A recent High Court decision has underscored the risks of disclosing commercially sensitive information without the protection of a non-disclosure agreement (“NDA”). In Henderson & Jones Ltd v Salica Investments Ltd & Others, the court awarded £2.15 million in damages after finding that confidential information shared during early-stage investment talks was misused to develop a competing product, a ruling that highlights the risks for both parties when information is shared without an NDA.
Background: a promising tech idea meets investment talks
Mr Gifford created True View Care (“TVC”), a software platform aimed at improving how care homes manage staff and tasks. In 2016, he presented the concept to investment firm Hambro Perks in two meetings with its then-CEO, Dominic Perks. Although the talks were initially positive, no investment followed.
Not long after talks between TVC and Hambro Perks, WeCare (later rebranded Vida) launched in the market. It was developed by a company founded by Mr Perks and an investment adviser, Mr. Jabir, who had also been involved with Hambro Perks.
Henderson & Jones Ltd acquired Mr Gifford’s right to bring the claim and issued proceedings.
The legal issues
The court was asked to decide:
- Whether the shared information was confidential.
- Whether it was shared in circumstances giving rise to a duty of confidence.
- Whether the Defendants misused the information.
- How any resulting loss should be valued.
The court’s findings
1. Yes, it was confidential
The Judge applied the Coco v AN Clark test and confirmed that while some aspects of the information may have been public knowledge individually, the overall combination of features, designs, and insights were original and not publicly accessible. As a package, the information was clearly confidential.
2. Duty of confidence existed
Even though there was no NDA in place, the court found that the context of the meetings and the commercial discussions about a potential investment created an implied duty of confidentiality. Mr Gifford had also expressly told Mr Perks that the information was not to be used beyond assessing investment viability.
3. Misuse was proven
The court held that the rival platform (WeCare/Vida) was “built on the TVC design”. Mr Gifford was effectively cut out of the opportunity to benefit from his own invention. His own product was also less attractive to potential investors because of the increased competition from Vida.
The Defendants had used the confidential information to build a competing business without consent.
4. Damages: valuing lost potential
Two approaches to damages were considered:
- A valuation of the business opportunity lost by Mr Gifford.
- A “negotiating damages” model which estimated what a hypothetical licence to use the confidential information would have cost at the time of misuse.
The court rejected the first as too speculative but accepted the second. It found the TVC platform had become commercially worthless due to the breach, and awarded £2.15 million, based on expert valuation. Importantly, the Defendants failed to submit any expert evidence in response due to their failure to comply with Court deadlines to exchange expert reports.
Key points
- Always use an NDA – While implied duties of confidence can be upheld, they’re fact sensitive and carry litigation risk. A clearly drafted NDA avoids ambiguity and uncertainty.
- Confidentiality can be implied – but only in limited circumstances. The court will look at the context and conduct of the parties but it will always be safer to rely on express obligations in an NDA.
- Combination of facts can still be confidential – Just because individual components are public doesn’t mean the combined whole isn’t protected.
- Loss can be significant – This case shows that “negotiating damages” can lead to large awards especially when confidential information forms the basis of a business concept. This is an exception to the rule. It remains difficult to prove and quantify loss in a misuse of confidential information case. The typical relief sought continues to be an injunction in most cases.
This case is a cautionary tale. If you’re advising on commercial or investment discussions, don’t rely on implied duties and agree an NDA first.
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Disclaimer
This information is intended for general informational purposes only and does not constitute legal advice. We recommend seeking professional advice before taking any action on the information provided. If you would like to discuss your specific circumstances, please feel free to contact us on 0800 2800 421.
