Confidentiality orders in court proceedings

Motorola is suing Hytera for infringement of its patents relating to mobile phone technology.1 As part of the proceeding, Hytera is seeking to invoke a Digital Mobile Radio Essential Properties Cross Licence Agreement. Hytera has obtained an order that information about various terms in the agreement be kept confidential (I.e., suppressed) for 10 years after the proceeding is decided.

Section 37AF of the Federal Court of Australia Act provides the Court with power to suppress or restrict the publication of evidence. In the case of confidential information, such as trade secrets, the party seeking to restrict access to the information must show under s 37AGthat the restriction “is necessary to prevent prejudice to the proper administration of justice”.

Perram J noted that some scepticism might be felt towards the idea that protection of confidential information met the strict standard of necessity. His Honour accepted, however, case law recognised that commercial sensitivity, especially if it were likely that competitors could benefit from information which made public through the Court system, is a circumstance in which the necessity standard could be met.The integrity of the litigious process might be undermined if parties were precluded from advancing relevant information as a result of the harm potentially flowing from publication. In this case, the agreement in question was still on foot. And the information would place Hytera at a competitive disadvantage in future negotiations with third parties. At [15], his Honour explained:

disclosure of the information would be prejudicial to the proper administration of justice because it would tend to ‘destroy or diminish’ (Origin Energy at 148) the value of confidential information with the possible consequence that commercial parties will be more reticent to approach the Court to settle their disputes. I am therefore satisfied that an order under s 37AF in this case is appropriate.

Perram J was not prepared, however, to grant Hytera’s request that the information be kept sealed for 10 years. There was no evidence about the nature and lifespan of the digital mobile radio technology in issue or the life cycle of the telecommunications standards. Having reviewed the agreement and the substance of the information that had been disclosed, Perram J was prepared to order suppression for three years only. His Honour was prepared to reconsider if further evidence were put on.

If you are going to seek suppression orders – i.e, that information be kept confidential, therefore, you will need to lead evidence which establishes (1) that the information is in fact confidential and (2) there is a real risk of prejudice if the confidentiality is not preserved. Another factor which the Court seems to be mentioning more often was that the affidavit evidence was through the solicitor “on information and belief”, rather than from someone knowledgeable within Hytera itself.

Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018 FCA 17

  1. Apparently, the trial is scheduled to run for 5 weeks. There are also parallel actions in the USA, China and Germany. ?

Calling The Pot Black

Vickery J has struck out parts of a statement of claim for misuse of confidential information and ordered that the plaintiff’s solicitors and barristers who have had access to the information be barred from continuing to act in the proceeding.

DC Payments is suing Next for misuse of confidential information. The two companies compete in supplying ATM machines to retail, convenience and hospitality venues and Next was set up by some disgruntled ex-employees from DC Payments.

Next’s General Manager, Bosma, emailed a spreadsheet of its customers to 2 other employees: Solomon and Whale. Like Bosma, Whale had been an emploee of DC Payments too. Somehow, Bosma’s email to Whale went to his old account at DC Payments. DC Payments’ General Counsel recognised the mistake and instructed her staff not to look at it, but to delete it. However, the email and the spreadsheet were included in DC Payments’ discovery and eventually information from the spreadsheet found its way into Annexures identifying misused confidential information in DC Payments’ Amended Statement of Claim and some particulars.

Next has successfully sued to have those parts of the pleading struck out for misuse of its confidential information.

DC Payments sought to argue that the information was not confidential as it could discover who Next’s customers were by going around to the shops and venues to see which ATMs were installed and by whom. That might seem questionable as use of the spreadsheet saved DC Payments all the time and trouble of going through such an exercise. Further, the judgment indicates that the information used from the spreadsheet was very much more detailed than just the identity of the customers. The Master Customer List constituted by the spreadsheet included some 26 categories of information in addition to the customer’s name, address and ACN/ABN. These included details such as the names and contact details of the customer contacts, the customer’s bank account details, the Next sales agent responsible for the customer, the number of transactions made a month through the ATM at the customer’s site, the rebates payable to the customer and the maximum withdrawls authorised for the ATM.

It would appear that DC Payments did not admit it had used the confidential information to prepare the Schedules and particulars in the amended pleadings. However, Vickery J found there must have been misuse. Essentially, the Schedules and particulars included information which corresponded to the information in the spreadsheet, including information about the Next sales representative for the customer which was not in the public domain, and DC Payments did not advance any evidence to explain how it had sourced the information.

Vickery J therefore ordered that the Schedules and particulars incorporating Next’s confidential information be struck out. This was ordered even though his Honour considered that DC Payments could have obtained the information in question through “well drafted interrogatories”. His Honour accepted that the relevant principle was that DC Payments should not gain any advantage from its breach of confidentiality. In addition, it was ordered to delete any electronic copies of the Master Customer List and destroy any documents which contained information derived from it.

Further, as noted above, Vickery J ordered that DC Payments’ solicitors and counsel who had access to the confidential information could no longer act for it in the proceeding:

Any lawyer or person within the organisation of any firm of lawyers engaged by DC Payments, or any counsel retained on behalf of DC Payments, who has seen or directly or indirectly made use of the Master Customer List, should be retrained from continuing to act or work for DC Payments in this litigation.

Presumably, armed with his Honour’s judgment, the first job for DC Payments’ new lawyers will be to draft the well-crafted interrogatories foreshadowed by his Honour. It will be interesting to see if such an application would be rejected by the potential exclusion through s 138 of the Evidence Act 2008 (Vic) as, perhaps, his Honour warned at [83].

If you have a comment or question about this post, please feel free to post it in the comments section below or send me an email.

DC Payments Pty Ltd v Next Payments Pty Ltd [2016] VSC 315

The mobile (iPhone) confidentiality agreement

iPhone J.D. reviews an intriguing development: a standard from Non-disclosure Agreement “app” for your iPhone – iNDA.

The developer told iPhone J.D.:

“People often have informal meeting where they would like to discuss ideas with colleagues, friends, or prospective employees. We want to promote these meetings by giving people legal protection available to them at all times.”

STOP LAUGHING, this is fascinating:

The discloser actually signs the document with his or her finger on the iPhone and the signed document is emailed to both parties. Read the review and watch the demo.

A couple of  points about this (1) enforceability and (2) ramifications.

First, although it is available in the Australian iTunes store ($5.99) and the developer’s website says the agreement has been drafted by “a leading contract law firm”, the developer’s conversation with the iPhone J.D. suggests the app was drafted in line with US laws. Whether or not it would be enforceable in Australia may well be another matter. One can’t tell from the screen shots what the wording is. Also, it doesn’t look like you can add details like what the information claimed to be confidential is. On the other hand, we have electronic signature laws too and a relationship of confidentiality can arise where the confidential nature of the circumstances is apparent from the circumstances. Signing up to such a document might, just might, lead to such an inference. You should form your own views.

Secondly and in many respects far more intriguingly, think about the ramifications.

We already go along to mediations toting our laptops and maybe a printer, type up the terms and print them out for signature.

With this product people can have in their pockets – well in their iPhones – and with them at (pretty much) all times a document which is intended to create binding legal relations with some other party and actually get them signed up on the spot.

OK, this particular document is pretty rudimentary and I personally don’t often find myself suddenly desperate to sign the person I’m talking to up to an NDA. How much longer will it be though before the number of fields in the document that can be customised is increased and you can actually start tailoring some form or other to the particular circumstances?

Confidentiality, unconscionability and contract

Telstra and Optus have an interconnect agreement, in part to regulate how callers originating from one network get delivered to the other, charges and the like.

Optus successfully sued Telstra for misusing Optus’ confidential information under the agreement: information about call traffic between the two networks.

(You should look at that judgment as it illustrates the two-edged nature of many definitions of confidential information.)

In this part of the fight, Edmonds J declined to grant relief under the equitable obligation of confidence as the contractual obligations in question were comprehensive.

His Honour also explored the meaning of the prohibition on unconscionable conduct in s 51AA of the TPA, but declined to find a contravention in that context.

Optus Networks Ltd v Telstra Corporation Ltd (No. 3) [2009] FCA 728

Sex, videotapes and damages II

Following on from last week’s Giller v Procopets, I was asked if Max Mosley’s payment of the prostitutes precluded a claim for breach of confidence, leaving him just with his Conventional rights to privacy.

It is certainly true that the trial judge focused primarily on the invasion of Mr Mosley’s rights to privacy. However, his Lordship did also find that “Woman E” breached her obligation of confidence to Mr Mosley:

104 In the light of these two strands of authority, it becomes fairly obvious that the clandestine recording of sexual activity on private property must be taken to engage Article 8. What requires closer examination is the extent to which such intrusive behaviour could be justified by reference to a countervailing public interest; that is to say, at the stage of carrying out the ultimate balancing test. I will focus on those arguments shortly.

105 Before I do so, however, I need to address the separate question of whether Woman E owed a duty of confidence to the Claimant and the other participants in respect of the events at the flat on 28 March. In the ordinary way, those who participate in sexual or personal relationships may be expected not to reveal private conversations or activities. Evidence was given by the Claimant and the other women both generally about the recognised code of discretion on “the scene” and also, specifically, about their relationships with one another. Woman A was a close friend of Woman E and had introduced her to the Claimant. Her outrage is displayed in a text she sent on 11 April:

” … our scene is based on complete trust and complete discretion. However one of my so called close friends dominatrix [Woman E] has betrayed that confidence by doing what she has done. I am devastated by this act of pure total selfish greed, she has no morals, no integrity, no loyalty, complete disregard to others, cruel, and she is a liar!!! No one … deserves this invasion of privacy.”

106 It was often said that “there is no confidence in iniquity”, but it is highly questionable whether in modern society that is a concept that can be applied to sexual activity, fetishist or otherwise, conducted between consenting adults in private. All the other women, as well as the Claimant, felt utterly betrayed by Woman E’s behaviour in filming them without consent and selling the information to the News of the World. I was told that she was soon ostracised from “the scene”, where the need for discretion is widely accepted.

107 It is true that the Claimant on this occasion paid the women participants, although he has not always done so in the past, but this does not mean that it was a purely commercial transaction. Even if it was, that would naturally not preclude an obligation of confidence, but it is quite clear from the evidence that there was a large element of friendship involved, not only as between the women but also between them and the Claimant. For example, had it not been for the intervention of the News of the World there was a plan to offer him a (free) session for his birthday (which falls in April).

108 In any event, irrespective of payment, I would be prepared to hold that Woman E had committed an “old fashioned breach of confidence” as well as a violation of the Article 8 rights of all those involved. This may have been at the instigation of her husband, who saw the opportunity of making £25,000 out of the News of the World and who made the first approach. (emphasis supplied)

One might add that the equitable obligation of confidence long since escaped the confines of private relationships involved in (Prince) Albert v Strange and Argyll v Argyll to afford protection in many commercial situations such as employer-employee relationships where money changed hands.

So, while the obligation of confidence was recognised, it would seem the English court took the converse approach to the Victorian Court of Appeal – concentrating on the modern right to privacy.  So e.g. Eady J noted at [182]:

The cause of action now commonly described as infringement or breach of privacy, involving the balancing of competing Convention rights, usually those embodied in Articles 8 and 10, has recently evolved from the equitable doctrines that traditionally governed the protection of confidential information. Now (and especially since the formulation by Lord Nicholls in Campbell v MGN Ltd [2004] 2 AC 457) it is common to speak of the protection of personal information in this context, without importing the customary indicia of a duty of confidence. 

Max Mosley v News Group Newspapers Ltd [2008] EWQB 1777