This must be the season for decisions on breaches of confidence. Only on Monday the IPKat was apologising for taking so long to write up the Vestergaard case (see earlier post here). Now he's apologising for taking so long to write on JN Dairies Ltd v Johal Dairies Ltd, Gurbir Singh  EWHC 1331 (Ch) a decision of Judge David Cooke, sitting as a Chancery Division judge in Birmingham on 12 June 2009.
Right: the defendants' getaway van?
Before that judge was the task of determining, as a preliminary issue, whether there had been any actionable breach of confidence or misuse of confidential information belonging to JN, a wholesale dairy, by Johal (a competing wholesaler) and Singh, who was Johal’s former employee.
JN bought bread and dairy products, then resold them to its customers. There were no set orders; it supplied each of its customers with what they required on a daily basis, recording what they ordered. Every week, JN prepared an invoice for each customer which was based on the record of its orders. Those invoices were closely guarded, to avoid the risk of JN being undercut in the market. According to JN, after Singh stopped working for it, he had returned to its warehouse, taken the weekly invoices and given them to Johal. Followng that, JN alleged, Singh tried to persuade its customers that it was no longer delivering to them and that they should buy their produce from Johal instead. JN maintained that Johal used its invoices in an attempt to undercut its prices.
Singh did not contest the proceedings, but issued a witness statement denying that he had stolen anything or provided any documents to Johal, which in turn denied all the allegations. According to Johal, the information in the invoices was not confidential in any commercial sense. Nor was it of any value because the market was transparent: all the competitors were buying from the same major suppliers and the prices paid could be ascertained simply by asking the customers. Johal further submitted that the information was of the kind that an employee had to treat as confidential only while he was employed but which, once learned, remained in the employee's head and became part of his own skill and knowledge, which he could not be restrained from using after his employment ended.
Judge Cooke determined this preliminary issue of actionability in favour of JN.
* There was a factual basis for JN’s claim was made out since, by arrangement with Johal, Singh had stolen the invoices and given them to Johal, for whom he then worked. Johal then made use of the invoices for the purpose of approaching and negotiating with some of JN’s customers.The IPKat notes that this is only a preliminary hearing and one which, though initially scheduled for four days, took eight -- largely on account of the quantity of witnesses involved, it seems. There are some good bits in the judgment too. The judge's review of the CCTV evidence is quite riveting -- and this case makes history, being the first occasion on which the Indian sport of Kabaddi has ever been mentioned in a British judgment in an intellectual property dispute. Kabaddi, for the uninitiated, is a sport in which
* The information in the invoices was of considerable commercial value; indeed, not only JN but also Johal, between whom the competition was intense, treated their invoices as confidential and took measures accordingly.
* Despite its submissions, Johal conceded that any dairy which lost its invoices would suffer commercial damage at the hands of a competitor who got hold of them, and its customers would be concerned if information about the prices they were paying became known.
* The suggestion that customers would freely disclose prices, if asked, was false, since customers, when asked, frequently reported for strategic purposes that they were paying prices lower than they actually were.
* The commercial value of the invoices was enhanced by the fact that Singh had been paid a lot of money to take them.
* It would not be said that Singh had memorised the information contained in the invoices. If he had, he wouldn’t have needed to steal them.
* The relative ease by which customer information could be obtained by legitimate means was not of itself a reason for concluding that the information was not confidential to begin with.
* The facts that, when Singh took the invoices, he knew that they contained JN’s commercially valuable information, and that he had no right to obtain or to pass that information on without JN’s authority, were sufficient to establish the existence of a duty on Singh not to disclose the information contained in them.
"Two teams occupy opposite halves of a field and take turns sending a "raider" into the other half, in order to win points by tagging or wrestling members of the opposing team; the raider then tries to return to his own half, holding his breath during the whole raid".Merpel says, we should introduce one of the Kabaddi principles into preliminary IP proceedings too: counsel for each side can address the court for only as long as the judge can hold his breath ...
What JN Dairies made of their victory here
Johal Dairies here
Cats and dairy produce here and here
The cat that got the cream here and here