Monday 25 January 2021

Travel Counsellors Ltd v Trailfinders Ltd: breach of confidence and the reasonable person

What happens when ex-employees of a competitor bring client information with them when they go to work with a new employer? In Travel Counsellors Ltd v Trailfinders Ltd [2021] EWCA Civ 38, the Court of Appeal held that an equitable duty of confidence on the new employer arises if a reasonable person would make enquiries about whether it is confidential, but the recipient fails to do so. 

The appellant argued that the judge had applied the wrong legal test in holding that the appellant owed an obligation of confidence to its rival in respect of the relevant information. According to the appellant, the equitable obligation would only arise if the recipient knew or had notice that the information was confidential. Whether it had notice of the confidential nature of the information has to be assessed objectively, by reference to a reasonable person standing in the recipient's position. And just because a reasonable person would make enquiries about whether the information (or some of it) was confidential was insufficient for an obligation of confidence to arise.

Arnold LJ, with whom Lewison LJ and Asplin LJ agreed, noted that there was surprisingly little authority. He cited his own judgment in Primary Group (UK) Ltd v Royal Bank of Scotland plc [2014] EWHC 1082 (Ch), as well as the Court of Appeal's decision in Racing Partnership Ltd v Done Brothers (Cash Betting) Ltd [2020] EWCA Civ 1300. On the basis of these cases he decided that:

... if the circumstances are such as to bring it to the notice of a reasonable person in the position of the recipient that the information, or some of it, may be confidential to another, then the reasonable person’s response may be to make enquiries. Whether the reasonable person would make enquiries, and if so what enquiries, is inevitably context- and fact-dependent. If the reasonable person would make enquiries, but the recipient abstains from doing so, then an obligation of confidentiality will arise

On the other hand, where the issue is accessory liability for misuse by another person rather than primary liability for misuse of confidential information, it may be necessary to show actual knowledge or turning a blind eye.

Cases like this are always fact-dependent, but the decision seems to place a significant burden on the recipient of information - although it does seem from the judgment that anyone offered information about clients in these circumstances really ought to sense that something is not quite right.

Florence Foster Jenkins and joint authorship

"Movie makers do lunch, not contracts", said now-retired* Judge Alex Kozinski in Effects Assoc., Inc. v Cohen, 908 F.2d 555, 556 (9th Cir. 1990), cert.denied, 498 U.S. 1103 (1991). The writers of screenplays are also disinclined to write contracts, it seems - although in the recent-decided case, Martin & Anor v Kogan [2021] EWHC 24 (Ch) (11 January 2021), it was perhaps excusable given that the two collaborators were also romantically involved. Mr Martin was (and is) a professional scriptwriter, and Ms Kogan an opera singer. 

Before they met, Mr Martin did not know of Florence Foster Jenkins, but she became the subject of the first of his feature film scripts to be produced, and the film was a great success. But was it really his script?

Mr Martin and a number of companies involved in the production sued for a declaration that he was the author of the screenplay and the sole owner of the copyright; Ms Kogan sought a declaration that she was a joint author and therefore joint owner of the copyright, and she also claimed damages for infringement against the various production companies. The case came before HHJ Hacon in the Intellectual Property Enterprise Court in 2017, and he found for Mr Martin. Ms Kogan (represented by, among others, Lionel Bently) appealed, and the Court of Appeal (which included Floyd LJ, a distinguished intellectual property barrister before he became a judge, who delivered the judgment of the court) decided that the first instance judgment was wrong. Unusually, because the Court of Appeal must avoid involving itself in detailed and complex re-asessments of factual findings by a judge, it sent the case back for a new trial before a different judge - specifying a full-time circuit of High Court judge. It ended up in the Chancery Division before Meade J, who became a High Court judge on 7 September last year.

The Court of Appeal found that the judge had made a number of errors. He had tried to draw a distinction between primary and secondary skills in assessing the parties' respective contributions, a distinction that the Court of Appeal found had no basis in law. He had also failed to consider the screenplay as a dramatic work, with many differences from a literary work.

The case raises a number of important and interesting questions, of which the most significant (for a copyright lawyer) is what sort of contribution to a collaborative work is going to make the second collaborator a joint author. The secondary question of how to work out what proportion of the copyright should belong to each joint owner is also pretty significant. There is also a lot more to the case - the judgment runs to 72 pages, although it is fact-heavy so it needs a lot of exposition.

Although the largest part of the screenplay had been written by Mr Martin, the original idea had been Ms Kogan's and she had also been involved in the characterisation and had contributed some technical terms. She had been involved in the work through several drafts and the judge was satisfied that she had made an authorial contribution to the work that was not distinct from Mr Martin's; in the judge's words: 'Trying to separate them would be like trying to unmix purple paint into red and blue' - like Kamela Harris's carefully-chosen bi-partisan inaguration outfit.

The judge decided that Ms Kogan was entitled to a 20 per cent share of the copyright. The starting assumption with joint copyright is that the parties will have equal shares, but clearly the parties' respective contributions here demanded something else. The judgment confirms that the parties hold their shares as tenants in common, not as joint tenants.

*Under a cloud, it's fair to say, but I think it's still acceptable to quote him especially since he's a master of one-liners.

Rabbit skin patent refused

An appeals board of the European Patent Office has upheld the refusal of a patent for "rabbit skin comprising biological active substance and its use" on public policy grounds. And, having read the first claim, I heartily approve; more than that, I am appalled not only that the application was ever filed (it was an international application seeking a European patent, by a Chinese pharmaceutical company) but that the invention was even devised. Claim 1 is just ghastly.

Article 53 (a) EPC tells us that European patents will not be granted in respect of (the draftsman must have been paid by the word, otherwise why not just "for"?) inventions the exploitation of which would be contrary to ordre publique or morality. (Note that it's the exploitation of the invention that has to be considered, not the invention itself, or the rights and wrongs of giving it patent protection) The applicant argued that in Decision T19/90, which I would have recognised more easily had the Board referred to it as Onco-Mouse, the suffering of the unfortunate animal had to be weighed against usefulness to mankind, a point reinforced by the EPO's examination guidelines (GII- 4.1) .

Unfortunately the Guidelines and the Board's decision fall into saying "ordre publique and morality", which is probably acceptable of the word "and" is construed disjunctively - but why on earth depart from the clear wording of the Convention? It is plain that the two concepts are independent, and the fact that the guidelines mention anti-personnel mines as an example seems to me to reinforce the distinction. Anyway, it appears clear enough that the Article does not intend that ordre publique and morality be cumulative requirements. But which was engaged in the present case? That isn't clear. The Board, and the Onco-Mouse board before it, seem to have treated ordre publique and morality as synonymous, which I don't think can be correct. Both decisions go on to balance the suffering of animals against the invention's usefulness to mankind - which is appropriate if ordre publique is being considered, because there are competing public policy goals involved, but surely not if you are considering morality, which has to be absolute.

In the end the Board came to what I think (as if anyone cares what I think) is the right decision, albeit perhaps not for the right reason. Its view was that the invention lacked the degree of usefulness needed to outweigh the suffering its exploitation would cause, because while it was the only way to produce the product, there were other products that do the same job. But I do wish it could have got there more directly.



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