1 Protecting Confidential Information Recent Developments Presented by Dr Stephen Lee, Barrister-at-Law

2 Overview Three Avenues For Protecting Information Breach of Confidence When Is Information ‘Confidential’? Breach of Contract Nine Lessons from Maggbury / Drafting Tips Implied Freedom of Communication on Political Matters: A Constitutional Defence Regulation 7 (13) of the Public Service Regulations (Cth)

3 Information is confidential when:  it is generally inaccessible  it is useful, as opposed to useless or trivial. When Is Information Confidential?

4 Three Particular Avenues For Protecting Information 1. The equitable doctrine of breach of confidence 2. The law of contract 3. Breach of fiduciary duty

5 Breach of Confidence The four requirements necessary to succeed 1. The information must have the necessary quality of confidence about it 2. The information must be disclosed to the Defendant in circumstances importing an obligation of confidence 3. There must be actual or threatened unauthorised use of the information, or disclosure of it to a third party, to the detriment of the Plaintiff 4. There must be no defence available

6 Breach Of Confidence - Defences Defences to an action for breach of confidence include:  ‘unclean hands’  the confidence itself relates to the commission of a crime, civil wrong or other misconduct which the public interest requires to be disclosed to a party with a legitimate interest in receiving the information  a defence based on the implied constitutional freedom of communication.

7 Breach of Contract – Confidentiality Clauses The limits of the ability to prevent the use or disclosure of information by contract are defined by the following (in addition to the usual requirements for the formation of a valid contract or other defences of general application):  a strict rule of construction  the rules governing implication of terms  the restraint of trade defence  a defence based on the implied freedom of communication about political matters.

8 Breach Of Contract – Rule of Construction The High Court held in Maggbury Pty Ltd & Anor v Hafele Australia Pty Lts & Anor (2001) 210 CLR 181 that references to ‘information’ in confidentiality clauses are construed as referring to information which is confidential at the time of the alleged breach, unless a contrary intent is evinced explicitly.

9 Breach Of Contract – Restraint of Trade Doctrine The majority of the High Court held in Maggbury Pty Ltd & Anor v Hafele Australia Pty Ltd & Anor (2001) 210 CLR 181 that: 1. The restraint of trade doctrine applies to a confidentiality clause because and when it in fact prevents a promisor who is in trade from doing activities which form part of that trade 2. A confidentiality clause which is unlimited in duration is more than adequate protection for a trade secret which is likely to be placed into the public domain within a year or two after the making of the agreement.

10 Breach of Contract – Implied Terms On a continuum, information might be said to fall into one of three categories: 1. Information which is publicly available (eg on a patent register) or trivial or useless 2. The kind of ‘know-how’ which amounts to ordinary skill and knowledge and which would be useful to a competitor, but which is not confidential because it is common to a particular trade or calling though not generally known 3. Confidential information properly so called. The implied term not to use or disclose confidential information only applies to category 3 information, though it survives the termination of the relationship. The duty of good faith and fidelity is limited to conduct during the relationship but extends not only to category 3 but also category 2 information.

11 Nine Lessons from Maggbury Drafting Tips 1. Choose and implement your strategy carefully 2. Where applicable, be mindful of the law of patents and copyright 3. Draft a reasonable period of restraint to protect confidential information 4. You can protect ‘category 2’ information during the employment 5. Spell out explicitly an intention to claim non-confidential information 6. Include express confidentiality clauses 7. Use cascading clauses 8. Include a contractual right to an account of profits and injunctions 9. A restraint can be unlimited as to time if the restraint of trade doctrine does not apply, subject to the constitutional defence

12 Implied Freedom Of Communication on Political Matters: A Constitutional Defence Three recent cases show that this defence applies to claims for breach of confidence, breach of confidentiality clauses and some other general law claims:  ABC v Lenah Game Meats Pty Ltd (2001) 208 CLR 199  Bennett v Human Rights and Equal Opportunity Commission (2003) FCA 1433 (10 December 2003)  R v Her Majesty’s Attorney-General for England and Wales, unreported, Privy Council, 17/3/03, PC App No 61 of 2002

13 Regulation 7(13) of the Public Service Regulations (Cth) provides: ‘An APS employee must not, except in the course of his or her duties as an APS employee or with the Agency Head’s express authority, give or disclose, directly or indirectly, any information about public business or anything of which the employee has official knowledge.’

14 Breathtaking bravado foils speed camera QC received a very amusing although naughty from a spy at the Department of Transport this week. Our mate informs us that four youths from Canberra recently pulled off a trick of breathtaking bravado to gain revenge on a mobile speed-camera van operating in the area. Three of the group approached the van and distracted the operator’s attention by asking a series of questions about how the equipment worked and how many cars the operator would catch in a day. Meanwhile, the fourth musketeer sneaked to the front of the van and unscrewed its number plate. “After bidding the van operator goodbye, the friends returned home, fixed the number plate to the car and drove through the camera’s radar at high speed – 17 times,” our transport spy writes. “As a result, the automated billing system issued 17 speeding tickets to itself. Go Aussies!” Courier Mail 31 January 2004 Queensland Confidential