15 May 2006

Confidential Information: Norbrook Laboratories Ltd v. Bomac

The interesting point about the Privy Council's judgment in Norbrook Laboratories Ltd v. Bomac Laboratories Ltd (New Zealand) [2006] UKPC 25 (4 May 2006) is that it was expressed as a decision in contract. This is a departure (at least in emphasis) from many recent decisions on confidentiality such as Campbell v MGN Ltd [2004] UKHL 22 (6 May 2004) that have treated a duty in confidence as a freestanding equitable obligation in its own right quite independent of any contractual obligation.

In Norbrook, by contrast, the claim was for breach of a confidentiality agreement. Clause 3 of an agreement by which a UK manufacturer disclosed the formula and other confidential information about one of its products to its local distributor so that it could obtain permission from the licensing authority to distribute the product in Aotearoa-New Zealand required the distributor to "maintain in confidence and not use, except as contemplated herein, any information provided by NORBROOK or its agents" for 15 years from the date of receipt. In the event the application was successful. A licence was obtained and the product was marketed successfully in NZ.

Problems arose when Norbrook decided to cut out the Aotearoa-NZ middle man and market its products directly in the dominion. The distributor decided to obtain a comparable product from another source and eventually found a supplier in Argentina. In discussions with the Argentine supplier the distributor disclosed information that had been part of the information that Norbrook had disclosed to it in confidence to pass on to the licensing authority. When he made the disclosure the official believed honestly and sincerely that the information that he had disclosed was in the public domain.

The trial judge took the view that he had been right but his decision was overturned by the NZ Court of Appeal on the ground that the judge's findings of fact were unsustainable (see Norbrook Laboratories Limited v Bomac Laboratories Limited [2004] NZCA 56 (5 May 2004)). However, it did not disturb his judgment dismissing the claim on the ground that "there was no misuse of confidential information in this case" (page [43]).

The Privy Council was unable to agree. It found that there had been a disclosure of confidential information by the NZ company to its Argentine supplier in breach of the non-disclosure agreement. The Board was quick to stress that that disclosure may have made no difference because the secret formula may already have been known to one or other of the parties but that was an issue that had not been explored fully by the courts below. Setting aside the decision of the trial judge and Court of Appeal the Privy Council ordered those points to be considered by the High Court of NZ.

Before closing this post I have to apologize for the lack of material over the last few weeks. That was largely because my time has been taken up with organizing the IPCEX event on ADR and IPR which, fortunately for me, turned out OK. I will give more details of that seminar when I return from DLA Piper's seminar on dispute resolution in China which is to take place in London tomorrow. China is my new interest and I shall report on that too when I get back from the Smoke.

No comments: