What is the springboard doctrine?

The ‘springboard’ doctrine refers to the benefit that is derived because of misuse of confidential information by a defendant that enables them to ‘springboard’ a new product or service to market more rapidly than if they had used their own mind.  A breach can be a contractual or equitable in nature and can also involve other causes of action such as breaches of director’s duties.

Case law on the springboard doctrine

The seminal statement of the springboard doctrine was made by Lord Roxburgh in the UK case of Terrapin Limited v Builders’ Supply Company (Hayes) Ltd (1967) RPC 375 at [391]:

“[a]s I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a spring-board for activities detrimental to the person who made the confidential information, and spring-board it remains even when all the features have been published or can be ascertained by actual inspection by any members of the public…  I think it is broadly true to say that a member of the public to whom the confidential information had not been imparted would still have to prepare plans and specifications. He would probably have to construct a prototype, and he would certainly have to conduct tests. Therefore, the possessor of the confidential information still has a long start over any member of the public.”

In the case of RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423 (RLA), RLA Polymers Pty Ltd contended that the respondents were in breach of their duty of confidence by disclosing and using their knowledge of the confidential information, effectively as a “springboard” to develop and bring to market, more quickly than they otherwise would have, their own competing products.

Ryan J in RLA at [73] synthesised the case law on the doctrine:

“[t]he fundamental principle discernible from the authorities is that a recipient of confidential information or trade secrets should not be allowed to use it as a springboard into a better position than would have been achieved from the use of publicly available information and the recipient’s own independent skill and ingenuity.”

This article looks at the case law on how to apply the springboard doctrine has been applied in relevant cases.

What is the test for springboarding?

RLA per Ryan J at [70] states:

“[t]he “springboard doctrine” is inextricably linked to the concepts of misuse of confidential information and trade secrets…”

It is for this reason that Ryan J outlines that the test to apply the springboard doctrine requires:

  • a breach of confidential information; and
  • the breach sped up the defendant’s product design process, granting them a head start over people that do not have that information.[1]

Breach of confidential information

Ryan J at [42] references the summary of the test required to establish a breach of confidential information outlined by Finn J in Australian Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Limited (ACN 008 204 635) [2009] FCA 1220 (Australian Medic-Care) at [632]-[634]:

  • the information must be a trade secret or confidential in nature;[2]
  • it must have been imparted to the defendant in circumstances enforcing an obligation of confidence;[3] and
  • it must have been actual or threatened unauthorised use or disclosure of that information.[4]

Ryan J at [42] elaborated on information being ‘confidential in nature’ involves a consideration of:

  • if it is not widely known or available in the relevant industry;[5]
  • if the confidential information could be ascertained by reverse engineering the product, experimentation or otherwise expending time, effort and money;[6]
  • if the plaintiff expended time, effort and money to produce or obtain the confidential information in the first place and it could only be obtained or duplicated by another going through a similar process to such a degree that it could not be said to be ‘publicly available’;[7]
  • if the plaintiff took steps to prevent the confidential information from becoming public knowledge, for example, password protected it;[8]
  • if the confidential information is essential and valuable in the eyes of the plaintiff, defendant or interested third party;[9] and
  • if a reasonable person would recognise the confidential information as the property of the plaintiff.[10]

In terms of circumstances of imparting the information that enforce confidentiality, Ryan J at [42] refers to  Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VicRp 7 per Gowans J at [40]:

“[t]hat obligation may come into existence by reason of the terms of an agreement, or what is implicit in them, by reason of the nature of the relationship between persons, or by reason of the subject-matter and the circumstances in which the subject-matter has come into the hands of the person charged with the breach.”

Ryan J also states that there is no conclusive legal definition for ‘trade secret’ but relies on the view of Lord Cross in Printers & Finishers Ltd v Holloway (No. 2) [1965] RPC 239 at [255] to characterise it as:

“…an item of confidential information, learnt during employment, the confidentiality of which, as an employee of ordinary honesty and intelligence would acknowledge, must be maintained even after that employment has come to an end. In other words, a trade secret has an inherent quality that takes it above and beyond more general knowledge, albeit that the general knowledge may to a lay person be very specialised. Whether information amounts to a trade secret is a question of fact, to be determined in the particular circumstances.”

Further, in the case of Searle Australia Pty Ltd v Public Interest Advocacy Centre [1992] FCA 241 the Court held at [28] that a “trade secret” is “a device or technique used in a particular trade or occupation and giving an advantage not generally known”.

Did the breach springboard the defendant?

For the springboard doctrine to applied, the breach, as found by applying the tests above, must have been used in a way that allowed the defendant’s product to be brought to market more quickly than what would otherwise be the case; otherwise known as ‘springboarding’.[11] To determine this, the court will objectively consider all evidence pertaining to:

  • the length of the process of developing the plaintiff’s product;[12]
  • the length of the process of developing the defendant’s product;[13]
  • independent development by the defendant;[14] and
  • misuse in the development process,[15]

to decide on the balance of probabilities if the defendant has misused the confidential information in a way that has springboarded them past procedures they otherwise would have had to go through if they did not have the confidential information.[16]  This evidence may come in the form of, among other things:

  • notebooks and logbooks containing specifics of experimentation;[17] and
  • expert evidence, for example, from financial controllers on how long a business such as the plaintiff and defendant’s would take to set up.[18]

Takeaways

The springboard doctrine is applied to cases where a person misuses the confidential information of another to streamline their product to the market.  It requires a breach of confidential information that in some way assisted in springboarding the breacher’s product to market.  In determining if the product was springboarded, the Court will consider the time taken to produce the original product, time taken to produce the alleged breaching product and anything else the Court thinks necessary.

Links and further references

Related articles

Know-how versus confidential information

Trade secrets – what are they?

Use of a competitor’s confidential information

Cases

Able Tours Pty Ltd v Mann (No 20) [2013] WASC 96
Ackroyds (London) Ltd v Islington Plastics Ltd [1962] RPC 97
Amber Size & Chemical Co Ltd v Menzel (1913) 30 RPC 433
Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VicRp 7
BCI Media Group Pty Ltd v Corelogic Australia Pty Ltd [2020] FCA 1556
Cranleigh Precision Engineering Ltd v Bryant [1966] RPC 81
Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VicRp 17
Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104
IPC Global Pty Ltd v Pavetest Pty Ltd (No 3) [2017] FCA 82
IPC Global Pty Ltd v Pavetest Pty Ltd (No 4)[2017] FCA 260
Measures Brothers Ltd v Measures [1910] 1 Ch 336
Nexus Adhesives Pty Ltd v RLA Polymers Pty Ltd [2012] FCAFC 135
Printers & Finishers Ltd v Holloway (No 2) [1965] RPC 239
Re Smith Kline & French Laboratories (Australia) Limited and Smith Kline & French Laboratories Limited v Anthony Jospeph Ayres, Secretary, Department of Community Services and Health [1989] FCA 384
RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423
RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 606
Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203
Searle Australia Pty Ltd v Public Interest Advocacy Centre [1992] FCA 241
Surveys & Mining Ltd v Morrison [1969] Qd R 470
United Sterling Corporation v Felton [1974] RPC 162
WA Fork Truck Distributors Pty Ltd v Jones & Ors [2003] WASC 102
Zomojo Pty Ltd v Hurd [2012] FCA 1175
Zomojo Pty Ltd v Hurd (No 2) (includes Corrigendum dated 18 June 2013) [2012] FCA 1458

Further information

If you need advice on protecting your confidential information or trade secrets, contact us for a confidential and obligation free discussion:

Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013
Mobile: 0419 726 535
e: mburrows@dundaslawyers.com.au

 

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] RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [40], [69].
[2] Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203, [215].
[3] Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VicRp 7 [40].
[4] Re Smith Kline & French Laboratories (Australia) Limited and Smith Kline & French Laboratories Limited v Anthony Jospeph Ayres, Secretary, Department of Community Services and Health [1989] FCA 384, [87].
[5] Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VicRp 7, [50].
[6] See Ackroyds (London) Ltd v Islington Plastics Ltd [1962] RPC 97.
[7] See Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203; See United Sterling Corporation v Felton [1974] RPC 162, Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104 [117]; See Cranleigh Precision Engineering Ltd v Bryant [1966] RPC 81; Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VicRp 7, [50]; RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [52]
[8] Amber Size & Chemical Co Ltd v Menzel (1913) 30 RPC 433, 438; RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [50].
[9] See Surveys & Mining Ltd v Morrison [1969] Qd R 470; See Measures Brothers Ltd v Measures [1910] 1 Ch 336.
[10] See Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VicRp 17; Printers & Finishers Ltd v Holloway (No 2) [1965] RPC 239 [255].
[11] RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [69].
[12] RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [11].
[13] RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [52]-[56].
[14] RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [81]-[99], [146].
[15] RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [100]-[146].
[16] RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [147].
[17] See RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [103].
[18] RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423, [147]; WA Fork Truck Distributors Pty Ltd v Jones & Ors [2003] WASC 102 [95]-[98].

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