When is confidential information misused?
Confidential information – which can include databases, sales figures, spreadsheets – is often an extremely valuable part of modern business. It can be critical in giving a competitive advantage. Consequently, it’s not surprising that disputes concerning its alleged misuse are often complex and hard fought, especially when they involve companies that were previously business partners.
That was the case in recent litigation between two motor insurance providers, in which Sir Anthony Mann had to rule on claims of misuse of confidential information and passing off (Mulsanne Insurance Company Ltd v Marshmallow Financial Services Ltd & Anor  EWHC 276 (Ch)).
Mulsanne brought the proceedings In March 2021 against Marshmallow (Mulsanne’s former broker) and Marshmallow Insurance, both of which were launched in late 2020. It sought an injunction and damages.
The parties had a business relationship from April 2018 until February 2021 and the dispute largely concerned information provided by Mulsanne for the so-called ratings engine used by Marshmallow during that time.
The judge examined in detail the motor insurance business, the relationship between the parties and each of the multiple items of alleged misuse of confidential information. These included both items used in Marshmallow’s own model (ongoing use claims) and some that provided a shortcut but no ongoing use (springboard claims).
He therefore had to establish whether the disputed information was confidential, whether there was ongoing use and also whether there was springboard use. In summary, he found there was misuse but only in some of the claimed cases. In those cases, where misuse was found, in many instances, the benefit may have been insignificant. He found:
So far as there has been found to be misuse of the Confidential Information, it was not sufficiently serious to amount to a repudiatory breach. Such breaches as I have found are more in the nature of incidental, and almost accidental, breaches, some of them in the context of a situation in which Marshmallow was conscientiously trying to avoid the use of Mulsanne material.
Another interesting aspect of the case was that Mulsanne argued that Marshmallow passed off its insurance policies as Mulsanne’s when persuading customers to renew their insurance policies from January 2021. In particular, it was alleged it did not make it sufficiently clear that the new policy was with a different underwriter.
But the judge dismissed this claim. He noted that the main branding of the Marshmallow product had always been Marshmallow, with Mulsanne mainly mentioned in the small print. He noted that the renewal documents had to be looked at as a whole – including important elements such as a statement regarding the change of underwriter.
Based on that evidence, there was no misrepresentation and consequently the passing off claim failed.
Customer surveys - which remain persistently popular but are rarely useful - and reports provided by both sides were not particularly helpful in resolving the matter.
Secure your information
This dispute provides yet another example of the complex and deeply felt arguments that can arise when business partners become competitors. In this case, as the judge noted, Mulsanne was not initially hostile to Marshmallow’s initiative – but very soon there were multiple points of contention between the parties.
In the current business climate, there are likely to be many restructurings, partnerships/separations and new corporate launches. It is usually possible to avoid the cost and distraction of prolonged litigation by giving full and careful consideration to the implications of the change before it is made and whilst it is implemented.
We can advise companies on the necessary steps to secure your IP rights and confidential information in agreements and on appropriate action to take if you suspect there is misuse or infringement.
To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - firstname.lastname@example.org #confidential #information #data #trade #secrets #IP #strategy #intellectualproperty