Case No. IP-2018-000134

39.Separately from any implied obligation arising in contract, there co-exists the possibility of an equitable obligation of confidence. It was explained by Lord Neuberger PSC (with whom the remainder of their Lordships agreed) in Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] UKSC 31; [2013] 1 WLR 1556: “[22] … [A]n action in breach of confidence is based ultimately on conscience. As Megarry J said in Coco v A N Clark (Engineers) Ltd [1969] RPC 41, 46, ‘the equitable jurisdiction in cases of breach of confidence is ancient; confidence is the cousin of trust.’ [23] The classic case of breach of confidence involves the claimant's confidential information, such as a trade secret, being used inconsistently with its confidential nature by a defendant, who received it in circumstances where she had agreed, or ought to have appreciated, that it was confidential: see eg per Lord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 , 281. Thus, in order for the conscience of the recipient to be affected, she must have agreed, or must know, that the information is confidential. … [25] Liability for breach of confidence is not, of course, limited to such classic cases. Thus, depending on the other facts of the case, a defendant who learns of a trade secret in circumstances where she reasonably does not appreciate that it is confidential, may none the less be liable to respect its confidentiality from the moment she is told, or otherwise appreciates, that it is in fact confidential. From that moment, it can be said that her conscience is affected in a way which should be recognised by equity.” 40.In Primary Group (UK) Ltd v The Royal Bank of Scotland plc [2014] EWHC 1082 (Ch); [2014] RPC 26, Arnold J detected an inadvertent inconsistency in paragraph 23 of Vestergaard: “[222] In the first sentence Lord Neuberger is plainly applying Lord Goff's statement of principle and stating an objective test, consistently with Campbell v MGN and Imerman v Tschenguiz. Although the second sentence, if read in isolation, might be thought to indicate that the test is subjective, Lord Neuberger cannot have intended to contradict what he had said in the first sentence. Nor can he have intended to depart from Campbell v MGN and Imerman v Tschenguiz, which, although they were not cited in Vestergaard, he would obviously have been familiar with. I would add that Lord Neuberger went on at [39] to say that an injunction to restrain misuse of confidential information against a recipient of confidential information ‘might well be justified, once it could be shown that she appreciated, or, perhaps, ought to have appreciated, that [the information was] confidential’. Again, this seems to recognise that the test is objective, albeit with what I consider to be surprising hesitation.” 41.In Campbell v MGN Ltd [2004] UKHL 22 [2004] 2 AC 457, Lord Nicholls said at [14]: “… the law imposes a ‘duty of confidence’ whenever a person receives information he knows or ought to know is fairly and reasonably to be regarded as confidential.” 42.The short point is that the test regarding the defendant’s appreciation of whether the information was confidential, is objective in the sense that it requires the claimant to show that the defendant ought to have appreciated that it was confidential, irrespective of her actual state of mind. This corresponds to the test as formulated by Megarry J in Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41, at 48 : “It seems to me that if the circumstances are such that any reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the equitable duty of confidence.” 43.I earlier quoted the passage from Lord Neuberger’s judgment in Vestergaard at [44] in which he stated the need to balance, on the one hand, the effective protection of trade secrets and on the other, not unreasonably inhibiting competition, particularly not imposing unfair difficulties in the honest attempts of employees to seek new employment. I think that, consistently with the law on implied contractual terms of confidence, the balance will generally be achieved if a former employer is entitled to enforce an equitable duty of confidence to restrain the use of his confidential information by a former employer except where that information forms part of the experience and skills acquired by the former employee during the normal course of doing his or her job, held in mind at the time of leaving the employment. The exception will not apply to any information deliberately memorised for use or disclosure after the conclusion of the employment or to any class 3 information (to use the classification taken from the law on implied terms).