Misuse of confidential Information and More
A decision of the UK Court of Appeal,  EWCA Civ 1300 released in October clarifies the rights relating to breach of confidence and conspiracy relating to the use of confidential information consisting of time-sensitive information.
The case is complex, but in essence, the plaintiff supplies live betting and horseracing data collated at various racecourses under agreements with the course owners to off-course (including online) bookmakers. The first defendant previously had the right to collect and distribute to off-course bookmakers the same data. The first defendant paid an eight-figure sum for the package of rights, which included broadcasting rights and a further eight-figure sum in fees during the agreement.
Notwithstanding that it had lost the right to collect and distribute the data, the first defendant continued to distribute it. After a three-week trial, the plaintiff succeeded based on its claim of misuse of confidential information. The defendant appealed to the Court of Appeal, and the plaintiff cross-appealed the dismissal relating to conspiracy to injure the plaintiff by unlawful means.
Breach of Confidence
The elements necessary to establish an action for breach of an equitable obligation of confidence
the information itself must have the necessary quality of confidence about it;
the information must have been communicated in the circumstances importing an obligation of confidence;
there must have been any unauthorized use of the information to the detriment of the party communicating it.
All three of the three Judges who heard the appeal agreed that information in the issue had the necessary quality of confidence about it.
The trial judge had found that the information was time-critical information of substantial commercial value, the dissemination of which was controlled by the race track owners through (i) its ownership of the Racecourses and (ii) the terms of access, which prohibited anyone who attended the race from transmitting off-course any information relating to “any race, fixture or other race-related activity” and from communicating with anyone outside the racecourse “for the purpose of or in connection with any betting.
All of the judges agreed that the information was of commercial value over which the plaintiffs had sufficient control to enable them to impose an obligation of confidence. However, once information was in the public domain, it could no longer be the subject of confidence.
The judges disagreed concerning whether the information was communicated in the circumstances importing an obligation of confidence. The majority concluded that the first defendant received the confidential information under a contract with a related company that contained an express warranty; it had all necessary right from third parties to provide the information and that the first defendant’s use of the data would breach no third party rights. A reasonable person receiving information based on such a warranty from a reputable party would not be on notice that the information was supplied in breach of an equitable duty of confidence unless there were clear countervailing indications, sufficient to override the contractual assurance of the party best placed to assess its own entitlement to provide the information. The first defendant had made inquiries and received assurances from the related party, which caused it to proceed because the related party lawfully could provide the information.
The trial judge concluded that the related company’s rights were limited and that the first defendant knew this such that information was communicated in the circumstances importing an obligation of confidence. The minority accepted this finding.
As a result, the appeal was allowed, and the claim for breach of confidence was dismissed.
Conspiracy to Injure the Plaintiff by Unlawful Means
A conspiracy to injure by unlawful means is actionable where the plaintiff proves that it has suffered loss or damage as a result of unlawful action taken under a combination or agreement between the defendant and another person or persons to injure him by unlawful means.
The majority concluded that knowledge of the unlawfulness of the means employed is not required for unlawful means conspiracy. The plaintiff had to establish that the unlawful means in question was the “instrumentality” by which it was harmed. In this case, the unlawful obtaining of information from the racecourses in issue was instrumental in the first defendant injuring the plaintiff by being able to compete with the plaintiff.
The decision confirms that the information of commercial value over which a party has sufficient control can be subject to an obligation of confidence even when the period of control is very short.
The conclusion that knowledge of the unlawfulness of the means employed is not required for unlawful means conspiracy was important. In the defendant’s appeal, the fact that it relied on the related party’s representation was telling for the majority. But in the plaintiff’s appeal concerning the unlawful means conspiracy, it was not relevant.
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.