Injunctions for breach of confidence

The recent Federal Court case of Howden Australia Pty Ltd v Minetek Pty Ltd [2019] FCA 981 highlights some of the challenges faced by applicants when attempting to establish that a breach of confidential information has taken place, and the steps required to obtain an interim injunction prior to the ultimate determination of a matter.

Background to the injunction

The third respondent, Mr Bourcier (Bourcier) was formerly employed as the senior design engineer for the first applicant, Howden Australia Pty Ltd ACN 004 265 276 (Howden), a company that made large mixed flow fans for the ventilation of mine shafts.  During his time with Howden, Bourcier had been involved in a major project which led to the re-engineering of Howden’s mixed-flow fans.

Subsequently, Bourcier went to work for the first respondent, Minetek Pty Ltd ACN 167 164 936 (Minetek).  At the time Bourcier started at Minetek, they did not manufacture mixed-flow fans.  However, shortly after Bourcier commenced, Minetek filed applications for letters patent of two mixed-flows, naming Bourcier as the inventor.

Howden commenced proceedings on the basis of breach of confidence, breach of contract and misleading or deceptive conduct, and sought an interim injunction to restrain the respondents from using or disclosing what was claimed to be certain confidential information in respect of the fans.  Howden argued that Bourcier disclosed and subsequently misused certain sections of Howden’s “Mixed Flow Fan Design Manual” and the “General Design Manual” in his work for Minetek and in the patent applications.  It was argued that this was because of the similarity between Howden’s fan and Minetek’s fan and the short time taken by Minetek to bring a project such as this to market.

Minetek’s argument

It was said by Counsel for Minetek advanced three points as to why Howden should not have the relief sought:

“Firstly. Howden did not articulate with sufficient precision or at all the aspects of the confidential information said to be embodied in or otherwise to have permitted the design of the Minetek fan.

Second, the assertions that it would have been impossible to design the Minetek fan in the time without resort to Howden’s confidential information has been denied and fully answered by Mr Bourcier.

Third, to the extent the Minetek fan reflects any aspect of the asserted confidential information, that is because such information is general knowledge in the industry.

Minetek also observed that the case against it is wholly circumstantial. There is no evidence that Mr Bourcier took any Howden information with him and he denies having done so.

Further, the confidential information in the manuals post-dates Mr Bourcier’s time at Howden and the evidence indicates that the manuals were in hard copy only while Mr Bourcier was working there”.^[1]

Decision

Justice Jagot of the Federal Court found that, although Bourcier had access to the Mixed Flow Fan Design Manual, and his work on the redesign project that led to its revision there was no evidence that he had taken this information with him when he left the first applicant’s employment.

With respect to the interlocutory injunction, the Court noted the discussion in Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156 that applicants must demonstrate:

• that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief;
• that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and
• that the balance of convenience favours the granting of an injunction.

In her Honour’s decision, Jagot J stated that Howden failed to establish a sufficient likelihood of success at trial to justify the grant of an injunction pending the trial.  The evidence provided by Howden:

• was general in nature and failed to specify how or in what respect any specific part of the Howden design was used in the Minetek fan; and
• did not establish that any of the allegedly “confidential” information was not publicly available in engineering literature and software.

Additionally, a key part of Howden’s argument was the similarity between Howden’s fan and Minetek’s fan.  However, none of the evidence identified which parts, if any, of the Mixed Flow Fan Design Manual appeared in the Minetek fan.  Accordingly, the evidence did not demonstrate that Howden had a prima facie case warranting the grant of an interlocutory injunction, particularly when compared to the detailed report given by Bourcier about how he designed the fan using standard texts, industry software and his own knowledge.

Takeaways

This case reinforces the importance of identifying precisely what the confidential information is, how it was alleged to have been kept information and finally how it was alleged to have been misappropriated and used.  This is particularly important in instances where an injunction is likely to have practical consequences extending beyond merely pecuniary interests.  The case also serves as a reminder for businesses to review their own procedures to safeguard against unauthorised use of their confidential information.

Links and further references

Legislation

Patents Act 1990 (Cth)

Cases

Australian Broadcasting Corporation v O’Neill [2006] HCA 46

Howden Australia Pty Ltd v Minetek Pty Ltd [2019] FCA 981

Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156

Further information about confidential information

If you are an business and need advice on obtaining a Court order for an injunction for breach of confidence, please contact me for a confidential and obligation free and discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Howden Australia Pty Ltd v Minetek Pty Ltd [2019] FCA 981 at para 29.

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