Privacy series part four: Protecting confidential information - An overview of injunctions

Our series focused on privacy and transparency considers issues encountered by practitioners across a range of different dispute resolution specialities. In this blog, we explore the steps required to obtain an injunction to prevent the disclosure of confidential information.

The unauthorised dissemination, or misuse, of confidential information can be considered a serious threat to the future health and viability of a company, and can cause serious distress to individuals. As such, we are often approached by potential clients whose first instinct is, invariably, to ask us to go to court to obtain an injunction to protect their confidential information. However, obtaining an injunction in these types of cases is seldom as straightforward as many assume.

What is an injunction?

An injunction is a remedy that the court may, at its discretion, award in order to require a party to perform, or refrain from performing certain acts – for example, making further use, or disseminating, the claimant’s confidential information. However, there must be grounds to bring a claim (existing or anticipated, as explained below) and the party seeking the injunction must issue a claim in order to make an application (or immediately afterwards in urgent cases unless the court orders otherwise).

Typically, a claimant would want to seek an interim injunction, which is a provisional measure intended to allow the concerned party to obtain a rapid remedy – but with the expectation that a full trial will follow, at which point they would ask the court to make the injunction final.

Injunctions can be applied for ‘on notice’, meaning that the defendant has an opportunity to contest the application at a hearing, or they can be ‘ex parte’, where (often due to urgency) the hearing takes place without the defendant present. In such cases, there is a heightened duty of ‘full and frank disclosure’ on the claimant in respect of facts that may harm their case, and a return date will be scheduled shortly after the injunction has been granted and served to allow the defendant to contest it, if they wish.

The test in cases involving confidential information

The usual test as to whether it is appropriate for the court to impose an interim injunction derives from the American Cyanamid case. An examination of the American Cyanamid test could fill another article, but a key component is that the claimant must show that there is a serious question to be tried (although this will not usually extend to a full assessment of the merits of the case as a whole).

However, for applications for interim injunctions where a respondent invokes their rights to freedom of expression under article 10 of the European Convention on Human Rights, in response to an injunction seeking to prevent the disclosure of confidential information, a higher standard is applicable than in American Cyanamid case. Section 12(3) of the Human Rights Act 1998 (“HRA 1998”) confirms that the court needs to be satisfied that the applicant is likely to establish at trial that publication should not be allowed. So the test in such cases is whether the claim is more likely than not to succeed, as confirmed in Cream Holdings Limited v Banarjee. Though if the consequences of disclosure are particularly serious the lower test may be applied.

The court will also consider, the extent to which the material has or is likely to become available to the public, or whether it is or would be in the public interest for the material to be published, and any relevant privacy code further to section 12(4) of the HRA 1998.

Advancing a claim for breach of confidence with either test will involve establishing that:

1. the information has the necessary quality of confidence – i.e. it is not public knowledge / has some degree of secrecy;
2. the information was imparted in circumstances importing an obligation of confidence – i.e. where the obligation to keep the information confidential was imposed by contract, the circumstances of how/why it was disclosed, or due to a special relationship between the parties (such as employer and employee); and,
3. there is threatened or actual unauthorised use, or misuse, of that information to the claimant’s detriment.

Facts that weaken any one of those limbs could undermine an argument that the court’s intervention is justified. For instance, being unable to rely on an express contractual obligation of confidentiality can leave room for doubt, which the court will have to weigh up. And simply labelling a document as confidential will not necessarily make it so. Defences may also include loss of confidentiality due to prior disclosure in the public domain, or a compelling public interest in the disclosure which requires the duty to be overridden.

When considering public interest arguments, a balance must be struck between competing interests including those of third parties. In Associated Newspapers Limited v HRH Prince of Wales, the Court of Appeal held that there is an important public interest in the observance of duties of confidence and that a significant element to be weighed in the balance between the right to respect for private life, and freedom of expression, was the importance in a democratic society of upholding duties of confidence that are created between individuals. It was not enough to justify publication that the information in question was a matter of public interest. 

It is worth taking note of the Supreme Court’s comment in Bloomberg v ZXC that misuse of private information is distinct from breach of confidence as a cause of action, since, “information may be private but not confidential, or confidential but not private”, although there is often an overlap.

What if it is not possible to identify the defendant?

Often, it may not be possible to positively identify the individual or entity that is intending / threatening to make use of confidential information. This was the situation that a Carlisle-based accountancy firm found itself in, having discovered that it had been hacked when a ransom demand was received, threatening publication of confidential information if payment was not forthcoming. In that case, an injunction preventing the publication or communication of seemingly stolen confidential information was granted against Person(s) Unknown (Armstrong Watson v Person(s) Unknown). The court may also order that the Person(s) Unknown identify themselves, so as to allow the claimant to pursue any additional remedies to which they might be entitled. However, since this type of application will necessarily be ex parte, the bar will be set much higher in order to convince the court that granting the injunction is appropriate.

Also relevant is the Spycatcher principle, which means that any third party who has been given notice of the injunction is also bound by it, and will have committed contempt of court if they contravene it (despite not being actually named on the injunction itself).

When might an injunction not be imposed?

The Court still retains a discretion and an injunction could be refused for example if damages would be an adequate remedy for a claimant. Often, in breach of confidence cases, an injunction is the most valuable remedy available to a claimant, since its intention is to preserve confidentiality. But it may be the case that, where the confidential information has already been disclosed, the fact that it is now publicly available means that an injunction to restrain further publication of the information would be less likely to be granted – rather, an award of damages may be more appropriate. That being said, it may be possible to obtain a ‘springboard’ injunction, which prevents a recipient of confidential information from using it to obtain an unfair advantage (for example, making use of leaked designs or trade secrets to short-circuit the time they would need to lawfully create or reverse-engineer a product).

It may also be the case, depending on the context, that an injunction may be granted, but with certain carve-outs – one example is a “whistleblower carve out” that would permit a defendant to disclose information in certain circumstances (for example, an employee reporting an employer’s activities to the authorities), such as in Pharmagona Ltd v Taheri.

Injunctions are also not generally intended to tackle the accidental or inadvertent leaking of confidential information (Rafael Advanced Defence Systems Ltd v Mectron Engenharia, Industria e Comercio SA). However, an injunction was obtained against a company’s former in-house lawyer (in Western Avenue Properties Ltd. v Soni) to protect against the risk that she might subconsciously use the claimant’s confidential information in proceedings against them by her new client. This was despite the fact that there was no suggestion that the lawyer might deliberately make use of the information, and despite her having taken steps to guard against the possibility, including by seeking guidance from the Solicitors Regulatory Authority. This was to guard against the risk, however slight, that confidential professionally-privileged information may come into the possession of a third party and be used to the former client’s disadvantage.

A powerful tool, but not one imposed lightly

The courts take the misuse of confidential information seriously, and will grant interim injunctions that guard against legitimate threats to the security of genuinely confidential information. However, the courts are also conscious of the serious interference that these restrictions constitute from a defendant’s perspective, and so they will rigorously test any application brought - including assessing the urgency of the need (any material delay in making the application will damage the likelihood of its success).

That being said, the cases set out above demonstrate the willingness of the courts’ to be creative in order to protect a claimant’s confidential information from misuse.

Where an interim injunction is granted, this may increase the chance of a settlement being agreed, since the fact that the court was convinced to impose the interim injunction at all will often not bode well for the defendant’s prospects of success.

Further information

If you have any questions or concerns about the topics raised in this blog, please contact a member of the Reputation and Media team.