted production, samples and products supplied for particular orders were capable of protection by confidence. The findings did not determine whether any particular misuse or breach had occurred.
7. Copyright. Copyright subsisted in the simplified crests and overall layouts of the back stamps. The composition went beyond a mere typographical arrangement and involved graphic design. The copyrights were narrow and did not prevent use of ordinary phrases, but prevented use of the modified crests and reproduction of a substantial part of the relevant skill and labour.
8. The court deferred questions of design-right subsistence and legal ownership of copyright and design right to the main hearing if not admitted. It confirmed that the claimant owned the Arabic coffee-cup and Butterchip moulds.