The Employment Appeal Tribunal (“EAT”) in the case of Marangakis... Read More
No proof of loss or damage required in equitable breach of confidence claim
The High Court in the case of Weiss Technik UK Ltd and others v Davies and others has recently considered the question of whether it is necessary for an employer as a claimant to prove loss or damage to have an equitable breach of confidence claim.
The claim was brought by a number of companies in the Weiss group (Weiss) against four former employees and a company – SJJ System Services Ltd (SJJ) – for breach of confidence, copyright & database right infringement and inducing/procuring breaches of contract. The corporate defendant (SJJ) was set up by one of the four individual defendants, namely Mr Jones.
Weiss argued that Mr Jones obtained and used confidential information from Weiss to set up SJJ and compete with Weiss; and that the other defendants continued to provide Mr Jones and SJJ with Weiss’s confidential information before they left Weiss.
The formulation for breach of confidence is found in Coco v AN Clark (Engineers). Coco established three elements for a successful breach of confidence claim including:
- The information ‘must have the necessary quality of confidence’.
- The information ‘must have been imparted in circumstances importing an obligation of confidence’.
- There must be a detriment arising from the use of that information.
The High Court upheld all of Weiss and others claims noted above. The judgment focused largely on the breach of confidence claim and in particular on whether detriment to the Claimants was necessary to establish a breach of confidence as an equitable claim. Notably the existing authorities dealing with whether it is necessary to establish detriment to the Claimants were not clear on this point.
It was found that the mere copying of confidential information ‘for the purposes of a competing business’ is an equitable wrong without the need for the Claimants to show that they suffered loss and damage as a result.
The case arguably expanded the scope of breach of confidence by finding that it is not necessary for a claimant to prove loss or damage to establish that they have a valid equitable breach of confidence claim. Practically, this case highlights that the defendant’s purpose in obtaining the information is more important than its impact on the claimant.