Media Entertainment NV v Karyagdyyev & Anor

A claim for damages for misuse of confidential information requires the defendant to have sufficient knowledge that the use was unauthorised, in addition to knowledge that the information was confidential. That knowledge, and the facts supporting it, must be pleaded. The requirement may involve subjective or objective knowledge, a question left open on the facts.

Injunctions stand on a different footing. They may be available to protect confidential information and prevent further use or dissemination even where the pleaded facts do not establish a damages claim. At an interlocutory stage, the court should avoid striking out claims involving fact-sensitive questions of authority, knowledge and equitable relief.

The claimant alleged that the defendants, acting through the claimant’s IT administrator and others, obtained passwords, accessed computer systems, diverted and opened emails, and created a backup containing confidential data.

The defendants applied under CPR 3.4(2) to strike out the amended particulars of claim and alternatively sought reverse summary judgment under CPR 24. They argued that the pleading did not allege the knowledge necessary for liability for misuse of confidential information and that the phrase “so far as the Claimant is aware” was improper. The central issues were the pleading requirements for a damages claim and the availability of declarations and injunctions.

1. Damages claim. The claim for damages was struck out under CPR 3.4(2)(a) and (c). The pleaded case alleged that the information was confidential and had been used without authority, but did not allege that the defendants knew, or ought to have known, that they lacked authority to use it.
2. Knowledge of the information’s confidentiality is not necessarily sufficient for a damages remedy. The claimant must plead sufficient knowledge that the particular use was unauthorised. The court did not decide whether the relevant knowledge must be actual, Nelsonian or objective. The facts supporting the allegation must also be pleaded, although limited particularisation may be permissible before disclosure.
3. Injunctions and declarations. The claims for declarations and mandatory and prohibitory injunctions were not struck out and were not suitable for reverse summary judgment. Injunctive relief may protect confidential information and restrain further use, copying or dissemination even where the defendant’s state of mind is insufficient for a damages claim. The precise relief remains discretionary and fact-dependent.
4. The alleged authority of the claimant’s IT employee, the defendants’ conduct in excluding the claimant’s directors and executives from its systems, the admitted download of approximately 5MB of data, and the possibility of further retention or dissemination raised issues unsuitable for summary determination.
5. The words “so far as the Claimant is aware” in paragraph 41 of the amended particulars were struck out. A statement of case must plead facts, not merely the claimant’s present state of awareness. The remainder of the applications to strike out and for reverse summary judgment was dismissed.