Confidentiality agreements rarely end up in court. However, in the case below, a company applied for injunctive relief on the basis that another company ‘may’ breach an agreement. This is a flawed application. The court will never grant an injunction on a hunch or a suspicion, the court needs solid grounds. Whilst the application surely fired a warning shot to the defending company, it was nevertheless an expensive one that failed!
Commercially sensitive information inevitably often passes between contracting parties and, in such cases, confidentially agreements are commonplace. One such agreement was considered by the High Court in the context of a defence supply contract.
Company A had contracted with company B to supply communications technology to an overseas air force. The relationship involved company B being entrusted with intellectual property information belonging to company A and a confidentiality agreement was therefore reached. Company B was subsequently taken over by a concern that had a close relationship with one of company A’s trade rivals.
In those circumstances, company A grew concerned that its information would be leaked and obtained an emergency injunction to hold company B to the agreement. In refusing to extend that order, however, the Court noted that company B had twice given assurances that it recognised its confidentiality and non-disclosure obligations and would honour them.
Arguments that company B was being disingenuous as to its true intentions were rejected. Company A had failed to establish a good arguable case that there was a real risk that its confidential information would be imparted to others by company B unless it was restrained from doing so by the Court.
