Confidentiality
Author:
Rockliffs Solicitors and IP Lawyers
Publish Date: June 28, 2010
Considerable steps are usually taken to ensure the protection of information exchanged between a principal and a tenderer. However, issues of confidentiality can also arise between the tenderer and potential sub-contractors.
In a recent case, a potential sub-contractor provided draft sketches of its design for a solution to occupational health and safety issues the tenderer had raised about conventional trailer designs.
Another company was ultimately awarded the sub-contract to design and manufacture the trailers. This design was alleged by the first company to incorporate its innovative and unique occupational health and safety solutions.
For a breach of confidence claim to be successful, the court must be satisfied that the information is confidential, that it was given in circumstances that generate an obligation of confidence, and that it was used in an unauthorised manner and to the detriment of the party that originally communicated it.
The court found that the information in the sketches and drawings had the necessary degree of confidence, as the design contained novel features compared to other existing trailers. It also found the secrecy of the information was of substantial concern to the sub-contractor.
Finally, the court decided the information was used in an unauthorised way, causing detriment to the sub-contractor. The court explained that the design information had been given for use in the tender, and this was the only purpose for which it was authorised.
To use the designs as part of the tender, the tendering company would have had to enter a manufacturing contract or pay a licensing fee to the designing company.
Principals and tenderers should be careful during the tender process when using and sharing information owned by another party and, where appropriate, obtain the necessary licences or deeds of assignment.
Reproduced with the permission of the Law Society of New South Wales.
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