English Court of Appeal considers meaning of 'public domain' in confidentiality dispute

In Illiquidx Limited v Altana Wealth Limited & Ors, the Court of Appeal unanimously upheld the first instance decision, finding that in a non-disclosure agreement (NDA) drafted by professionals, information in the public domain is that which is "so generally accessible that, in all the circumstances, it cannot be regarded as confidential".

The term "public domain" has a well-established legal meaning and, unless the contract indicates otherwise, it is obvious to infer that in a professionally-drafted contract, the parties intended to use the term in accordance with its legal meaning.

The Court of Appeal's decision gives important clarification on the drafting of NDAs and the reliance that can be placed on them. It underscores the robust protection given to confidential information under English law and the care that must be taken to protect it.

Joint venture

The parties entered into a joint venture agreement for the purpose of setting up a sanctions-compliant fund to trade in distressed Venezuelan debt, as envisaged by Illiquidx. They also entered into an NDA, but they did not end up launching the fund and the JV was abandoned. 

Shortly afterwards, Altana launched a fund for the same purpose without involving Illiquidx. Illiquidx issued various claims against Altana for breach of the NDA, breach of confidence, unlawful use of trade secrets and copyright infringement.

High Court decision

At first instance, the defendants accepted that certain information shared by Illiquidx was "confidential information" for the purposes of the NDA and that they had used it. However, one of the defendants' primary defences was that the use of the information was permitted because it had entered the "public domain".

Various disclosures had been made, including information about the proposed fund being circulated to around 200 potential investors in a slide deck marked 'strictly confidential,' but without any requirement for those potential investors to enter into an NDA. 

The NDA did not define "public domain". Mr Justice Rajah held that "public domain" should have its usual meaning under the law of confidentiality and therefore found that the confidential information had been misused by Altana.

'Public domain' has normal legal meaning

On appeal, Altana argued that any information that had been made available to recipients without subjecting them to a duty of confidentiality should be in the public domain. However, the Court of Appeal affirmed that information only enters the public domain for the purposes of breach of confidence if it is "so generally accessible that, in all the circumstances, it cannot be regarded as confidential." Confidentiality is a relative, not an absolute, concept and therefore the information does not have to be truly secret, as relative inaccessibility "can suffice to make information confidential."

The Court of Appeal unanimously upheld the High Court's finding that the confidential information was not in the public domain. As this was "a finding of fact, or at the very least an evaluative assessment", the threshold for overturning it by an appeal court would have been high. Nevertheless, the potential investors had understood that the slide deck would not be circulated more widely, and that Illiquidx would not want it shared with its competitors. 

The opportunity to invest in Venezuelan debt was found not to have been widely known in the market: other investors could have deduced it on the basis of public information, but on the facts, they had not.

Osborne Clarke comment

This decision confirms the English courts' strong approach to the protection of confidential information and gives guidance on the drafting of NDAs. It serves as a reminder that where standard legal expressions are used in agreements drafted by professionals, they will carry their established legal meaning. 

For NDAs in particular, "public domain" means generally accessible. Parties seeking a broader definition should ensure that this is reflected in the wording of the agreement, or consider narrowing the definition of confidential information to specific types of information.

When confidential details about funding opportunities have been shared with potential investors, the court will take into account a "general understanding in the industry" that such materials are confidential, and the disclosing party's intention that the materials would not fall into the hands of their competitors. 

In order to bolster these arguments, it is crucial to take reasonable steps to protect confidential information, for example by clearly marking the confidential nature of any documents before they are shared with third parties. Further, businesses should specifically identify and document which information is confidential and what reasonable steps they have taken to protect confidentiality, to strengthen their position when enforcing rights. 

Laura Henderson, a trainee solicitor with Osborne Clarke, contributed to this Insight.