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Privy Council rules on breach of confidence and copyright ownership

The Judicial Committee of the Privy Council (Privy Council) has ruled that the Court of Appeal of Jamaica had erred in finding a breach of confidence in a dispute concerning the development of multi-payment agency software.

The Privy Council has also rejected a claim in respect of the ownership of copyright in the software.

Factual background

Paymaster sought to develop a multi-payment agency system allowing consumers to pay their bills to various companies in one branch or kiosk. A computer programmer, Mr. Lowe, was commissioned to assist in developing the system by designing multi-payment agency software.

Mr. Lowe created the software by modifying CSSREMIT, a cashiering program he had developed which collected payments for a single company directly. Mr Lowe granted Paymaster a non-exclusive licence to use CSSREMIT for the multi-payment agency software he developed for them. Paymaster used the modified multi-payment agency software to operate its business. Mr. Lowe's business practice was to modify his basic CSSREMIT program to meet the needs of each client and, retaining his copyright, to grant the client a non-exclusive licence to use the program as modified.

Grace Kennedy Remittance Services (GKRS) used the CSSREMIT software developed by Mr. Lowe for Paymaster (through a non-exclusive licence granted to GKRS by Mr. Lowe) to enter the market for the provision of a multi-payment agency system in Jamaica in competition with Paymaster. This followed discussions between GKRS and Paymaster during which Paymaster showed its business plan to GKRS, on a confidential basis, with a view to acquiring investment in its multi-payment agency proposal. GKRS decided not to invest in Paymaster.

Paymaster sought damages from GKRS and Mr. Lowe for breach of confidence on the basis that the CSSREMIT software, licensed from Mr. Lowe to GKRS, contained confidential information in relation to Paymaster's business and that GKRS used Paymaster's business plan to develop its competing business. It also sought to prove that the ownership of the copyright in the multi-payment agency software had been assigned to it by Mr. Lowe.

Ownership of copyright

Paymaster failed to establish ownership of the multi-payment agency software due to evidence establishing Mr. Lowe's authorship of the software. Paymaster then submitted that a term should be implied into its contract with Mr. Lowe (which was oral and informal) that Paymaster would own the software which Mr. Lowe created for it. Paymaster's submission was based on section 22(1) of the Copyright Act 1993 of Jamaica.

The Privy Council ruled that there was no scope for implying the term into the contract as this would be inconsistent with Mr. Lowe's pre-existing business model which involved retaining the copyright for the products created for clients. It also considered that it was not necessary for Paymaster to own the copyright of the software as its business did not involve the sale of the software to third parties. The Privy Council also stated that there was no evidence to suggest that the specified requirements for the software provided to Mr. Lowe by Paymaster (or Paymaster's agent) constituted copyright material owned by Paymaster.

Breach of confidence

The Privy Council considered whether the Court of Appeal of Jamaica was correct to conclude that GKRS had used Paymaster's business plan to create its own competing business. It also considered Paymaster's claim (which was rejected by the Court of Appeal of Jamaica) that the software licensed from Mr. Lowe to GKRS contained confidential information relating to Paymaster. In doing so, the Privy Council made the following findings:

  • There was not sufficient basis for the Court of Appeal of Jamaica to overturn the lower court's assessment of the evidence in relation to how Paymaster's business plan was used by GKRS. It had not been demonstrated that the judge at first instance disregarded relevant evidence or was wrong in its assessment of the evidence. In the Privy Council's view, there was evidence entitling the judge to reach the conclusion that GKRS had not used Paymaster's business plan to the detriment of Paymaster. Paymaster's multi-payment agency concept was not novel or confidential; it existed overseas and could provide a model for use elsewhere. GKRS had researched multi-payment agency systems by sending an employee to the United States and, while in the process of two years' preparation and planning, it used Mr. Lowe's CSSREMIT software to establish its own multi-payment agency services. The software was designed to implement Paymaster's business proposal but belonged to Mr. Lowe who was free to license it to others.
  • The Privy Council was not persuaded that the information relating to Paymaster contained in the licensed software was confidential. The software contained Paymaster's name, the location of some of its branches and the names of certain client companies but there was nothing to suggest that that information was of any value to Mr. Lowe or GKRS.

Comment

The decision provides a useful indication of the judicial approach that may be taken in consideration of a claim for breach of confidence. The Privy Council concluded that there had been no breach of confidence as the information contained in the licensed software did not amount to confidential information and was not of any value to Mr. Lowe or GKRS.

Critical to the Privy Council’s decision was also the issue of how Paymaster’s business plan was used by GKRS and whether it was novel. The evidence provided by the parties did not suggest that the business plan was used to the detriment of Paymaster. In addition, GKRS had conducted research into multi-payment agency models existing overseas in order to set up its own services.

The case serves as a useful reminder that not all information will have the necessary quality of confidence to qualify as confidential information, for example, if it is not particularly different from information which can be pieced together from the public domain. Describing a document as confidential will not make the contents confidential. However, if an organisation would like to maximise the chances of protecting information which could be considered as confidential, it should obviously restrict access to that information and ensure that any disclosure is subject to a confidentiality agreement.

The judgment of Paymaster (Jamaica) Ltd and another v Grace Kennedy Remittance Services Ltd and another [2017] UKPC 40, 11 December 2017 can be found here.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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