Maintaining commercial confidentiality has recently hit the headlines with a dispute that reached the High Court. It has highlighted the importance of maintaining commercial confidentiality and avoiding sharing intellectual property between competitors.
Privacy laws are there to protect intellectual property, from commercial enterprises to the entertainment world, to celebrity secrets and royal correspondence.
After being awarded a contract as the exclusive designers of a cable-laying vessel, naval architect Salt Ships  found they were removed from the project and its designs shared with the replacement designer, who had pitched to complete the work at a lower price.
Salt Ships pointed to the speed at which competitor Vard had supposedly been able to develop the alternative design for purchaser Prysmian, describing it as “the Christmas miracle” as it was completed in less than two weeks, including a Christmas and New Year period.
The Court agreed that Prysmian had acted in breach of confidence when they encouraged Vard to make use of the design work prepared by Salt Ships.
Breach of confidence
The law relating to breach of confidence is based on the principle that someone should not take unfair advantage of information obtained or given in confidence. It allows individuals or businesses to take civil action to protect private or commercially sensitive information, or governments to protect security interests.
“Breach of confidence often hits the headlines when a celebrity’s phone is hacked, and their personal details or images are leaked to the media or posted online. A high-profile example is the action by the Duchess of Sussex  against the press for publishing a private letter she had written to her father in the run-up to her marriage to Prince Harry.
“But it can also be used to protect intellectual property, as in this case,” explained corporate expert Özgecan Sözeri of London solicitors Bowling & Co.
In the ruling, the judge pointed to the considerable cost saving made by Prysmian in transferring the contract, while keeping the benefit of the original design work. He also took into account that Prysmian had obtained an indemnity from Vard in the event of a claim by Salt Ships for infringement of intellectual property rights. Calling the company’s behaviour ‘ high-handed’, the judge said there was a case for punitive damages when the claim is heard.
Özgecan added: “It is unusual to see damages awarded for more than financial compensation in the English courts, but exemplary damages are likely where wrongful conduct can be seen to generate more profit than any compensation would involve.
“This case demonstrates why purchasers should avoid the temptation to make use of commercially sensitive information and intellectual property belonging to a former supplier, or where it has been developed and shared as part of a tendering process. It’s not just the potential cost of litigation, but also the reputational damage.”
This is not legal advice; it is intended to provide information of general interest about current legal issues.
 Salt Ship Design AS v Prysmian Powerlink SRL  EWHC 2633 (Comm) (30 September 2021)  Salt Ship Design AS v Prysmian Powerlink SRL  EWHC 2633 (Comm) (30 September 2021)