Confidential information Kerry Ingredients (UK) Ltd v Bakkavor Group Ltd [2016] EWHC 2448 (CH)
Does information provided for one purpose (but not under an express NDA), and used by the recipient for its own purposes enable the discloser to bring a claim for breach of confidence?
The facts
The claimant, Kerry, is a large food business who supplied the defendant, Bakkavor, with edible infused oils for several years for use in salads, pizzas etc. In 2010, Bakkavor launched a project to explore making its own infused oils. Kerry's claim was that product information which it had supplied to Bakkavor under food safety and labelling requirements had been used by Bakkavor to develop its own products.
The decision
The High Court held that Bakkavor had misused Kerry's confidential information (ie the composition of the infused oils) because:
• the relevant specifications were confidential
• they were communicated to Bakkavor for a limited purpose (ie safety/regulatory reasons, and not for product development); and
• the information was used to assist in developing a replacement product.
The Court awarded Kerry an injunction to prevent Bakkavor's use of the information until 30 June 2017, based on the estimated head start in product development that Bakkavor had gained from using the confidential information (as opposed to starting from scratch without reference to Kerry's information). Kerry will also be entitled to damages (to be assessed in due course) and its legal costs.
The key points worth noting from a practical and operational point of view include:
• Confidential information – Bakkavor suggested the information was not confidential because it could be reverse engineered and Kerry's methods were based on a few recognised food safety steps. The Court disagreed and found that the information was confidential because it would have required substantial work or what it called "special labours" to reproduce (and it appeared to have been unusual/unique to Kerry). So information which provides a significant shortcut is more likely to be considered to have (at least a degree of) confidentiality.
• Obligation of confidence – the information was provided for only a limited purpose (ie safety/ regulatory reasons) and a reasonable person would have appreciated that this did not extend to development of a rival product. This was suffcient to establish the obligation of confidence. Note that an objective standard of what a "reasonable person" would have thought (not a subjective standard of what Bakkavor itself thought) is suffcient in this regard.
• Misuse of the information – Bakkavor's use of the information as a starting point for the new product, even though it did not copy Kerry's process exactly, amounted to misuse.
• Remedies – an injunction is generally granted to prevent further misuse of confidential information. But the Court recognises that information can lose its confidentiality over time or other similar products can be developed independently, and so an injunction will often be limited to the advantage gained from the misuse of the information (eg the difference in development time between starting from scratch and starting from the information provided).
Why is this important?
This case highlights the importance of being very careful in how confidential information is put to use and is indicative of the types of measures which the court is prepared to adopt in protecting parties against unauthorised use of their confidential information, even in the absence of any confidentiality provision/agreement.
Any practical tips?
For the disclosing party, clearly there would have been a benefit in including confidentiality obligations in the parties' supply agreement, or a separate confidentiality agreement, from the outset. In this case, had clear confidentiality provisions been put in place at the contractual formation stage, this may have deterred Bakkavor from using it in the first place. For the recipient, think very carefully about your processes for handling and/or using information received from a third party.