Cray Valley Ltd v Deltech Europe Limited

Information is not confidential merely because it is unpublished. The court must assess its quality, the surrounding circumstances and the conduct of the alleged owner. Information that is ordinary knowledge to skilled employees, readily reproducible, substantially published and left uncontrolled may form part of their ordinary skill and experience rather than a protectable trade secret. In marginal cases, the absence of warnings, confidentiality terms, access controls and other security measures is significant. Even where a short head-start is established, an injunction may be inappropriate if its terms would be unworkable or oppressive; damages may be the proper remedy. A written transfer of a business’s assets may assign copyright without expressly mentioning copyright, if the document is signed and its context shows that copyright was included.

Cray had acquired Borden’s coating and structural resin business but not the Haverhill site. Deltech later acquired the site and employed many former Borden personnel. Cray alleged that Deltech and two individuals had used confidential resin formulations and manufacturing instructions, and also alleged copyright infringement.

The formulations concerned ordinary commodity resins. Much of the information was published or readily reproducible, the documents were unmarked, and access had not been controlled. The court considered whether the information had the necessary quality of confidence, whether an obligation of confidence arose, whether the individuals incurred personal liability, and whether Cray owned copyright in the documents.

1. Breach of confidence. The claims against all three defendants failed. The relevant information lacked the necessary quality of confidence and was not imparted in circumstances imposing an obligation of confidence. The formulations were ordinary to skilled resin manufacturers, flexible in practical manufacture, substantially disclosed in industry material, and readily capable of reconstruction or reverse engineering.
2. The absence of protective conduct was important. No employee had been told that the information was confidential; the documents were unmarked; access was unrestricted; and no effective steps were taken to preserve secrecy. In a marginal case, an owner who does not treat information as secret cannot readily impose a restriction on an employee’s conscience.
3. The proposed injunctions would be unworkable and oppressive. The defendants could not realistically use their ordinary remembered skill while avoiding every fact reflected in the former recipes. Even if there had been a minor breach producing a short head-start, the appropriate remedy would have been damages rather than an injunction. The court expressed doubt about damages calculated on all production as though the information were a patent, but did not decide that issue.
4. Mr Scanlan incurred no personal liability. Liability would have required proof that he personally directed or authorised a breach of confidence, which he had not done.
5. Copyright. Cray owned copyright in the relevant documents. Under Copyright Patents and Designs Act 1988, s 90(3), and its predecessor, s 36(3) of the Copyright Act 1956, a written assignment need not mention copyright expressly. Words such as assets may suffice where the commercial context shows an intention to transfer all business assets. Copyright infringement was therefore established, but the court reserved the question of financial relief and directed further argument.