Confidential Information and Breach of Confidence

There is a single, well-established test that has governed breach of confidence in English law for over fifty years. This is the three-limb test in Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41.

The leading formulation from Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41 is as follows:

1. First, the information itself must have the “necessary quality of confidence about it“.
2. Second, that information must have been imparted in circumstances importing an obligation of confidence.

• Third, there must be unauthorised use of that information to the detriment of the party communicating it.

Limb one: necessary quality of confidence

Megarry J in Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41 was clear that there can be no breach of confidence in revealing something already common knowledge, though material assembled from public-domain sources can still acquire the necessary quality of confidentiality if something new is created through skill and ingenuity.  The information must not be public knowledge, although sharing it with a limited number of people will not necessarily destroy confidentiality — that is a question of degree.

Limb two: circumstances importing an obligation

A reasonable person standing in the recipient’s shoes must have realised, upon reasonable grounds, that the information was being given in confidence.  This obligation is often created by agreement, but it can also bind indirect recipients: an equitable obligation of confidence arises both where information is disclosed in breach of confidence and the recipient has notice of that, and where information is acquired without any prior breach but the recipient has notice that it is confidential — assessed objectively.

Limb three: unauthorised use to detriment

Finally, there must be unauthorised use of the confidential information without lawful excuse.

Why it matters

This test operates independently of contract.  Therefore, whilst you may have an agreement in place and therefore a separate claim for breach of contract, breach of confidence is an equitable doctrine that can catch information passed between parties with no confidentiality agreement at all, provided the circumstances put a reasonable recipient on notice. For businesses, this means confidentiality protection does not depend solely on having an NDA or any wider agreement in place, but a well-drafted one still helps by making the obligation and its scope explicit rather than leaving limb two to inference.