Confidential Information – disclosure of information regarding potential improvements to invention – whether use of information by recipient is a breach of confidence – whether ‘information’ or merely ‘idea’ – whether identified with sufficient specificity – whether information had necessary quality of confidence – whether circumstances of imparting information imported obligation of confidence
If there were ever a case to prove the hoary old chestnut that the person who acts as their own lawyer has a fool for a client, then this is it. Especially when they do so in a higher court, such as the Federal Court of Australia.
But we will return to the issue of self-representation towards the end of the article. Our interest in the case of Abrahams v Biggs, decided by Justice Jessup just before the holidays, lies not so much in the conduct of the parties before the Federal Court, but rather in the aspect of the dispute relating to an alleged breach of confidence. The case involves invention (and, peripherally, patent applications), and serves as a useful reminder that inventors need to be careful of what they disclose, to whom, and the circumstances in which they make disclosures, especially when potentially valuable ideas are involved.
And to add to the interest, the applicant in the proceedings, Tony Abrahams, was a winner in the episode of the ABC television program The New Inventors which aired on 20 May 2009.
BACKGROUNDTony Abrahams was the inventor of the ‘Bed Bug Barrier’. There is background to the development of the invention in the Federal Court decision, however the brief explanation provided on The New Inventors web site is quicker and easier to digest. According to the site, Abrahams had been…
… running a number of private apartments … for travellers. Throughout that time he has battled with the problem of bed bugs. He has seen a lot of people get out of the industry, and has reduced the number of apartments he runs from 60 to 12. The problem with bed bugs was doing his head in. He would spray insecticides and they would still come back.
After discovering how widespread the problem was, Tony began a business distributing mattress protectors. However, the feedback he was receiving was that while the mattress protectors help, they were not entirely solving the problem, so he decided to invent the Bed Bug Barrier.
The best way to understand his solution is to watch the one-minute video presentation from The New Inventors program. Basically, the Bed Bug Barrier is a simple fitting which sits under the legs of a bed, including a tacky non-drying glue in which bed bugs attempting to climb the leg will become stuck, and where they will then die. Since bed bugs cannot fly, this effectively prevents them from using the most common path into the bed.
Abrahams had wisely filed a provisional patent application, on 13 January 2009, before telling the world about the Bed Bug Barrier via Australian national television! An International Patent Application (no. PCT/AU2010/000030) was subsequently filed, and there is presently an Australian patent application pending (no. 2011211442) which claims the benefit of the international application.
From this point, matters become murky. The Federal Court decision lays out the ‘he said, she said’ of conflicting evidence in detail. We will just attempt to summarise the most probable version of events.
THE DISPUTEAbrahams had known Barbara Biggs since around 2003, at least in the professional capacity of managing a property which she owned in Melbourne. It appears that this business arrangement had come to an end some time in 2008, but that Biggs reappeared in Abrahams’ life following his appearance on The New Inventors.
Accounts of exactly what happened, and how, differ. However, it seems fairly certain that a meeting took place at Abrahams’ house on 22 May 2009, and that during the following week or so some further discussions took place involving other acquaintances of Biggs. These discussions were directed generally towards the possibility of some form of business partnership between Abrahams and Biggs – and possibly others – with Biggs in particular having an interest in operating a business with a view to using to profits to support charitable causes.
Prior to the meetings with Biggs, Abrahams had been considering possible improvements to the Bed Bug Barrier, with the aim of eliminating the dependence upon glues and/or insecticides, to produce a long-lasting barrier that would not collect dead bed bug bodies over time. He had been corresponding with Stephen Doggett, a senior hospital scientist in the Department of Entomology at the Institute for Clinical Pathology and Medical Research at the Westmead Hospital, who is (as the Court put it) ‘an acknowledged expert on bed bugs.’ Specifically, Abrahams had established from this correspondence a likelihood that polytetrafluoroethylene (better known as ‘Teflon’) would provide a surface of sufficient slipperiness that bed bugs would be unable to cross it, thus planting the idea of creating a device based on a Teflon barrier that would not require glues or insecticides. Doggett was aware of the use of Teflon as a barrier against bugs, for example by entomologists who had used it to contain their laboratory samples.
Some time during the week following the initial meeting with Biggs, Abrahams mentioned the Teflon idea to her. According to Biggs, she inquired ‘why Teflon?’, to which Abrahams allegedly replied ‘because bed bugs can’t crawl on it.’
The business discussions subsequently petered out, and it appears that Abrahams spent much of the reminder of 2009 resolving production problems with the original Bed Bug Barrier. There was no evidence that he made any significant progress with a Teflon barrier design during this period, other than conducting some tests with Teflon samples. It was not until January 2010, when Abrahams contacted Biggs again to see if she was interested in investing in his business, that he learnt from her that she had been working on her own Teflon barrier designs, in respect of which she had engaged Doggett to assist, and had filed patent applications of her own.
Initially, it seems that Abrahams did not seem especially perturbed by this. However, relations between the parties clearly deteriorated in the following months, and by April 2010 Abrahams was alleging that statements on Biggs’ website constituted misleading and deceptive conduct in breach of the Trade Practices Act 1974. In June 2010, a story on Biggs appeared on the tabloid ‘current affairs’ television program Today Tonight, which Abrahams believed resulted in the loss of a substantial business deal by his company.
Abrahams then sued Biggs for breach of confidence, and breaches of the Trade Practices Act.
CONFIDENTIAL INFORMATIONThe part of the decision of greatest interest to us deals with the confidentiality issues. It is useful to be reminded of the requirements for a disclosure of information to be considered confidential, such that it will be protected by the court (technically in equity, rather than at common law, for those interested in such distinctions).
These requirements were set out by the court in this case at paragraph , and anybody wishing to ensure the confidentiality of a disclosure needs to make sure that all are met:
- the discloser must identify with specificity, and not merely in global terms, that which is said to be the confidential information in question;
- the information have the necessary ‘quality of confidence’ about it;
- the information must be imparted in circumstances importing an obligation of confidence; and
- before a court can intervene, there must have been an actual or threatened unauthorised use or disclosure of the information.
- the information disclosed by Abrahams to Biggs was merely the idea of using Teflon as a barrier, which was insufficiently specific, and could not serve to preclude Biggs from employing Teflon as a bed bug barrier in any way, and by reference to any design (at );
- the idea disclosed lacked the quality of confidence, because the use of Teflon as an insect barrier was already generally known, and in any event the idea had originated with Doggett and not with Abrahams – it was simply not confidential information, because it was already ‘out there’ (at ); and
- there was no credible evidence that Abrahams had disclosed the information in circumstances that would have led Biggs to believe that she was under any obligation of confidentiality (at ).
TRADE PRACTICESAbrahams had more success with his allegations of misleading and deceptive conduct, with the court finding that some of the statements appearing on Biggs’ website were inaccurate and likely to mislead consumers (at ), and also that his company had suffered damage to its business as a result of the Today Tonight story (at ).
However, for reasons discussed below, these successes have brought Abrahams no compensation for the losses.
‘A FOOL FOR A CLIENT’It appears that at the onset of the court proceedings, both Abrahams and Biggs had legal representation. However, at some time prior to the matter reaching trial, both became self-represented. It is not clear how or why this happened – perhaps due to financial constraints, or perhaps their lawyers determined, for some reason, that they could no longer act. It is perhaps worth noting, for the benefit of readers unfamiliar with Australian Federal Court practice, that Abraham and Biggs were only able to represent themselves because they were the named parties to the proceedings. A company is not permitted to be ‘self-represented’ in the Federal Court, and must engage at least a solicitor to act on its behalf.
In any event, it is no doubt a testament to Justice Jessup that the case did not devolve into total farce, and that it was actually possible in the end for a reasoned decision to be issued. Since Abrahams and Biggs were each their own primary witness, it seems that they actually cross-examined each other in the Federal Court! It is hard to imagine that this process would not have become heated at times.
A significant part of the reason for Abrahams’ failure was the inadequacy of his preparation of evidence, and his case. His own account of the events of May 2009, along with the corroborating account of his friend Sean Christie, were determined by the court to be ‘of no evidentiary value whatsoever’ (at ), due to various inconsistencies with other evidence, and the deeply flawed process by which the concurring accounts appeared to have been prepared. While it seems unlikely that he could have won his breach of confidence claim in any event, this was an impossibility in the absence any credible account of the relevant events which supported Abrahams’ arguments.
Furthermore, even though Abrahams effectively won on most points of his ‘misleading and deceptive conduct case’, he was unable to obtain any compensation because of the way in which the application to the court had been filed and structured. While he proved damage, particularly as a result of the Today Tonight story, the damage was incurred by his company The Bed Protector Pty Ltd, and not by Abrahams personally. Abrahams was therefore not entitled to relief, and since the company was not a party to the case, the court could not issue any orders in its favour (see paragraph ).
At least some of these problems with Abrahams’ case appear to have arisen while he still had legal representation, and it is not clear why these aspects were so badly managed. However, the client is always ultimately responsible for their choice of legal representation, for seeking professional advice before making decisions, and for issuing instructions regarding the conduct of the proceedings (preferably heeding relevant advice).
CONCLUSIONThe breach of confidence aspect of the case provides a useful guide to all innovators regarding the protection of confidential information which may be disclosed in the course of commercial dealings.
The best way to ensure that the three initial conditions are met is via a well-drafted confidentiality agreement (or ‘non-disclosure agreement’, NDA). The agreement should ensure that all confidential information is actually identified, with as much specificity as possible. Itemising the information in an annexure is a good idea, as is drafting the agreement so that the information can be supplemented without the need for a new agreement each time.
The specified confidential information should be, to the best of the parties’ knowledge, genuinely original, and not already known to the public. It may help for this to be acknowledged in writing.
The signing of an NDA will necessarily ensure that the recipient of the information is aware of its confidentiality, and will be documentary evidence of this.
Of course, for a variety of reasons (some of them good) it is not always possible for both parties to execute a written NDA prior to the formation of a more formal business arrangement. It is not necessary for the conditions of confidentiality to be established in writing – a verbal agreement is binding, if it can be convincingly proven. This can be assisted by keeping good written records of all discussions, and providing written information for discussion in writing in advance, and confirming in writing afterwards. Such documents may be marked ‘Commercial – In Confidence’.
As for the issue of representation, there is no question that it is expensive to run a case in the Federal Court of Australia. However, somebody loses every dispute, even when both parties are represented! The law is complex, and the practice of the Federal Court is complex, and while it might seem harsh that money is a prerequisite for the pursuit of justice, this is the reality, and a litigant who cannot afford quality representation might be better off walking away.
POSTSCRIPTAccording to Australian Patent Office records, in November 2010 Barbara Biggs withdraw all of her pending patent applications. As a result, none of them ever have been, or ever will be, published. Her web site, www.bbsafe.com.au, appears no longer to be operating.
Abrahams has a number of patent applications pending, and continues to operate a web site at www.bedbugbarrier.com.au.