Confidentiality – the poor and distant relation of intellectual property


In September, I advised in arbitration proceedings, in which the issues surrounded the subject of confidentiality, to my mind an often misunderstood subject, and something of a poor and distant relation to traditional forms of intellectual property.  Confidentiality is often taken for granted by some, whom with too little understanding of its many nuanced applications and with a degree of flippancy, disregard its affect to their potential detriment.  In my case, it became necessary to correct certain labours under which, by the time of my involvement, both parties had become hostage.  This article seeks to address some of the misunderstandings often held regarding the subject of confidentiality, from an English law perspective.

A non-proprietary right

Information is not property.  Although often linked with intellectual property (when drafting agreements, I include confidential information within my definition of intellectual property, purely out of convenience), the law does not regard confidential information as property.  There is no proprietary right to information, unlike traditional forms of intellectual property, and by information, I am concerned with ideas or concepts per se, and not how they may be expressed physically.

In Nichrotherm Electrical Limited v Percy, Lord Evershed MR rejected the suggestion of property in ideas saying “… a man who thinks of a mechanical conception and then communicates it to others for the purpose of their working out means of carrying it into effect does not, because the idea was his (assuming that it was), get proprietary rights equivalent to those of a patentee.  The rejection in Nichrotherm was endorsed in Phipps v Boardman, where Lord Upjohn said “In general, information is not property at all.  It is normally open to all who have eyes to read and ears to hear…  the real truth is that [confidential information] is not property in any normal sense, but equity will restrain its transmission to another if in breach of some confidential relationship.

Although it may seem that some forms of confidential information bear a similarity to certain forms of intellectual property, any broad concept of confidential information as property of itself is difficult to summarise, and the claim to property in intangible information presents obvious definitional difficulties, having regard to the criteria of certainty, exclusivity, control and assignability, which normally characterise property rights, and distinguish them from personal rights.

Context is key

Context defines the protection of information.  In Nichrotherm, Lord Evershed MR added “Apart from such rights as may flow from the fact, for example, of the idea being of a secret process communicated in confidence or from some contract of partnership or agency or the like which he may enter into with his collaborator, the originator of the idea gets no proprietary rights out of the mere circumstances that he first thought of it.”, and in Phipps Lord Upjohn included “The true test is to determine in what circumstances the information has been acquired.  If it has been acquired in such circumstances that it would be a breach of confidence to disclose it to another then courts of equity will restrain the recipient from communicating it to another.  In such cases such confidential information is often, and for many years has been, described as the property of the donor, the books of authority are full of such references… 

It is necessary, therefore, to keep in mind that the circumstances in which confidential information is disclosed, are key to understanding the jurisdiction arising (or not) to protect such information, and where there is no contractual tie, of whatever nature, giving rise to such protection, it is only the equitable jurisdiction of the court that may, and not always, restrain (or if not restrain then to award compensation or an account of profits in lieu) a breach of confidence.

Contractual and equitable considerations

Information is affected by different considerations.  The legal protection for confidential information derives from the common law and equitable principles.  A recipient’s agreement that information is confidential will often give rise to an express or implied contractual obligation of confidence.  In the absence of an agreement, it is generally enough that the recipient should have notice that the information in question is confidential.  Notice of confidentiality may be expressed or implied.  Clearly, when the notice is expressed there is a higher degree of certainty, and when the notice is implied there is a lower degree of certainty.  Where information is disclosed in the course of a relationship or venture, which a reasonable person would regard as having a duty of confidentiality, it is sufficient that a reasonable person in the recipient’s position would regard the information as confidential: the test is objective.

In Att Gen v Barker, Lord Donaldson MR observed that a contractual promise not to publish information, even if not inherently confidential, is a form of negative covenant for consideration (a contract not to do something), which the court will enforce “provided only that the covenant itself cannot be attacked for obscurity, illegality or on public policy grounds, such as that it is a restraint of trade.”  In Att Gen v Blake, the House of Lords declared the Attorney-General entitled to an account of profits from George Blake, following Blake’s breach of a contractual undertaking not to publish information gained by him, as a result of his time spent in the Secret Intelligence Service, notwithstanding that none of the information published was secret.

Delayed notice

Frequently, and peculiarly with US agreements, I see provisions to protect oral disclosures information only in the event a disclosing party provides written notice to a recipient (usually within 30 days of the oral disclosure) that such information is to be treated confidentially: in effect, knowledge or notice of confidentiality of such information is acquired only after receipt.  Aside from the impracticality of the requirement, how should such information be regarded in the interim period?  According to Toulson & Phipps on Confidentiality, a “lack of notice at the time of its receipt that information was subject to a duty of confidence, should not prevent the recipient from coming under such a duty upon discovering the true position.”  In the case of a recipient acting upon possible notice, I would advise the recipient should hold such information on trust for a disclosing party, and treat it as confidential from receipt.

Clarity of information

I recall my pupilmaster’s warning that I should always draft my written work as though one day it would be read by a judge.  I took him to mean not to write material that might embarrass me, whether out of discourtesy or uncertainty: sound advice, which certain lawyers should take note.  In written work, and for practical reasons, parties should endeavour to capture information, which they know is necessary to be kept confidential, such as specific information they know will be disclosed, as well as information, which they do not know is necessary to be kept confidential, such as information they do not know will be disclosed.  It is not practicable to know of, and list, every piece of information by its content, which may be disclosed during the course of a relationship, and so it follows that such information cannot, nor should be, identified at the outset, and must, therefore, be described generically.

Concurrent obligations

Where a relationship of a confidential nature arises from a contract, which does not contain an express confidentiality term, the courts will imply a contractual duty of confidentiality, but the scope of the duty will be the same, whether viewed as an implied term or an equitable duty of confidentiality.  In English law, even an express contractual obligation of confidentiality does not preclude the existence of a concurrent equitable duty of confidentiality.  The extent of any equitable obligation of confidentiality, however, will fall to be determined by reference to the underlying contractual relationship, and usually by reference to any express contractual terms that were agreed between the parties.  Accordingly, an equitable duty of confidentiality is limited.

Necessity of identification

Information must be identified.  A party seeking to protect information, keep it secret, and from misuse, should be specific, so that it is clear to the world, and identifiable as confidential: it creates certainty for the parties, yet often parties generalise to the point of obscurity.  It would be wrong, however, to cast a party’s obligation of particularisation as absolute, and a both practicable and pragmatic approach is often necessary.  Information may be categorised, so that a party is not required to identify with specificity every item of information for which protection is sought.  The most common example is in a contractual context, where the entirety of a collection of information falls within a contractual obligation of confidence, subject to specified, and well-known exceptions.

Practically, this is done, in respect of information disclosed in documentary form (or by way of a model or in some other tangible form), by marking the same as confidential, or with words of a similar meaning.  In respect of information disclosed orally, it is only necessary, at the time of its disclosure, for a disclosing party to inform a receiving party that it is imparted in confidence.  Information, which is reasonably identifiable from the context of its disclosure, or from the nature of the information (or both) as being confidential, including Information that any reasonable person, skilled in the nature of the information or the purpose for its disclosure, would consider to be confidential, may also be protected.

Trivial or useless information

Trivial information is not relevant.  The rule that confidentiality does not attach to trivial or useless information reflects the underlying rationale of the jurisdiction.  Like most heads of exclusive equitable jurisdiction, its rational basis does not lie in any proprietary right but instead in the notion of an obligation of conscience, arising from circumstances in or through which the information is communicated or obtained.  Relief under the jurisdiction is not available, however, unless it appears that the information in question has the necessary quality of confidence, “and that it is significant, not necessarily in the sense of commercially valuable but in the sense that the preservation of its confidentiality or secrecy is of substantial concern to the plaintiff.

What is trivial or useless information?  The discretion to grant and injunction or an award of damages would not be exercised in a case which was merely trivial but the exercise of such a discretion can only be decided in the light of all the circumstances.  If a matter is not such that the preservation of its confidentiality would be thought by a person of ordinary honesty and intelligence to be of any substantial concern to the plaintiff, there is sense in not attaching to it any duty of confidence.  Furthermore, a triviality test has to be applied with caution, and the apparent triviality of an item considered in isolation may not be conclusive.

Public domain

As I have endeavoured to show, information not generally considered to be confidential may nonetheless be subject to contractual obligations against its disclosure and misuse: it is purely an effect brought on by variations of the law of contract, yet equity behaves differently.  In Saltman, Lord Greene MR said “The information, to be confidential, must, I apprehend, apart from contract, have the necessary quality of confidence about it, namely it must not be something which is public property and public knowledge.”  The term ‘public domain’ has come to be the expression most often used in this context, but other phrases used include ‘common knowledge’ and ‘information generally available to the public’.

The equitable duty of confidentiality is subject to limiting principles, the foremost being that the principle of confidentiality only applies to information to the extent that it is confidential.  Once information has entered into the public domain, which means no more than the information concerned is so generally accessible that, in all the circumstances, it cannot be regarded as confidential, the principle of confidentiality is lost.  In all cases, the question is whether the degree of accessibility is such that, in all the circumstances, it would not be just to require the party against whom a duty of confidentiality is alleged to treat it as confidential: in other words, the greater the accessibility, the less likely duty of confidentiality will exist.


Confidentiality is no less important than traditional forms of intellectual property, and often more so in cases of know-how and trade secrets.  A common law creation, its natural roots are founded upon confidence, which of itself is concerned with trust, and subject to principles developed according to equity: its reach is broad, variable, and subtle in application.  To understand confidentiality properly, it is necessary to have a level of thinking above seeking to keep information secret.  These days, my experience is that few give much thought to actual information likely to be disclosed, and what measures should be employed to protect against unlawful disclosure and misuse: instead, there is a wave to secure (or seek to secure) indemnities and injunctive relief, which is a reckless and presumptive course of action, and very much putting the cart before the horse.