Case Nos: IP-2023-000039 and IP-2023-000132 - [2024] EWHC 2889 (IPEC)

Currentbody submitted that the NDA is a contract between two SMEs, badly drafted apparently without professional help. It is therefore all the more important to investigate the factual matrix underpinning the NDA to resolve what a reasonable person, with the relevant background knowledge in mind, would have understood the language of the contract to mean.

Currentbody continued: the background knowledge would have included an awareness that even though ISM did not create the designs in issue, it or a related company would have had the opportunity to file an application for the Registered Designs at the IPO in its own name, exploiting the grace period, and, relying on ss.217(1) and 220(1) of the 1988 Act, to claim UKUDR in respect of the designs and to assert those rights against Kaiyan. Clause 2(5) was included to prevent that happening. The NDA is reciprocal, so to the extent that Kaiyan could exploit confidential information provided by ISM to obtain registered designs in the UK or IP rights in China, this too was prohibited under clause 2(5). That is why clause 3(1) is not drafted to provide an exception to clause 2(5), as is apparent from its wording. It is directed only to information which ‘now or hereafter becomes generally known or available to the public’. Its function is to prevent contractual attempts to restrain the use of information in the public domain, nothing more. It is not directed to the unfair application for, or claim to, IP rights based on the discloser’s information.

Responding to this, ISD argued that clauses 2(1) and (2) provide general prohibitions on the use of confidential information, while the remaining subclauses of clause 2 are examples of such misuse. One such is clause 2(5) which prevents the misuse of the other party’s confidential information to apply for or claim IP rights. That is a use of confidential information and clause 2(5) spells out that it is a misuse. If the parties’ intention had been to give clause 2(5) the special status contended for by Currentbody, the NDA would have made that clear.