Protecting your ideas
This section looks at how you can prevent someone from making unfair use either of your reputation or of your confidential information. The former is concerned with 'passing off' and the latter involves a consideration of how the law deals with issues of confidentiality and how you can take additional steps to protect yourself.
'Passing off' is where a third party uses the goodwill associated with your goods or services without authorisation which causes, or is likely to cause, the public to become confused between your goods and services and third party goods and services, resulting in, or potentially resulting in, loss to you. For example, usually, passing off cases would involve the scenario of the infringer 'copying' the 'get-up' of your goods/services by copying your packaging and overall presentation as seen by the consumer. This could cause the consumer to purchase the 'infringer's' goods/services unintentionally, when they actually believe they are purchasing your goods/services, resulting in a loss of sales to you. Passing off is often used as an additional/alternative court action to registered trade mark infringement claims and may succeed even if the registered trade mark claim does not.
Passing off is based on the idea that no one has the right to represent his goods/services as the goods/services of another. Passing off must be in relation to third party use of your goodwill in a commercial activity.
If you wanted to raise an action of passing off, the three elements that you must prove are 1) that you own goodwill or reputation in the mark 2) that the infringer's activities are likely to, or are causing, misrepresentation leading to confusion on the part of the public (i.e. that the goods/services are associated with yours) 3) that damage has been, or is likely to be caused, for example, a loss of profits.
Defences to passing off include:
- Use of own name
- Use other than in the course of trade
- That you have no goodwill or reputation in the mark
- Your acquiescence
- No provable loss to you
If you can prove passing off, remedies include:
- An injunction (or, in Scotland, interdict)
- Damages; or an account of profits
- An order to change the way the offending product is packaged or presented
- Order for delivery up or destruction of the offending products
- Declaration as to rights (Where, for example, two separate businesses have honestly acquired a reputation in a single mark or name, but in separate geographical areas, the court might make a declaration to specify that one business has the rights in the mark or name in one area, and the other business has the rights in the mark in the other area)
The broad principle under the law is that a person who has received information in confidence cannot take unfair advantage of it. That person must not make use of it to the detriment or disadvantage of the person who gave it without obtaining his consent.
For a breach of confidence claim to succeed, three criteria must be met:
1. The information must have the requisite quality of secrecy or confidence. For the information to be considered confidential, it must appear to have a confidential quality to it. A good indicator of whether information is confidential is whether it is labelled as such on the outside of a folder or if it contains a confidential watermark running through it. The consequences of the information being released into the public domain may also be relevant to the decision as to whether the information has the necessary confidential quality. For example, in areas such as patents or the registering of designs, certain information becoming public knowledge prior to the patent or design being registered would have huge consequences for the application. In a case such as this, the information would be treated clearly as confidential due to the nature of the outcome of that information being released into the public domain.
2. The information must have been disclosed in circumstances importing an obligation of confidence. When secret information is dealt with in a commercial setting it is usually the case that an obligation of confidence is created by an express contractual provision. These are called non-disclosure agreements and are a standard business practice across many different fields. If the obligation of confidence is not expressly provided then, in certain cases, there will be an implied duty of confidence. An example of where this would arise is in an employment setting, as employees are considered to owe an implied duty of confidence concerning trade secrets and such like to their employers.
3. There must be an unauthorised use of that information to the detriment of the party communicating it.
Whether information in a particular case is confidential, depends on all the circumstances. An express agreement (i.e. a non-disclosure agreement) about what is confidential information and what use may and may not be made of that information will avoid disputes arising.
In addition, a non-disclosure agreement will:
- Create certainty
- Establish a contractual obligation
- Facilitate enforcement and support a claim under the general law by creating the relationship of confidence that is the required basis of a claim
- Set out in detail the conduct that the disclosing party expects from the recipient
In commercial negotiations, non-disclosure agreements can be vital.
The following types of information may need to be kept confidential:
- The detailed commercial information provided to the recipient in the course of negotiations. This can include everything that the recipient finds out from the disclosing party - from customer lists to manufacturing processes.
- The fact that negotiations are taking place and their status. A leak of this nature is particularly detrimental when a listed company is involved as it could force the parties to make an announcement or expose them to allegations of insider dealing. But private companies do not normally want their employees, customers, suppliers or lenders to know about a proposed deal until they are confident it will go through. This is particularly true in the case of an acquisition. One of the oldest tricks used by acquirers is to let everyone know that the target business is for sale, putting it into a state of uncertainty, possibly even affecting its value and giving the acquirer a stronger negotiating position.
- The existence of the agreement, its detailed terms and conditions. The disclosure of this information could also be detrimental to the discloser (assuming that no listed company is involved and therefore no obligation to announce under market rules) and cause uncertainty in that it would alert people to the fact that some major commercial transaction was imminent.