Tuesday 4 November 2014

Damages for misuse of confidential information: some helpful guidance

The breach of confidence action in Vestergaard Frandsen A/S v Bestnet Europe Ltd and others [2014] EWHC 3159 (Ch)), a vigorously-contested dispute before the courts of England and Wales, has now reached an end, with the assessment by the Chancery Division of the quantum of damages arising from the misuse of information relating to the manufacture of insecticidal mosquito nets.

In short, in relation to nets made using an insecticide developed on the basis of Vestergaard's confidential information, Mrs Justice Rose awarded a lump sum quasi-consultancy fee for the use that Bestnet made of the information in order to arrive at their own subsequently-developed formula and then secure  World Health Organization (WHO) approval for it. No sum was however awarded to compensate Vestergaard in respect of Bestnet's accelerated entry into the market.  This was because, the WHO approval date -- without which there was little market for the product -- would have been the same even if the consultant had developed the later formula from scratch without the benefit of the confidential information.

For those who are interested in money, and issues such as whether the damages you get at the end of the litigation make it worth starting it in the first place, the calculation of damages is always a priority.  Here, damages were awarded for the sale of products the manufacture of which was derived from the misuse of confidential information, even though those products were not actually made using that information. While there was no authority directly on this point, Mrs Justice Rose felt that the principles that underpinned this approach were based on established case law.

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