BTC1110 Chapter Notes - Chapter 3: Breach (Security Exploit)
13 Jun 2018
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BREACH OF CONFIDENCE
MISUSE OF CONFIDENTIAL INFORMATION BY FORMER EMPLOYEE TO CREATE COMPETING PRODUCT
Case: RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd (2011)
➢ The Federal Court has awarded damages to a RLA Polymers Pty Ltd, a flooring adhesives manufacturer,
after finding that former employees who founded a competing company had misused confidential
information to speed up their product development.
➢ Justice Ryan ordered Nexus Adhesives Pty Ltd, the company co-founded by two of the former employees, to
pay damages for sales made during the period of time that was saved as a result of the misuse of the
confidential information.
CONFIDENTIAL INFORMATION
The Court considered each of the elements RLA needed to satisfy in order to make out an action for misuse of
confidential information, namely that:
1. the information the subject of the action must be confidential;
2. it must have been imparted in circumstances importing an obligation of confidence; and
3. there must have been an actual or threatened unauthorised use or disclosure of the confidential information.
Justice Ryan held that each of these elements had been satisfied.
1. Found that the former employees retained information about the formulations, including component
ingredients, of two of RLA's flooring adhesive products and that such information was confidential to RLA
➢ Not part of an employee's "stock of knowledge"
2. Found that the former employees had disclosed RLA’s confidential information to Nexus and that the
respondents misused that confidential information by referring to and using it in the research and
development of Nexus' own flooring adhesive products.
3. The Court proceeded on the basis that Nexus was under an (equitable) obligation to keep RLA's confidential
information confidential and not to misuse that information, although not expressly identified in the judgment.
SPRINGBOARD DOCTRINE
RLA argued that, as a result of the respondents' misuse of its confidential information, Nexus obtained an unfair
advantage in developing and getting to market its own adhesive products and that, accordingly, the relief to which it is
entitled should reflect that advantage. This is known as the "springboard doctrine".
Recipient of confidential information or trade secrets should not be allowed to use it as a springboard into a better
position than would have been achieved from the use of publicly available information and the recipient's own
independent skill and ingenuity
If the springboard doctrine applied in the present case, his Honour held that it would be necessary to consider what
advantage Nexus had obtained by misusing RLA's confidential information.
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Document Summary
Misuse of confidential information by former employee to create competing product. Case: rla polymers pty ltd v nexus adhesives pty ltd (2011) The federal court has awarded damages to a rla polymers pty ltd, a flooring adhesives manufacturer, after finding that former employees who founded a competing company had misused confidential information to speed up their product development. The court considered each of the elements rla needed to satisfy in order to make out an action for misuse of confidential information, namely that:
