I often wonder why, at the start of a commercial relationship, the parties do not insist on an NDA (non disclosure agreement) in order to protect the flow of confidential information. However, such situations do arise and one party may attempt to take advantage of the situation by using the confidential information for their own benefit.
In the case below, the court (quite rightly) awarded an injunction to stop one party taking advantage of confidential information that had been provided to them in the course of a business relationship.
Commercial relationships almost always involve a powerful element of trust and it is common for confidential information to pass between buyer and seller. However, one important High Court ruling has emphasised that such information must only be used for the purpose for which it is supplied and not to obtain a competitive edge.
Company A had for many years supplied a particular food product to company B. The former provided the latter with confidential information concerning the product’s manufacture for labelling and food safety compliance purposes. Company B, however, believed that it was paying too high a price for the product and used the information in an attempt to develop a similar product of its own.
In finding that the confidential information had been misused, the Court noted that company B had throughout been aware that the information had been provided to it solely for regulatory and safety purposes. Although it may not have been trying to exactly replicate company A’s manufacturing process, it had nevertheless breached the obligation of confidence that it owed its supplier. In the circumstances, the Court issued an injunction to protect company A’s position and opened the way for it to seek further, financial, relief against company B.
