Using Intellectual Property Rights To Protect Software – The Law of Confidence

Software plays an important part in the day-to-day functioning of many different industries – from retail, to hospitality, through to aviation and engineering, the vast majority (if not all) businesses rely upon software.

In many instances, that software will have been licensed from a third party (e.g. Microsoft Office) – but what of the businesses who write their own software, or pay others to create a bespoke program? How can they best protect what is likely to be a valuable asset, designed to help a business drive efficiency and stay ahead of their competition?

This is the first of a series of blogs, aimed at helping businesses identify how intellectual property law can help protect against the unauthorised use of software.

In this blog, we consider the law of confidence.

What is the law of confidence?

The law of confidence, as the name suggests, protects confidential information.

An obligation of confidence can arise through a contract (e.g. employment contract, a non-disclosure agreement or a research and development agreement) and through the circumstances in which the information is communicated to the recipient.

Similarly, the obligation of confidence on the recipient of the information can be enforced through the contract (if there is one) and/or through common law or the Trade Secrets (Enforcement, etc) Regulations 2018.

In all cases, the information in question must be confidential (which, broadly speaking means that it is not publicly available) and in some circumstances, the information will only be protected if it constitutes a trade secret.

Whilst the legal tools available to protect that information will depend on the circumstances of each case, insofar as the law of confidence might be invoked to protect software, which elements of software would most likely have the benefit of such protection?

The GUI, being visible to the world, will not be protected.

However, the source code of a program will be, provided that it cannot be accurately decompiled from the executable files (or reverse engineered), provided that it has been kept confidential. So too, will algorithms; it is also perfectly possible for the data stored in a program’s database to benefit from protection as confidential information.

So what does this mean in practice? Essentially, if the code or data is protected by the law of confidence, any disclosure or misuse of that code etc. will be actionable by the owner of that information or trade secret.

Consequently, if a disgruntled ex-employee decides to try and take the code with them to their new employer, or tries to use it to set up in competition, the owner of that confidential information will have the right to apply to Court for an order that the ex-employee compensate the owner for losses suffered as a result of their actions or, if the owner prefers, it can ask that the ex-employee pay to it all profits made through the breach of confidence.

Perhaps most importantly, where there is an actionable breach of confidence, the owner of the confidential information will likely have the ability to apply for an urgent injunction, so as to stop it from suffering any damage or loss at all.

So what can a business do to protect its confidential information?

How to protect it:

  1. Limit the people it discloses the information to, to those who really need to know it;
  2. Ensure that when it does disclose the information, it is made clear to them (ideally in writing) that the information is confidential and is not to be disclosed;
  3. Ensure that it has stringent contracts in place that make clear that the information must not be shared (e.g. non-disclosure agreement, appropriate clauses within employment contracts and any other contracts where confidential information is disclosed between parties);
  4. Ensure that any contracts of employment or contracts where (for example) your business either commissions work or collaborates with a third party are clear: any confidential information created belongs to the business; and
  5. Document the information when making any changes to it, so that it is clear when it was created and that you are the creator and owner of it.

How can Nelsons help?

If you have any queries regarding the subjects discussed in this article, please contact either Emma Ward or Kristina Ford in our expert Dispute Resolution team, who specialise in contentious intellectual property matters.

Please call 0800 024 1976 or contact us via our online form for further information.