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Tuesday, 10 August 2010

Court restores confidence in confidentiality

Why, some readers ask, does the IPKat have so little to report on the subject of confidentiality? Isn't that also part of intellectual property law? Yes, it is -- but there's not always that much news to report. Like any other case-law subject, confidentiality depends on cases for a continuing flow of interesting things to write about. However, good news for enthusiasts is that, in the recent 177 paragraph decision of the Court of Appeal for England and Wales in Imerman v Tchenguiz and others [2010] EWCA Civ 908, there were a few good points for connoisseurs to savour.


The background to this litigation suggests that none of the parties was legally aided and that the threat of mounting legal costs was never going to pressurise reluctant combatants into reluctantly accepting a cash-saving settlement. Vivian Imerman shared an office with his brothers-in-law Robert and Vincent Tchenguiz, in which his computer was supported by a server. Robert owned or leased both this office and the server and had unrestricted access to the latter. After the Tchenguiz's sister Elizabeth petitioned Vivian for divorce, Robert evicted him from the office, also accessing the server in order to make electronic copies of Vivian's emails and other documents. For good measure, Robert also took further copies of that material on various digital storage media, including two USB memory sticks and one hard drive -- all with Vincent's knowledge.

Robert handed the materials so obtained to the brothers' solicitor Zaiwalla (which boasts rapport with clients who are "high net worth individuals": various Gandhis, Bhuttos and -- representing those who don't have a silent 'h' in their surnames -- former boxing champion Chris Eubank), who in turn passed the two USB memory sticks and hard drive to forensic accountants, in order to prepare a report. A big chunk of that material, being thought to be of particular relevance to Elizabeth in any ancillary relief proceedings, was printed out and handed over to Zaiwalla, while the rest (some seven files) was collated and passed on to Elizabeth's solicitors; they were later passed on to Vivian's solicitors.

None too happy about this, Vivian sought and obtained interim relief to stop the brothers using information obtained from the documents, plus summary judgment for orders precluding both Robert and Vincent from (i) communicating or disclosing to third parties any information contained in them, (ii) copying or using any of them or information contained in them. Vivian also sought delivery up. After the brothers appealed, Elizabeth launched ancillary relief proceedings and Vivian them sought from her (i) the return of the seven files and any copies and (ii) an order prohibiting both her and her solicitors from using any of the information obtained in them. The judge ordered the conditional return of the files to that Vivian could identify any privileged material in them, but added that they then had to be returned to Elizabeth for the purpose of her ancillary relief claim.

Both sides appealed, Vivian denying that there was any legal justification for permitting a wife to retain copies of documents which she had unlawfully obtained on the grounds that to do so would assist in preventing or curing a less than frank disclosure by her husband of his assets.

The Court of Appeal (with Lord Neuberger, Master of the Rolls, reading the judgment to which both Lord Justice Moses and Lord Justice Munby contributed) allowing Vivian's appeal and dismissing that of the Tchenguiz clan and their solicitor. In the court's view,
* It was a breach of confidence for a person, without the claimant's authority, to examine documents or to make, retain, or supply copies of them to a third party where that person knew or ought to have known they were confidential to that claimant. This was because, at the heart of the claimant's right to confidentiality, the claimant has the choice of whether and, if so, to whom and how, to reveal his confidential information. Once this is shown, the claimant should be entitled to restrain use of publication of that information and to ask for any copies back: he should not be at risk of that confidentiality being actually or even potentially lost.

* White v Withers LLP [2009] EWCA 1122 established the proposition that the mere receipt of documents by solicitors from their client and their continued retention in connection with matrimonial proceedings could not give rise to a cause of action. This proposition should only be taken as applying to the receipt of documents by solicitors from their client and did not mean that a claimant could not recover the documents from the solicitors.

* The fact that misuse of private information was now recognised as an actionable wrong under English law did not mean that a claim for breach of confidentiality could not succeed in the absence of such misuse -- unless the claim was brought in respect of the pre-Human Rights Act 1998.

* The court would almost always order the return or destruction of wrongfully held information and copies of documents. If it didn't, the information would still be 'out there' in the possession of someone who should not have it.

* Confidentiality claims being based on equity, any relief ordered by the court was at its discretion. However, where confidential information is passed by the defendant to a third party, the claimant's rights will prevail as against the third party unless he is a bona fide purchaser of the information without notice of its confidential nature.

* It could not be argued that a husband could not enjoy rights of confidence as against his wife in respect of information which, if they were not married, would be confidential as against her.

* Under English law, while marriage might be a partnership of equals, there remained a sphere in which each spouse had, within and as part of the marriage, a life separate and distinct from the shared matrimonial life. This was implicit in the protection under the European Convention on Human Rights, Article 8, which each spouse enjoys in relation to his or her personal and individual private life, in contrast to their shared family life.

* Once a court found that a document was properly to be regarded as confidential to one spouse but not to the other, the relationship had no further relevance in relation to the remedy for breach of confidence.

* In this case Vivian had an expectation of privacy for most of his documents which he stored on the server and the fact that Robert had access to it as controller of the server did not affect this ("Confidentiality was not dependent upon locks and keys or their electronic equivalents": para.79).

*The illegal nature of the "self-help" in this case could not be condoned on the ground that it was feared that Vivian would unlawfully conceal that which had to be disclosed.

* The defendants could not rely on the so-called Hildebrand Rules in order to justify the retention of wrongfully obtained documents so that they could be admitted in evidence in matrimonial proceedings because "There are no such rules. There are no rules which dispense with the requirement that a spouse obeys the law" (para. 139).

* This was an extreme case of wrongful access to confidential material and Elizabeth should not be entitled to benefit in any way from the wholesale, wrongful, and possibly criminal, accessing and copying of the claimant's confidential documents.
The IPKat is, as ever, impressed with the Master of the Rolls' elucidation of the law and application of it to the facts. It seems to him entirely correct that confidentiality should be respected in this manner, and it's very reassuring for all of us who use computers extensively for the creation, storage and transmission of confidential information to know that the ability of a third party to access it does not diminish its confidentiality. Merpel says, I think Hildebrand's a great name for a cat ...

Theme song for this litigation here
Robert Tchenguiz and borrowings from Icelandic banks here
The fantasy world of Vincent Tchenguiz here
Other Vincents here and here

7 comments:

Gavin Ward, WardblawG said...

Great read, as usual Jeremy. And it is correct that the web needs more info about confidentiality, protecting trade secrets and know-how.

If you want to read more on the basic laws re confidentiality but not updated as at 2010, please see the UK's entry on a survey I collated on a summer placement working for Fiona Nicolson, Alison Bryce and Ross Nicol at MMS in 2007 http://www.lexmundi.com/lexmundi/IP_Commercialization_Survey_By_Jurisdiction.asp

Best wishes
Gavin Ward
MD
WardblawG Limited

Jeremy said...

What's "the pre-Human Rights Act 1998"? I wasn't aware of such legislation...

Gavin Ward, WardblawG said...

I believe that's the legislation to which the short-hand writer is accustomed.

In passing, without having reviewed the case's merits, it seems to WardblawG that a further argument could or perhaps should have been run based on the unauthorised access to a computer crime under s1 of the Computer Misuse Act 1990, as amended (http://www.opsi.gov.uk/acts/acts1990/ukpga_19900018_en_1#pb1-l1g1). It has, however, always seemed like that is more of a last-gasp argument, notwithstanding its place in a Section 1 spot in a UK statute.

Thomas Dillon said...

I second Gavin's praise and thanks.

I don't think, however, that the protection of confidential information is actually part of intellectual property law. It may be an arbitrary piece of categorisation, but in England at least the law of confidence is not a branch of the law of property. I have the feeling that it might be important in some contexts (crime, e.g.: Oxford v Moss) to assert this.

Jeremy said...

Thomas: I think a strong case can be made for categorising confidentiality within IP law and practice. Before an invention is patent-protected, the law of confidentiality guards it against unlawful use and disclosure; the employee's duty of confidentiality trumps his entitlement to patent his own invention if, to do so, he must divulge information belonging to his employer -- and the concept of publication of hitherto unpublished works in copyright law is a recognition of the actual or quasi-confidentiality of the unpublished work. Then there is the theory and practice of know-how licensing ...

Thomas Dillon said...

That is all plainly right and forgive a former pupil for being pettifogging - it is just that, to my mind, Equity operates upon the conscience of the defendant - in personam. That is not to say that Equity does not give rise to remedies in rem, as it evidently does, but we treat IP as giving rise to obligations against the world. We claim a special status for it - which I think is proper, but others do not. That is not to say that the law of confidence is not a proper part of a course on IP. It is not, however, a branch of the law of property - hence information cannot be stolen under the criminal law.

Gavin Ward, WardblawG said...

Thomas

That's a fair point you make. I think, perhaps, a better way of considering confidentiality would be under some other rather ethereal heading of law such as that relating to brand or idea protection, rather than IP protection. However, is "idea" not just a synonym for "intellectual product" or "intellectual property"? Clearly WardblawG loves word play and semantics.

Have a brilliant weekend gents. Mine just got a little bit after managing to procure http://blawgofjustice.com. Luckily, today is also pay day.

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