Maggbury Pty Ltd v Hafele Aust Pty Ltd
[2000] QCA 172
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- Appeal Determined (QCA) - Appeal Determined (HCA)
- Maggbury Pty Ltd v Hafele Aust Pty Ltd[2000] QCA 172
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Maggbury Pty Ltd v Hafele Aust Pty Ltd[2000] QCA 172
Maggbury Pty Ltd v Hafele Aust Pty Ltd[2000] QCA 172
SUPREME COURT OF QUEENSLAND
CITATION: | Maggbury P/L & Anor v Hafele Aust P/L & Anor [2000] QCA 172 | |
PARTIES: | MAGGBURY PTY LTD ACN 011 007 793 (first plaintiff/first respondent) GISMA PTY LTD ACN 072 964 311 (second plaintiff/second respondent) v HAFELE AUSTRALIA PTY LTD ACN 006 021 432 (first defendant/first appellant) HAFELE GmbH & CO (second defendant/second appellant) | |
FILE NO/S: | Appeal No 1495 of 1999 SC No 8775 of 1998 | |
DIVISION: | Court of Appeal | |
PROCEEDING: | General Civil Appeal | |
ORIGINATING COURT: | Supreme Court at Brisbane | |
DELIVERED ON: | 12 May 2000 | |
DELIVERED AT: | Brisbane | |
HEARING DATE: | 17 February 2000 | |
JUDGES: | de Jersey CJ, Pincus and Davies JJA Judgment of the Court | |
ORDER: | Appeal allowed, judgment below set aside and replaced by an award of $5,000 damages. Parties are invited to make written submissions within 14 days as to costs, here and at first instance. | |
CATCHWORDS: | EQUITY – EQUITABLE REMEDIES – INJUNCTIONS – INJUNCTIONS FOR PARTICULAR PURPOSES – TO RESTRAIN BREACH OF CONTRACT – NEGATIVE STIPULATIONS – GENERALLY EQUITY – EQUITABLE REMEDIES – INJUNCTIONS – EFFECT, INTERPRETATION, ENFORCEMENT AND BREACH OF INJUNCTIONS – BREACH – WHAT CONSTITUTES BREACH – injunction restraining use of confidential information – unlimited as to time – most information publicly available at time of injunction – whether use of restricted information would amount to breach INTELLECTUAL PROPERTY – OTHER MATTERS – CONFIDENTIAL INFORMATION – WHAT CONSTITUTES AND GENERALLY – use of confidential information restricted under agreement – information subsequently made public – whether information still confidential as between parties to agreement TRADE AND COMMERCE – TRADE AND COMMERCE GENERALLY – RESTRAINT OF TRADE – RESTRAINT BY AGREEMENT – VALIDITY AND REASONABLENESS – IN GENERAL – REASONABLENESS – restriction of use of confidential information unlimited as to time – whether perpetual restriction reasonable to protect inventor's interest Restraint of Trade Act 1976 (NSW) s 4 Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288, followed Amway Corporation v Eurway International Ltd [1974] RPC 82, followed Attorney-General v Guardian Newspapers Ltd (No 1) [1987] 3 All ER 316, mentioned Bridge v Deacons [1984] AC 705, considered Buckley v Tutty (1971) 125 CLR 353, considered Butt v Long (1953) 88 CLR 476, mentioned Electronic Appliances (Commercial) v Toubkin [1962] RPC 225, followed Kone Elevators Pty Ltd v McNay (1997) 19 ATPR ¶41-564, mentioned O'Brien v Komesaroff (1982) 150 CLR 310, mentioned O Mustad & Son v S Allcock & Co Ltd [1963] 3 All ER 416, followed Plume v Federal Airports Corporation (1997) 19 ATPR ¶41‑589, considered Rentokil Pty Ltd v Lee (1995) 66 SASR 301, considered Suhner & Co AG v Transradio Ltd [1967] RPC 329, followed Woodward v Hutchins [1977] 2 All ER 751, followed followed Woodward v Hutchins [1977] 2 All ER 751, followed Wright v Gasweld (1991) 22 NSWLR 317, considered | |
COUNSEL: | J S Douglas QC, with him G C McGowan, for the appellants P R Dutney QC, with him S J Lee, for the respondents | |
SOLICITORS: | Shand Taylor (Brisbane) acting as Town Agents for Logie‑Smith Lanyon (Melbourne) for the appellants O'Shea Corser Wadley for the respondents | |
- [1]THE COURT: This appeal principally concerns contractual provisions which restrained the appellants from using certain information supplied by the first respondent (Maggbury). The appellants' argument depended in part upon criticism of the primary judge's factual conclusions. It is not necessary to deal with those criticisms, for in our view the real question is the way the law relating to protection of confidential information applies to the facts found; but it should be added that there seems no good ground for differing from the learned primary judge's findings. The agreements on which the respondents successfully sued were made with each of the appellants separately; one is dated 25 July 1995 and the other 13 November 1995. We shall quote the relevant terms of the first agreement only, that made with the first appellant, as the two may for present purposes be treated as identical.
- [2]The agreements were made during the course of communications between Maggbury and the appellants about domestic ironing boards made to fold against a wall, out of the way, and also ironing boards designed to fold into a drawer. Mr G W Allen, who controls Maggbury, had worked for some years to design such ironing boards and looked about for an established company to produce and market them. In June 1995 he began discussions with the first appellant, which is the Australian subsidiary of the second appellant, a Germany company. Contacts by phone and personally continued for about two years, when the appellants proffered and Mr Allen accepted a payment of $20,000; this was intended to settle any claims arising out of the negotiations, but Mr Allen did not accept it on that basis. The parties never made any agreement for the making or selling of boards based on the Allen designs.
- [3]In October 1997, the first appellant began distributing a wall‑mounted board having some features in common with the Allen design; when Mr Allen found out about this and was also told that there was a drawer-mounted version being made, the dispute leading to this case arose. The judge found that the wall-mounted board used information supplied to the appellants by Mr Allen and that the appellants were in breach of the agreement by making the wall-mounted boards and by importing and distributing them. His Honour rejected the claim relating to the drawer-mounted boards and it is unnecessary to discuss that further. Damages were awarded and an injunction granted.
- [4]There is a need to go into some detail about the issues raised before us. A preliminary observation, of a general kind, is that the injunction granted is unusual in that it is intended to restrict the use of commercial information which is and has for some years been publicly available. It does so without a time limit – that is, permanently. We have not been referred to any authority in which an injunction having these characteristics has been granted.
- [5]At the time the first agreement was made, representatives of the first appellant had gone to Maggbury's premises and been told that they could not inspect prototypes of the Allen ironing boards unless a confidentiality agreement was signed. That was done, as we have mentioned, on 25 July 1995, at a time when it was contemplated that (as in fact occurred) Maggbury would through Mr Allen supply information to the appellants about the designs, to further discussions with a view to their commercial exploitation. The same observation applies to the second agreement, that made with the parent company, the second appellant. The purpose of the confidentiality agreements was to ensure that the appellants would not, having abandoned Maggbury, use the information supplied by Mr Allen about his designs in order to make their own. Maggbury's wisdom in insisting on the confidentiality agreements is shown by the event which occurred; the appellants, using in part the information supplied, made their own wall-mounted ironing board, as mentioned above.
- [6]The principal arguments raised on behalf of the appellants were that the agreement should be read down, by way of an implication, so as not to protect publicly available information; that the agreements unreasonably restrain the appellants' trade and are therefore unenforceable; and that the injunction granted is uncertain in effect.
Construction of Agreements
- [7]The relevant parts of the first agreement read as follows, and the second agreement is in substantially the same terms:
"2.0 RECITALS
...
2.2 The Inventor and Hafele wish to hold discussions to consider mutually advantageous ways of commercially exploiting the Product (the "Purpose").
2.3 In the course of these discussions the Inventor or his representatives may disclose information about the Product to Hafele.
2.4 The Inventor and Hafele have entered into this Deed so as to set out the terms and conditions governing any disclosure by the Inventor about the Product.
2.5 Hafele has agreed to enter into this Deed to acknowledge the right title and interest of the Inventor in the Product and to scrupulously observe a strict code of confidentiality in relation to the Product.
3.0 DEFINITIONS AND INTERPRETATION
3.1 In this Agreement the following terms shall have the meaning ascribed to them below unless the context otherwise requires:-
- 'Information' means each and every record of information whatsoever disclosed, shown or provided to Hafele by the Inventor in relation to the Product and, without limiting the generality thereof, includes any writing, sketches, diagrams, models, film, video, tape plans, designs, drawings, manufactured prototypes, layouts, schedules or photographs.
...
(e) 'Product' means:
- the invention created by the Inventor being a foldaway ironing board assembly and in particular a folding ironing board mounted to a support structure such as a wall, kitchen unit, cupboard bench support, mobile cabinet or drawer;
5.0 THE INFORMATION
5.1 Hafele shall treat the Information as private and confidential.
5.2 Hafele shall not use the Information, or any part thereof, for any purpose other than to fairly and properly assess proposals canvassed with the Inventor in relation to the Purpose.
5.3 Hafele shall take all reasonable steps to ensure that the information is made known only to...(the "permitted persons").
...
5.6 Hafele shall not at any time hereafter use the Information for any purpose whatsoever except with the Inventor's informed prior written consent".
The "Inventor" is Maggbury.
- [8]It is not argued that there is any difficulty of construction, in the ordinary sense; if the judge's factual findings are accepted – and there appears to be no reason to reject them – then there has been a breach of both clauses 5.2 and 5.6, if they are read literally. But a question has been raised about an implied term. The appellants argue that a term should be implied to exclude information in the public domain from the obligations set out in cl 5.
- [9]An oddity about this aspect of the case is that the respondents' further amended statement of claim, in para 6, made an allegation in the alternative, that each agreement was subject to an implied term, limiting the obligations it created "to subject matter which was confidential at the time of breach or threatened or intended breach". The further amended defence delivered by the appellants admitted the implied term. But the existence of such a term has ceased to be common ground. That is presumably because, as will appear, limiting the agreements to confidential information would greatly reduce if not destroy the usefulness, to the respondents, of the injunction which was granted.
- [10]The suggested implied term would not directly contradict anything in the agreements, but a reader of them would find it difficult to accept that Maggbury would have intended the "information" as defined in cl 3.1(a) to have the restricted meaning which acceptance of the implication would give it. So far from meaning that "information" means "each and every record of information whatsoever disclosed, shown or provided ... in relation to the Product", the implication would protect only certain parts of that information. It should also be noted that cl 5.1 requires that the information stipulated be treated as "private and confidential" which seems to mean that it shall be so treated whether or not it is in truth confidential. Looking at the matter more broadly, each agreement, headed "Deed of Confidentiality", is drawn with some care to give very extensive protection against disclosure of any information about the boards which Maggbury supplied; it is unlikely that the parties meant, but by an oversight omitted to say, that only truly confidential information was intended to be protected.
- [11]It is arguable that special considerations apply to the making of implications reading down broadly defined protection which is under suspicion of being too broad to be enforceable. This topic is discussed below.
Enforceability
- [12]The two substantial objections to the enforceability of the protection afforded by the agreements are that they purport to restrain disclosure of any of the information supplied, whether confidential or not, and that they operate without limit as to time. As to the former point, it was clear from the evidence that at least the substance of the invention was in fact made public; the point is discussed below, under the heading "Invention Made Public". A restraint is not enforceable "unless it affords no more than adequate protection to the interests of the covenantee in respect of which he is entitled to be protected": Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 306; see also in Amoco per Gibbs J at 315, 316; Bridge v Deacons [1984] AC 705 at 713; Buckley v Tutty (1971) 125 CLR 353 at 376. Maggbury's interests required, in our opinion, protection against any possible disadvantage which it might incur, in the absence of confidentiality agreements, as a result of disclosures made to the appellants. In particular, it was of course entitled to protection against events of the kind which took place, namely that the appellants used some of the information supplied to assist them in designing a board of their own.
- [13]But did the adequate protection of Maggbury's interests require that the appellants be prevented from using information covered by the agreements even after it had been disclosed to the world? And did it require such protection permanently? These matters have to be decided as at the date of the agreements.
- [14]In the course of discussion of these points, before us, it was pointed out that the appellants could comply fully with the agreements, so far as they related to publicly available information, by ensuring that the source to which they went to get such information was the public one, rather than what was obtained from Maggbury. To put this in practical terms, in a way which is related to the facts of the present case, if a patent specification were published disclosing the important features of the Maggbury design then it would be no breach of the agreements to copy those features, even if they were substantially the same as information supplied by Maggbury; so having to go to the public source rather than using their own private source, to obtain the identical information, is (it was argued) no hardship to the appellants but merely an inconvenience. And to the appellants' argument that they would be in peril, in such a situation, of a finding against them that they had not been careful to exclude access to the information referred to in the agreements, the answer was made that any such risk could be averted by various means, such as using a new design team uncontaminated by any knowledge of the information supplied by Maggbury.
- [15]The difficulty in the path of Maggbury is that it has to show (the onus being upon it) the propriety of the restraint, from the point of view of protection of its own interests. It has the advantage that the law will allow the parties considerable freedom, where they are bargaining on an equal footing, to judge what is reasonable in their own interests: Amoco (above) at 316, 317. No doubt subjecting the appellants to the inconvenience and the risk to which we have referred would be a hindrance to the appellants and their business and a corresponding advantage to the appellants' competitors and potential competitors, including Maggbury. But it appears to us impossible to conclude that requiring the appellants, where a design feature can be drawn from a public source or from Maggbury's information, to use only the former, is no more than is necessary to protect Maggbury's interest in that information. Where the information is public, having been made so by Maggbury, it would not become less so if the terms of the agreements are followed by the appellants; the only outcome of their compliance which would be potentially useful to Maggbury would be a complication, and therefore a hindrance, in the conduct of the appellants' business – not the preservation of secrets.
- [16]The general question of restraint of further publication of information which has already become public does not arise here; see Attorney-General v Guardian Newspapers Ltd (No 1) [1987] 3 All ER 316. This Court is concerned with the narrow topic of protection under contract of a confided design and whether it can legitimately extend to a design which is at the time of contract, or later becomes, public property.
- [17]In O Mustad & Son v S Allcock & Co Ltd [1963] 3 All ER 416, the House of Lords had to consider a contractual constraint of the present kind; there the covenantor was an employee. The employee, after his employment ceased, breached the agreement by disclosing information caught by it. While an action to restrain the employee was pending, a patent specification was published by the plaintiffs which disclosed the essentials of the information in question. The House of Lords held that:
" ... after the disclosure had been made by the appellants to the world, it was impossible for them to get an injunction restraining the respondents from disclosing what was common knowledge". (418F)
The legal basis of the rule applied in Mustad is not stated; it appears to have been treated as beyond question that the contract could not protect the plaintiffs, once they made the information in question public. The decision, which is discussed usefully in Toulson and Phipps: Confidentiality (1996) para 4.05, gives some encouragement to the notion that protection of commercial information which the covenantee has made public goes beyond what the legitimate interests of the covenantee require.
- [18]With respect to the lack of a time limit, the position appears to be even clearer. Statutory protection of copyright and patents is limited as to time, but this contract purports to give eternal protection, which can surely not be necessary. See Wright v Gasweld (1991) 22 NSWLR 317 at 327 FG, 332(3). Perhaps anticipating this objection, cl 11 of the agreements, after requiring that the obligations of confidence be observed "forever", specifically requires their observance:
"(a) upon the signing of this agreement;
(b) while the Purpose is being carried out;
(c) after the Information is returned; or
(d) after the Commercial Party becomes liable to return the Information".
It is safe to assume that this form was adopted to encourage severance; it does not assist Maggbury in the present circumstances. Situations can be imagined in which permanent prohibition of use of information divulged is necessary to protect the covenantee's interests, but it appears that ordinarily, in a commercial context, a time limit of some sort must be fixed; this is illustrated by the Federal Court decision in Plume v Federal Airports Corporation (1997) 19 ATPR ¶41-589 at 44,136. It will be noted that in that case the judge thought the necessary time limit had probably been left out in error, but was unwilling to make any implication in favour of validity.
- [19]This leads to another aspect of the argument about an implied term, discussed above. In England there has arisen what Mr Robert Dean in his work on The Law of Trade Secrets (LBC, Sydney, 1990) refers to as the flexible approach. This has two aspects: first, reading restraint clauses down by rejecting words which consist of "unskilful drafting in which the draftsmen inserted rather too wide words" and, secondly, leaving "improbable and unlikely events" out of consideration when looking at validity (at 394). In Rentokil Pty Ltd v Lee (1995) 66 SASR 301, Doyle CJ was prepared to accept that restraints of the present kind should not be held void merely because of circumstances "falling within the restraint but either unlikely to occur or not within the contemplation of the parties" (at 304). Matheson J read down the relevant covenant by consideration of what it was "aimed at" (326) and a similar approach was taken by Debelle J (at 340). In New South Wales a statute permits a reading down to achieve validity: The Restraints of Trade Act 1976, s 4. In discussing it, Sheller JA said in Kone Elevators Pty Ltd v McNay (1997) 19 ATPR ¶41-564 at 43,833, that the statute "confirmed and enlarged the capacity of the Court to enforce just and reasonable covenants which may on their face be too widely expressed".
- [20]The High Court has in no case we have found given any encouragement to severance by this process of reading down; see Butt v Long (1953) 88 CLR 476 at 488. It appears that, nevertheless, this Court should follow the approach of the South Australian Full Court in the Rentokil case and apply the doctrines to which Mr Dean refers in his work. To do so will amount to making contractual excisions or additions to avoid outcomes which appear to be contrary to the parties' true intentions. Unfortunately for Maggbury, however, these principles cannot in our view be stretched to reduce the express obligations so far as to achieve validity, in the present case. Writing in a restriction limiting the contractual obligation to information which is truly a trade secret or otherwise confidential, or writing in a time limitation would, as it appears to us, simply be a process of redrafting, in a way which could not plausibly be asserted to be merely giving effect to the parties' true but unskilfully expressed purpose.
- [21]We therefore conclude that the learned primary judge should have held the relevant promises to be invalid.
Invention Made Public
- [22]As foreshadowed, in this section we will discuss the evidence that the invention was made public. That was a matter which was not in essence disputed; but counsel for Maggbury sought to argue that some aspects of the invention might have been preserved from disclosure. If contrary to our view the agreements are enforceable there would remain a question whether the principles of equity would favour the grant of an injunction preventing the appellants from using information which is publicly available.
- [23]Although the details of the invention evolved with time, it seems evident that those aspects of it which were then considered to be of particular value must have been included in an international application which Maggbury published under the Patent Co-Operation Treaty on 18 February 1997. On the second day of the trial counsel for Maggbury made reference to that publication, saying in effect that most of the features of the board in issue would have been disclosed by the publication of the specification in February 1997, but that a number of features "being the specific design detail of the ironing board" were not disclosed.
- [24]The judge made no findings on this point; some indication of what turned out to be significant in the Allen designs is to be found at p 15 of the judge's reasons:
1. Leaves constructed of perforated metal with a tubular steel frame.
2. Supported on U shaped wall brackets.
3. Multiple key-holed mounting points.
4. Two-plate carousel.
5.U shaped intermediate support frame with a flat plate welded across it.
The judge also referred to some more trivial similarities which it is not necessary to discuss.
- [25]It appears to us that all these features except possibly the last are present in the published specification. Looking at the matter more generally, it would be surprising if a patent specification intended to protect a number of different embodiments of the invention would fail to set out, with a view to obtaining protection for them, all aspects of the invention thought by the inventor to be of value. It was common ground that no aspects of the Allen design were considered individually inventive. The argument which was put forward and accepted by the primary judge was that the combination of features was worthy of protection. But no attempt was made to show that the combination disclosed in the patent specification published in 1997 kept from the public any worthwhile aspect of the various combinations of features it disclosed.
- [26]Apart from the patent specification just discussed there were other disclosures of the invention, consisting principally in displays of Maggbury boards at trade fairs in Sydney and in Melbourne in July 1996. Mr Allen demonstrated the advantages of the boards to the people who came to the fairs. When asked by the judge what features of the ironing board would the people who came to the Sydney fair not be able to see from the demonstration Mr Allen gave, he answered "probably none, I would think". A difference between the disclosure at the trade fairs and the disclosure by the patent specification is that only people in the relevant trade or trades came to the fairs, whereas the patent specification was, as in Mustad, open for inspection to all.
- [27]None of these three disclosures included specific information as to dimensions, except insofar as it might be judged from observation (or, perhaps, obtained by questions at the fairs). There was, however, no finding that the precise dimensions of the sheets of metal and fastening constituted information of any special value. The view that they did not is supported by the affidavit of Maggbury's expert Mr A W Chaseling, discussing the differences between the Maggbury wall‑mounted board and the appellants' wall-mounted board. Speaking of the fact that both boards have tubular steel frames supporting thin steel perforated sheets, that both are supported on wall-brackets formed from 3mm steel sheeting and matters of that sort, Mr Chaseling comments that these are –
" ... common engineering features when considered separately and in applications other than ironing boards. While they may be used in combination to produce an item with a desired function, they are by no means the only features which could have been employed".
Mr Chaseling goes on to give examples of this proposition. There is nothing in Mr Chaseling's affidavit to suggest that precise thicknesses of steel used constitute valuable information; nor does the witness's oral evidence give any support to that view of the matter.
- [28]In this connection the judge's observations about Maggbury's patenting prospects should be noted:
"Moreover, the main if not the only idea which Maggbury hopes has protection is the linkage arrangement between the wall-mounting and the U shaped support arm. [The appellants] abandoned this mechanism for a safer, probably cheaper, pivoting arrangement ...".
- [29]Maggbury won the case because the judge found that their wall-mounted board copied some aspects of the Maggbury design. Insofar as the features copied were not what Mr Chaseling described as "arbitrary" - referring to such matters as the use of a particular rather than a slightly different gauge of steel – it seems probable that they had all, or substantially all, been disclosed by the patent specification and the exposure at trade fairs. We were not asked, if of opinion that what was disclosed by the patent specification or what was disclosed at the trade fairs, or the combination of both, could not be protected as confidential, to reduce the scope of the injunction accordingly. Nor, in our opinion, would it be right to do so. Insofar as the patent specification failed to disclose any information about the invention, it is likely to have been either commonplace or of no real significance.
Form of Injunction
- [30]The appellants objected to the form of injunction granted. We do not here set it out, but will write on the assumption that the reader of these reasons has access to the order. This discussion is unnecessary if our conclusion that the agreement cannot be enforced is correct.
- [31]It has a minor defect in that para 2(b) should begin with the words "manufacturing or distributing". The formal order does not confine its operation to information which is confidential or to information which is not publicly available. One of the prohibited sources in the order is information obtained from the versions of the wall-mounted board displayed at the trade fairs discussed above, and another version displayed at a fair in Germany in 1995: para 2(f) and (g). It has been argued for the appellants that it is unsatisfactory to include among the prohibited sources material not tendered in evidence, such as the objects just discussed, and that appears to us to be correct, although the force of this objection is weakened by the fact that photographs of the objects were tendered.
- [32]But a more formidable difficulty is that, if the evidence in an application for contempt shows that a particular feature in one of the appellant's models is identical with a feature in one of the various versions of Maggbury board referred to in the injunction, being a feature which has been publicly disclosed or is commonplace, the Court will have to delve into the process whereby that feature came to be in the appellant's board – from one of Maggbury's versions, on the one hand, or from information published by Maggbury or common knowledge, on the other.
- [33]There is much authority emphasising that an injunction restraining the use of confidential information should not be in such terms as to be likely to give rise to difficult or embarrassing questions when it is sought to prove breach: Suhner & Co AG v Transradio Ltd [1967] RPC 329, Amway Corporation v Eurway International Ltd [1974] RPC 82, Woodward v Hutchins [1977] 2 All ER 751, and Electronic Appliances (Commercial) v Toubkin [1962] RPC 225. Here the problem the Court would encounter would not be to discriminate between confidential and other information, that being the main difficulty in the sorts of cases to which we have referred. It would probably be to determine whether the presence of a feature which is in truth publicly known or commonplace is to be found in the appellant's board as a result of, for example, one of its employees having once looked at a drawing supplied by Maggbury. It appears to us that that task could fairly be described as embarrassing, not least of all because it would seem to make little practical difference to Maggbury whence the feature was derived.
- [34]The order requires to be more self-sufficient and not to make proof of breach depend upon proof of the identity of any item which the order lists as a protected information source. If as is our view, any order made should protect only information which is confidential rather than public or commonplace, what if anything is to be protected on that basis should be as precisely identified as is practicable: O'Brien v Komesaroff (1982) 150 CLR 310 at 326, 328.
Damages
- [35]The judge awarded damages to the respondent assessed at $25,000 for "loss to date caused by the breaches of contract". His Honour fixed the amount by reference to the loss in value of Mr Allen's information because of the manufacture and distribution of the appellants' wall-mounted board. Since the agreements are, in our opinion, unenforceable, the question remains whether the damages award can be sustained under the general law i.e. in the law of equity. The statement of claim covered such a claim and it was also put forward in Maggbury's submissions below. The contention made there was that some features of the invention which had not been disclosed – presumably meaning publicly disclosed – had been incorporated into the appellants' product. The only features identified were screw sizes and gauge of steel, which appears to be a slim basis for an award of damages. However the fact remains that on the judge's findings there was copying of features disclosed. The evidence suggests that, to some extent at least, copying was done to save the appellants what would not have been a great amount of trouble in design work. But information was supplied confidentially and it was used in breach of confidence. We would not remit the case for reassessment, but recognise the appellants' breach of their obligation by an award against them of equitable damages in the sum of $5,000.
Summary
- [36]1. In our opinion, the agreement not to use information is unenforceable, because it has no time limit and it covers all information whether or not publicly disclosed.
- No injunction should be granted under the general law, because the information has been made public, so far as it is of significant value.
- If an injunction were granted, it would have had to be in a form which confined its operation to information not publicly available.
- The award of damages should be upheld, under the general law, but should be reduced to $5,000 to reflect the fact that the information used was at least in large part publicly available.
- [37]We would allow the appeal, set aside the judgment given below and replace it by an award of $5,000 damages. We would invite the parties to make written submissions, within 14 days, as to costs, here and at first instance.