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Court Clarifies When a Third Party Business’s Information is Confidential and Must Not be Used or Disclosed

Businesses should ensure they identify when a third party’s information given to them is confidential, and should only be used for the purposes for which it was given, and not disclosed to others without the third party’s permission.

A company supplied edible infused oil to a customer for use in its products. This was to ensure that the customer’s products satisfied food safety regulations. The company therefore had to supply technical information about the oil to the customer, including ingredients and recipes, so the customer could be sure the oil would meet the relevant regulatory standards. The customer also obtained information about the oil in the course of its internal technical audits.

The customer started looking for a new supplier of oil. As part of the process of checking whether potential new suppliers’ oil could satisfy the regulatory standards it disclosed information about the existing supplier’s oil to them.

The existing supplier applied for an injunction to stop it from disclosing the information on the basis the information was confidential. Information is confidential and will be protected if:

1. The information has the necessary quality of confidence about it
2. It is provided in circumstances which import an obligation of confidence
3. There has been unauthorised use of the information to the detriment of the party seeking to protect it

It can also be possible to maintain a breach of confidence claim even though the information in question could be gleaned by reverse engineering.

The High Court ruled that the test was whether the information was freely available to the public or could be discovered without a significant amount of work. In this case it found that neither applied, and the information therefore had the necessary quality of confidence and was confidential.

It also found that a reasonable third party would conclude that the information was provided to the customer solely to help it determine that the safety and regulatory regulations were complied with, as this was commonly understood in the food industry. That imported an obligation of confidence on the customer not to disclose the information to third parties for any other purpose (or to use it for other purposes itself).

Operative date

• Now

Recommendation

• Businesses should ensure that they identify when a third party’s information given to them is confidential, so it should only be used for the purposes for which it was given, and should not be disclosed to others without the third party’s permission

Case ref: Kerry Ingredients (UK) Limited v Bakkavor Group Limited and others [2016] EWHC 2448

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Jonathan Waters
is the founder of Helix Law. Before qualifying as a Solicitor he worked in industry and in investment banking for over a decade. He was also the Partner in charge of Commercial Litigation, Employment Law and Property Litigation at Stephen Rimmer LLP. Jonathan has wide experience of helping and advising businesses to avoid or to deal with commercial disputes and in particular construction disputes.

This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of  this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice. 

Contact Helix Law on 01273 761 990 or email: [email protected]