IP Draughts

One more time, with feeling: information is not property

There is a clause in some US contracts that makes IP Draughts feel puzzled, exasperated or resigned, depending on his mood.  Well, more than one, but for today let’s focus.  The clause typically says something like:

The Client shall own the Report.

Bland and inoffensive as this statement may seem to a casual reader, it doesn’t make much sense to this English IP lawyer.  Usually it features in a contract that has other provisions that state that intellectual property in the results belongs to the Client, and that the information contained in the report should be treated as the confidential information of the Client.  IP Draughts understands both of these last provisions.  Similarly, a clause that stated that the property in the paper on which the report was printed belongs to the Client, would be logical if usually rather pointless.

Nor would IP Draughts have any conceptual problem with a statement that copyright in the report belongs to the Client.  Or a statement that the Contractor will not use the results in work for any other person.  All of these statements have legal meaning.  What is unclear, though, is a statement that pure information (such as that contained in a report) belongs to anyone, in the absence of an identifiable legal right, such as patents, copyright, or rights in confidential information.

When IP Draughts has raised this point with US parties in negotiations, and tried to tighten up the wording of the clause, his point is sometimes accepted.  On other occasions the objection is viewed as too legalistic.  “The business managers want it, so it must stay” has been the cry.  “Let’s not get into an academic debate”, seems to be the subtext.  So far, no-one has made a reasoned legal case to IP Draughts for its retention.  Surely it is important for contractual statements of ownership to be aligned with legal principles on property ownership?  Otherwise, how can the contractual statement be enforced?

IP Draughts is sure he has made this rant before on this blog.  So why make it again?  Only because a recent case in the English Technology and Construction Court (part of the High Court) has looked in some detail at past case law and reaffirmed the point that IP Draughts has been making.  The case is called Fairstar Heavy Transport NV v Adkins and another [2012] EWHC 2952 (TCC).  It was decided on 1 November 2012 and the case report can be found here.  The case focuses solely on the following question: “Does Fairstar have an enforceable proprietary claim to the content of [certain] e-mails held by Mr Adkins…”  The answer, says Edwards-Stuart J, is:

In my judgment it is clear that the preponderance of authority points strongly against there being any proprietary right in the content of information, and this must apply to the content of an e-mail, although I would not go so far as to say that this is now settled law.

Shame about the last 16 words, but you can’t have everything. So the position under English law is clear. Information, per se,  is not property.  A detailed analysis of the case can be found on the IPKat website here.

(By the way, that is a different proposition from whether the legal rights that are given to confidential information should be treated as a category of intellectual property, as this recent case discussed.)

Is there something in US laws that IP Draughts is missing, or is the clause referred to above another example of a “cockroach” provision that has infested US contracts, and other contracts that are based on US templates, and is now difficult to dislodge, like hold harmless clauses?