Friday, 22 March 2013

Emails (and other pure information) are not property

Author: Mark Anderson (Anderson Law LLP)

Fairstar Heavy Transport NV v Adkins and another [2012] EWHC 2952 (TCC), Edwards-Stuart J, Technology and Construction Court, England and Wales, 1 November 2012

Journal of Intellectual Property Law & Practice (2013), doi: 10.1093/jiplp/jpt030, fFirst published online: March 21, 2013

A court held that there was no property right in emails.

Legal context

This was a decision on an application for inspection of emails, preliminary to a main action. The first defendant opposed the application on the ground that the claimant had no property in the emails. In the words of the judge in this case:
To the extent that people require protection against the misuse of information contained in e-mails, in my judgment satisfactory protection is provided under English law either by the equitable jurisdiction to which I have referred in relation to confidential information (or by contract, where there is one) or, where applicable, the law of copyright. There are no compelling practical reasons that support the existence of a proprietary right—indeed, practical considerations militate against it.
For unstated ‘jurisdictional reasons’ none of these other areas of law was available, in the present case, so the court was required to focus on the narrow (but important) legal question of whether property rights exist in pure information—here, emails held in electronic form.

Facts

The first defendant, Mr Adkins, had been the CEO of the claimant, Fairstar, a Dutch company, which provided specialist transportation services by sea and owned a number of ships. The company was acquired in a hostile takeover, at which point Mr Adkins was dismissed. Fairstar was in dispute with a Chinese shipyard in relation to the construction and supply of some ships. The new management of Fairstar sought access to documentation in Mr Adkin's possession concerning the dispute.

During his period as CEO, emails sent to Mr Adkin's office email account were automatically forwarded to his private email account and the office emails were then automatically deleted from the office system. Emails sent by Mr Adkins as CEO were typically sent from his private account.

In the present application to the court, Fairstar sought inspection of these emails by an IT expert. Mr Adkin's objected on the ground that Fairstar had no entitlement to inspect these emails, at any rate not by means of any claim that could be asserted in the courts of England and Wales.

The case report indicates that there was a last-minute flurry of witness statements and supporting evidence before the hearing, and that objections were made to having to deal with the material submitted without an adjournment. This resulted in counsel for Fairstar agreeing to limit the scope of the application in the following terms:
Does Fairstar have an enforceable proprietary claim to the content of the e-mails held by Mr Adkins (and/or Claranet) insofar as they were received or sent by Mr Adkins acting on behalf of Fairstar?
Edwards-Stuart J reviewed a large number of authorities that had been cited by counsel on the question of whether there is property in pure information. He considered that it was ‘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’. He continued:
I can find no practical basis for holding that there should be property in the content of an e-mail, even if I thought that it was otherwise open to me to do so. To the extent that people require protection against the misuse of information contained in e-mails, in my judgment satisfactory protection is provided under English law either by the equitable jurisdiction to which I have referred in relation to confidential information (or by contract, where there is one) or, where applicable, the law of copyright. There are no compelling practical reasons that support the existence of a proprietary right - indeed, practical considerations militate against it.
Accordingly he found in favour of Mr Adkins and rejected the application.

Analysis

As the judge points out, the conventional view in England, supported by the case law that he discussed, is that there is no property in pure information. Other rights may be relevant in particular situations, for example:
Physical property in the paper or other recording medium on which the information is recorded.

Intellectual property in any invention, patent claim, copyright work etc. that may exist in relation to the information.

Rights to prevent use or disclosure of the information under the law of confidence.

Contractual rights to prevent use or disclosure of the information, eg as part of an employment contract.
For unstated reasons, none of these other rights was available in the present case. Commentators have speculated that this may be because the claimant was a Dutch company and any contracts with Mr Adkins may have been under Dutch law and subject to the jurisdiction of the Dutch courts, leaving a property claim as the only potential claim available in the English courts. The precise reasons may not matter too much to intellectual property lawyers, given that the scope of the application to the court was so precisely defined, as quoted above.

The writer understands that property rights may exist in information in other countries, eg under US trade secrets laws.

Practical significance

The taxonomy of intellectual property does matter. It is very helpful to intellectual property lawyers to have the case law in this area examined in detail by a High Court judge, and to have some clear and up-to-date analysis that property does not exist in pure information under English law.

For example, having this clarity helps contract draftsmen when drafting clauses dealing with the ownership and use of the results of research projects, such as might be found in a research collaboration agreement or technical consultancy agreement.

This case law should be considered in conjunction with other recent case law that examines related topics. For example, in Coogan v News Group Newspapers Limited and Mulcaire [2012] EWCA Civ 48, the Court of Appeal (led by Neuberger MR) decided that confidential information should be regarded as a type of intellectual property. That decision was made in the context of s 72 of the Senior Courts Act 1981, but could be viewed as having wider application. It is also widely acknowledged that know-how is commonly licensed in a similar way to patents and other types of intellectual property, and for transaction purposes is often viewed as a type of intellectual property. Usually, this is on the basis that the know-how is protected as confidential information.

2 comments:

  1. I'm confused.

    Copyright is a property right, surely? The copyright in the emails must have belonged to Fairstar since Adkins was an employee. Would it not have been open to the judge to order that the copyright material be disclosed to the copyright owner? I would have thought that would be a pretty uncontroversial extrapolation of the principles of copyright ownership.

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  2. A unique feature of this case was that counsel agreed a specific question to be put to the judge, which focussed just on property in information (ie the emails in electronic form on the ex-CEO's computer). The judge answered that question. This was a preliminary application rather than a full trial of an action.

    Could you formulate the basis of the claim in copyright? Is it for delivery up of infringing copies? In what sense is the ex-CEO infringing copyright by allowing emails to remain on his computer [undisturbed and unviewed]? I am not disagreeing with you, by the way, I am curious as to how this claim would be framed.

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