Confidentiality as an emerging tort in India

People in business, trade and manufacture prefer to keep the information

relating to their financial management, inventive, administrative procedure

which contributes to efficiency in production and values addition

undisclosed. The disclosure of such information might help his competitors

and predators .Secrecy and a belief in its belief efficiency and utility are the

factors which make the information undisclosed. If the undisclosed

information is already known or is in common use or cases to be of any

utility are the factors losses its characteristics of undisclosed or

confidentiality.

Ideas are not entitled to copyright. Similarly undisclosed information

consists of mere methodology or a mere process of manufacture which being

and abstract principal, is not patentable. Hence undisclosed information has

to find an independent legal source for its protection other than under

copyright and Patent Act.1

1
Law of Intellectual Property by S.R. Mynani,609
The right in undisclosed information is a civil right. It is inherit ant in every

person acquire retain and protect undisclosed information about his business,

trade and manufacture.2

CONFIDENTIAL INFORMATION

An information can be said confidential if the owner of that information got

injury or loss or it give advantages to his rivals or competitors. In this, one

thing is also necessary that owner must agree that the information is

important or confidential in nature and it must not be in public domain.

Success of business depends upon strategy, plannings and technique for

production, distribution and extension/expansion of same. This is why the

technique evolved and planned. Strategies are kept secret so that the

proprietor can maximize the benefits for long. This is known as trade secret

or confidential information.

It may include designs, drawing architectural, programs, instructional

method, manufacturing or repair process, technique or know how formula,

for producing products, business plans, marketing plans, financial

information about research and development etc.

2
Ibid,609
From above we can say that not all information can be confidential. From

decided cases, it can be discerned that to qualify information need not be

complex nor of commercial value, although some form of creativity would

likely to be required. Courts have been reluctant to protect mere “title

tattle”3, but some personal information such as private diaries and details of

sexual activities has been found confidential4. Although as noted claims are

frequent in the employment context, not all details of workplace activities

will be confidential.5

The content of information (isolated or in combination)6 or its value likely

must not be in public knowledge. However, unlike with patents, absolute

novelty is not required; the key is the level of accessibility of information.

Accordingly a claim in confidence has in the past survived publication of the

information overseas. However this approach would likely not be taken now

given increased global communication technologies.

3
Coco v. Clark
4
Argyll v. Argyll[1967] Ch302
5
Tillary vally Foods v. chanel Four Telivision Corp. 2004 WL1074218
6
COCO v. Clark
If any information has been disclosed by limited or specified people by the

owner itself it will remain confidential. As the Prince of Wales provided

confidential access to his diaries to his authorized biographer didn’t mean

that they were no longer confidential.

If the information is disclosed as a part of a project then when the project is

completed the information must be treated as confidential.

GOVERNMENT INFORMATION

For government information to be confidential, the government must satisfy

the court that the public interest in confidentiality exceeds the public interest
in the information being available.

COFIDENTIALITY
Confidentiality is an ethical principle associated with several professions
(e.g., medicine, law, religion, professional psychology, and journalism). In
ethics, and (in some places) in law and alternative forms of legal dispute
resolution such as mediation, some types of communication between a
person and one of these professionals are "privileged" and may not be
discussed or divulged to third parties. In those jurisdictions in which the law
makes provision for such confidentiality, there are usually penalties for its
violation.
Confidentiality has been defined by the International Organization for
Standardization (ISO) as "ensuring that information is accessible only to
those authorized to have access" and is one of the cornerstones of
Information security. People who have information should only be allowed
to access it, most private letters come with the heading in bold and red
saying private and confidential showing that letter is only accesable to those
whose name is on it.
Essential requirements of confidentiality
Three elements are normally required if, apart from contract, a case
of breach of confidence is to succeed. First , the information itself
must have been necessary quality of confidence about it. Secondly,
that information must have been imparted in circumstances
importing an obligation of confidence. Thirdly there must be an
unauthorised use of that information to the detriment of the party
communicating it. [Coco v. Clark(1969)RPC 42AT 47].7
The information must be judged in the light of the usages and
practise of the particular industry or trade concerned.
The confidentiality of information does not solely depend upon
amount of labour and skills expended in collecting it. Facts relating
to a person’s private life can be protected although it involves
hardly any labour or skill. Use of engineering drawings outside the
contract may amount to breach of confidential relationship. If two
persons make a contracts under which one of them obtains, for the
purpose of the contract or in connection with it, some confidential
7
Intellectual Property right by P.S.Pillai,369
materials, the law will imply an obligation to treat that confidential
material in a confidential way as one of the implied terms of
contracts.
Ingrediants of an action for breach of confidence8
In an action for breach of confidence the plantiff must establish the
following:-
(a) The information must be traced to a particular source and
must be identified in specific terms. The information need
not be embodied in a document. It is sufficient if it is
carried in the head.
(b) The information sought to be protected must be of a
confidential nature.
(c) The information in question was communicated in
circumstances importing an obligation of confidence.
(d) The defendant has made or is about to make an
unauthorised disclosure or use of that information.
State secrets are protected by the Official secrets Act.
Confidentiality can be categorised into following types:
1. LEGAL CONFIDENTIALITY
Lawyers are often required by law to keep confidential anything
pertaining to the representation of a client. The duty of confidentiality
is much broader than the attorney-client evidentiary privilege, which
only covers communications between the attorney and the client.

8
Ibid,371
Both the privilege and the duty serve the purpose of encouraging
clients to speak frankly about their cases. This way, lawyers will be
able to carry out their duty to provide clients with zealous
representation. Otherwise, the opposing side may be able to surprise
the lawyer in court with something which he did not know about his
client, which makes both lawyer and client look stupid. Also, a
distrustful client might hide a relevant fact which he thinks is
incriminating, but which a skilled lawyer could turn to the client's
advantage (for example, by raising affirmative defenses like self-
defense).

However, most jurisdictions have exceptions for situations where the

lawyer has reason to believe that the client may kill or seriously injure
someone, may cause substantial injury to the financial interest or
property of another, or is using (or seeking to use) the lawyer's
services to perpetrate a crime or fraud.

In such situations the lawyer has the discretion, but not the obligation,
to disclose information designed to prevent the planned action. Most
states have a version of this discretionary disclosure rule under Rules
of Professional Conduct, Rule 1.6 (or its equivalent).

A few jurisdictions have made this traditionally discretionary duty

mandatory. For example, see the New Jersey and Virginia Rules of
Professional Conduct, Rule 1.6.
 In some jurisdictions the lawyer must try to convince the client to
conform his or her conduct to the boundaries of the law before
disclosing any otherwise confidential information.

Note that these exceptions generally do not cover crimes that have
already occurred, even in extreme cases where murderers have
confessed the location of missing bodies to their lawyers but the
police are still looking for those bodies. The U.S. Supreme Court and
many state supreme courts have affirmed the right of a lawyer to
withhold information in such situations. Otherwise, it would be
impossible for any criminal defendant to obtain a zealous defense.

California is famous for having one of the strongest duties of

confidentiality in the world; its lawyers must protect client
confidences at "every peril to himself or herself." Until an amendment
in 2004, California lawyers were not even permitted to disclose that a
client was about to commit murder.

Recent legislation in the UK curtails the confidentiality professionals

like lawyers and accountants can maintain at the expense of the state.
Accountants, for example, are required to disclose to the state any
suspicions of fraudulent accounting and, even, the legitimate use of
tax saving schemes if those schemes are not already known to the tax
authorities.
In India confidential duty is imposed on lawer under Evidence Sec.129
which says:-
 129. Confidential communication with Legal Advisers - No

one shall be compelled to disclose to the Court any

confidential communication which has taken place
between him and his legal professional adviser, unless
he offers himself as a witness in which case he may be
compelled to disclose any such communication as may
appear to the Court necessary to be known in order to
explain any evidence .

2. MEDICAL CONFIDENCIALITY
Confidentiality is commonly applied to conversations between doctors
and patients. Legal protections prevent physicians from revealing
certain discussions with patients, even under oath in court. The rule
only applies to secrets shared between physician and patient during
the course of providing medical care.

The rule dates back to at least the Hippocratic Oath, which reads:
Whatever, in connection with my professional service, or not in
connection with it, I see or hear, in the life of men, which ought not to
be spoken of abroad, I will not divulge, as reckoning that all such
should be kept secret.

Confidentiality is mandated in America by HIPAA laws, specifically

the Privacy Rule, and various state laws, some more rigorous than
HIPAA. However, numerous exceptions to the rules have been carved
out over the years. For example, many American states require
physicians to report gunshot wounds to the police and impaired
drivers to the Department of Motor Vehicles. Confidentiality is also
 challenged in cases involving the diagnosis of a sexually transmitted
disease in a patient who refuses to reveal the diagnosis to a spouse,
and in the termination of a pregnancy in an underage patient, without
the knowledge of the patient's parents. Many states in the U.S. have
laws governing parental notification in underage abortion

Traditionally, medical ethics has viewed the duty of confidentiality as

a relatively non-negotiable tenet of medical practice. More recently,
critics like Jacob Appel have argued for a more nuanced approach to
the duty that acknowledges the need for flexibility in many cases.

CONFIDENTIALITY: AS A TORT
A tort is any injury to a person caused by another. It is not based on a
criminal act, although in some cases it can be. It is civil in nature and the
liability can be enforced through a civil action.

For example, a person slips and falls inside the premises of a building
because of poor maintenance by the owner. He suffers injury and gets
hospitalized. If he can prove that the owner was remiss in his responsibility
to keep his building safe, then he can file a civil action to recover a sum of
money to compensate him for his injury.

People file tort cases against offenders for four main reasons. First is to
compensate the victim for the injury he or she suffered because of an act or
omission of another person. Second, it is to compel, by way of a court
action, the guilty party to compensate the victim for all the injuries suffered
as well as for all the consequential effects of those injuries. Third, it works
as a preventive measure against the re-occurrence of the negligent action in
the future. And lastly, it is to safeguard the rights of the offended party.

There are three main kinds of torts and they are differentiated by the nature
of the liability of the guilty party. These are torts based on negligence, strict
liability and intentional wrong.

The first kind is an easy one. It is like saying that the guilty party is to blame
for another’s injury because he failed to prevent it and he has a duty to keep
it from happening. For example, an owner of a merry-go-round is supposed
to ensure that no one gets injured while riding in his equipment. If someone
does, the owner is liable if it can be proven that his negligence resulted in
the injury.

The second one is tort based on strict liability, which is a species of personal
injury. It applies to manufacturers who release to the market defective
products and causes injury to people. For example, if a person is injured
because of faulty brakes in a bicycle, the manufacturer can be held liable if
the product was inherently defective to start with.

The third kind is the tort based on intentional wrong, an example of which is
when someone knew that what he was doing will cause injury but decides to
go through with it. The person is liable both criminally (if applicable) and
civilly liable, meaning he can be sentenced to serve jail time and pay
damages to the victim.
Confidentiality is tort of this third kind as not a single person will commit
this act without intention. Confidentiality also violates Right to
privacy(Art.21).
As it is an emerging tort in India, people didn’t know about this. So only few
cases are available for study it Indian context.
REMEDIES
As it is a tort remedies are available in the form of compensation. It also

consist of an injunction and damages and delivered up where applicable. The

injunction may be interlocutory or permanent. The information may retain

confidential only for a limited period in which case the injunction will not

extend beyond the period. The principles governing the grant of

interlocutory injunction are the same for all kinds of actions. Since

information alleged to be confidential may be of value to the plaintiff only

for a certain period depending upon the, interim injunction will ordinarily be

granted only for a specified period depending upon the circumstances and

nature of confidential information.

In regard to balance of convenience the following factors are considered:-

(1) Whether the effect of injunction would be disastrous to the

defendants.
(2) Whether the terms of injunction are such that it is extremely difficult

for the defendant to know what they may do and what they may

not do.

(3) Whether it is certain upon the material before the court that even if

they were successful at the trail, the plaintiff would obtain an

injunction rather than damages.

Damages or compensation is determined on the basis of the market value

of the confidential information based on notional sale between a willing

seller and a willing purchaser. This method may be appropriate for

confidential information relating to industrial designs or process or

business secrets.

Cases on Confidentiality
1. Petronet lng. limited v. Indianpetrogroup
The Plaintiff (LNG Petronet), a company setting up LNG terminals in
the country approached the Court asking it to restrain the Defendant
from publishing information relating to the plaintiff’s commercial
developments on the defendants website at www.indianpetro.com.
The Plaintiff alleged that these news reports published by the
Defendants were interfering in its contract negotiations with third
 parties as well as limiting the Plaintiffs ability to negotiate as to the
rates for LNG supply.
The legal grounds utilized to press for the relief was on the grounds
of, (a) breaches to the right of privacy; (b) publication of the
information related to confidential negotiations and contractual
clauses; (c) the publication violated the SEBI regulation on price
sensitive information. The court rejected all the three contentions,
playing on “public interest” served in the disclosure of the information
as opposed to a “gag order” placed on a journalistic entity, especially
when the information related to a company which was partly owned
by the government as well as provided public utility services.
This is the only case which we find in India relating confidentiality. Other
foreign cases which can be dealed here are :-
1. Coco v. Clark [1969] RPC 41:-
The plaintiff had developed the “coco” moped which featured inter
alia some special engine part. He entered into negotiation with the
defendants with a view to ultimately manufacture it. After
approximately four months of discussion , the defendants broke off
negotiations, alleging difficulties with the transmission design. The
defendant then wrote to plaintiff offering him a royalty of 5 shillings
per engine on the first 50,000 engine made, but it was not accepted.

The defendants subsequently manufactured and sold their own

“Scamp” moped. They admitted that the piston and carburetor were of
the same type of plaintiff’s .
 The plaintiff sought an injunction against the manufacture and sale of
machine in which the defendant had made use, directly or indirectly,
of any confidential information the property of plaintiff.
2. Seager v. Copydex[1967] 2 All E.R.415(C.A.)
3. Saltman Engineering v. Campbell Engineering(1948) 65 R.P.C.203
4. Fraser v. Evans [1969] 1 All E.R. 8 (C.A.)
5. Tbomas Marshall v. Guinle [1979] 1 Ch.227
 CONTENTS

INTRODUCTION

CONFIDENTIAL INFORMATION

GOVERNMENT INFORMATION

COFIDENTIALITY
ESSENTIAL REQUIREMENTS OF CONFIDENTIALITY

INGREDIANTS OF AN ACTION FOR BREACH OF CONFIDENCE

CONFIDENTIALITY: AS A TORT

REMEDIES
CASES ON CONFIDENTIALITY