Property in information? Wrong question, m’Lud.

Readers with long memories will recall this blog’s discussion of a case in the English High Court last year, in which the judge decided that there was no “property” in information.  The information in question was emails stored on a computer.

High Court decision

Mr Adkins, when he was CEO of Fairstar

Mr Adkins, when he was CEO of Fairstar

The case, Fairstar Heavy Transport NV v Adkins [2012] EWHC 2952 (TCC) had some unusual facts.  Mr Adkins had been employed as the CEO of Fairstar (a company involved in the shipping industry), but was not an employee.  His services were provided through a Jersey-based company controlled by him.  Emails sent to his company email account were automatically forwarded to his personal email account and the original emails were then deleted from the company’s system.

The agreement between Mr Adkin’s company and Fairstar was made under Dutch law and was subject to the exclusive jurisdiction of the Dutch courts.  A dispute between that company and Fairstar had been resolved by a settlement agreement made under Dutch law, but there was continuing litigation in the Dutch courts between Fairstar and Mr Adkins personally, in which it was alleged that he had mismanaged the company, and in which Fairstar sought to enforce some restrictive covenants.

The only question before the English court was whether Fairstar could have access to the emails on Mr Adkin’s personal computer.  Mr Adkins was refusing to provide access.

landIn the English High Court, the parties’ counsel were asked to formulate a specific question on which they sought a ruling from the court.  They came up with the following:

Does Fairstar have an enforceable proprietary claim to the content of the emails held by Mr Adkins… insofar as they were received or sent by Mr Adkins acting on behalf of Fairstar?

The judge in the High Court, Edwards-Stuart J, decided that the answer to this question was “no”.  He reviewed the case law on the nature of information and concluded that there was no property in pure information.

Appealing to the Court of Appeal

Fairstar sought leave to appeal the decision.  The judge refused, but the Court of Appeal decided to give leave to appeal.  The case came before the Court of Appeal in April this year (Mummery, Patten and Black LJJ), and their written decision was handed down last week.

special agentIt seems that Fairstar’s legal team had a rethink on the best way to present their case to the Court of Appeal.  Instead of focussing on the jurisprudential nature of information as property, they argued that Mr Adkins was acting as an agent of Fairstar, and that under the law of agency, when an agency appointment comes to an end, the principal is entitled to have access to documents held by the agent in his capacity as agent.

Mr Peter Susman QC, for Fairstar, asked the court to allow him to submit a revised skeleton argument that focussed on this area.  Mr Richard Spearman QC, for Mr Adkins, objected on the ground that this was a completely different point, which had not been argued in the High Court, and that it would be improper to allow the appeal to be argued on this new legal basis.

Mummery LJ, who gave the only judgment in the Court of Appeal (and with which Patten and Black LJJ agreed) allowed Mr Susman to submit his revised skeleton argument and to argue the point before the court.  In Mummery LJ’s view, it was part of the original case that Mr Adkins was an agent of Fairstar.  It was unfortunate that the parties had focussed so much on the proprietary nature of information in their question to the court (quoted above).  This had introduced an unnecessary complication and was a distraction from the core issue, which was the relationship between Fairstar and Mr Adkins.

Court of Appeal decision

Mummery LJ declined to enter into the controversy over whether information is property.  It was not necessary to do this in order to decide the case before him.  In particular he was very reluctant to make sweeping statements, such as that information could never be property.  There might be cases where the facts pointed in a different direction.  For instance, he observed that:

Some kinds of information, such as non-patentable know-how, are more akin to property in their specificity and exclusivity than, say, personal information about private life.

Before stating his conclusions on the agency point, Mummery LJ cleared the decks by saying what the case was not about.  In the English case:

  • there was no claim for ownership of the computer on which the emails were stored, nor any claim to own any USB stick, electronic medium, sheets of papers or other physical thing or material
  • there was no claim to ownership of confidential information in the emails, nor any claim of misuse of confidential information
  • there was no claim to copyright or other IP in the content of the emails
  • there was no allegation of breach of contract, fiduciary duty or any other wrongful conduct on Mr Adkin’s part, and he was willing to preserve the emails.

distractionThus, the only issue was whether Fairstar was entitled to access to the emails.  Fairstar described this claim as “proprietary” but, as mentioned earlier, this was an unfortunate distraction from the real basis of the claim which was in agency.

Mummery LJ accepted Fairstar’s submissions and allowed the appeal.  In summary, his main reasons were:

  1. The relationship was one of agent and principal.
  2. A principal is entitled to require production by the agent of documents relating to the affairs of the principal.  This right survices termination of the agency appointment.
  3. Documents may include information held electronically (eg see CPR 31.4).
  4. Documents held on a computer are subject to the rule summarised in point 2 above.
  5. The question of whether information is property does not need to be decided in this case.

Comments on the decision in the Court of Appeal

In IP Draughts’ view, Mummery LJ was bending, if not breaking, the rules to do justice in the case.  Viewed from the outside, it looks like a completely new line of argument was raised in the Court of Appeal.  It is difficult to detect any sign of the agency point being part of the argument or decision in the High Court.  The principal line of authorities under discussion in the High Court was on the question of property in information.  The principal line of authorities under discussion in the Court of Appeal was from a different branch of commercial law – agency law.

Mummery LJ is a very experienced, wise, humane and pragmatic judge who is due to retire fairly soon.  His approach is the opposite of some Chancery judges whose judgments read more like academic treatises than practical decisions for busy people.  IP Draughts is left feeling that justice was probably done in this case, but at the same time he is uneasy: if judges disregard the rules on what can be argued on appeal, there may be costs to the justice system overall, and the outcome of cases becomes less predictable.

As for the question of whether information is property, we are no further forward.  As this blog has previously mentioned, the question is not just an academic one.  It has practical implications for the wording of IP contracts, including licences and assignments.  Mummery LJ rightly highlights that commercial know-how looks more like property than private information.

2 Comments

Filed under Confidentiality, Intellectual Property, Legal Updates

2 responses to “Property in information? Wrong question, m’Lud.

  1. If I remember it right, the Lord Chancellor sang:
    The law’s the true embodiment, of everything that’s excellent
    It has no kind of fault nor flaw, and I, my friends, embody the law!

  2. Would this constitute an adequate paraphrase of Mummery LJ’s opinion?

    ‘Allow me, as an old Equity draftsman, to make a
    suggestion. The subtleties of the legal mind are equal to the emergency. The thing is really quite simple–the deletion of a single word will do it. Let the question on appeal stand “Does Fairstar have an enforceable … claim to the content of the emails held by Mr Adkins…”, and there you are, out of your difficulty at once!’

    The source of this paraphrase being now public domain, there is no proprietary interest in it; those of us in the legal profession should be forever grateful that W. S. Gilbert was a lawyer.

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