a know-how legal regime in the English right

In the English right there is no exact legislative definition of concept "know-how" (“know-how”). At the same time the given term is usually used for the characteristic of commercially valuable confidential information of mainly technical character.

“Trade secret” is the similar term applied in the English right for a designation of commercially valuable business information.

It is necessary to notice, that in the English right the confidential information as a whole, and a know-how in particular, it is not considered as intellectual property, unlike author's and a patent right, and also trade marks.

It is necessary to mention, that the Appeal court of England in one business [208] for justice recognised technical know-how as object of intellectual property and recognised applicability of the Instruction of the European Union about enforcement of intellectual property rights [165]. And in an another matter [174], concerning the rights of co-owners of the information about nezapatentovannom, the court by analogy has applied norms of a patent right.

For subsequent deeper analysis of a know-how in the English right it is obviously important to give the comparative characteristic of a know-how and to objects of a patent right. Comparison is resulted in table 1.

Table 1 - the Comparative characteristic of a know-how and objects of a patent right

Know-how Patent right
Occurrence of the rights to a know-how is not caused by registration. Occurrence of patent rights is caused by registration of the rights (patent reception is required).
Uncertain term of protection of the rights, up to the moment of wrongful disclosure of a know-how. Protection term - 20 years from the date of application (in some cases can be extended for the term up to five years).
It is not given a monopoly in the sense that there is no possibility to forbid use or disclosing of the similar independently developed information. The monopoly is given.
There are complexities with protection of the rights in the court, connected with difficulties in definition of what part of the information is confidential in the corresponding matter in dispute (are rare situations in which it is easy to define, for example, that such źthe confidential formula╗). It is rather simple to protect the rights in court - complexities with a presentation of corresponding requirements in a situation at the same time are possible, for example, when the patent validity is challenged.
Does not admit quality of the property by the English right (but has commercial value owing to what can be a licence subject). Admits the property right (“property right”) by the English right.
Does not come under to alienation as the property right.

In practice know-how transfer is carried out on the basis of collateral undertaking on a concession of the rights (“equitable assignment”) in which frameworks the legal owner opens a know-how to the purchaser, and also takes up obligations in the subsequent not to use a know-how and not to open its maintenance

Comes under to alienation as the property right.

To the third parties.

Besides, the given obligations are quite often accompanied by obligations of the legal owner not to compete to the purchaser during certain term which owing to positions of the legislation on a competition should not exceed five years. In the latter case in the presence of the facts of information leakage from the initial owner, the new owner can submit against it the claim for contract infringement (“breach of contract”).

The English right uses the flexible approach to an establishment of the maintenance of a legal regime of a know-how, considering it as an equity law part - one of sources of the English right which consists in application by court of principles of justice at the permission of justiciable disputes when the "strict" legal analysis can lead to refusal in a legal protection (denial of justice), in particular, when the behaviour of the respondent does not admit an offence on a general law.

The given conclusion follows from one of a basic principle of the equity law: źthe Equity law never will suffer because of absence of the remedy╗ (“Equity will not suffer a wrong to be without a remedy”). Given maksima is the mechanism of suppression of unfair behaviour, it thus operates only in case the behaviour of the party is established as running counter to rules of law or morals.

In the English right there is no legislative establishment of a legal regime of a know-how; a legal regulation source is only judiciary practice. The Know-how is not classified as the property; also there is no criminal prosecution for wrongful disclosure and know-how use as the know-how, from the point of view of the English right, cannot be stolen".

At the same time, despite lacking a legislative (statute) establishment of a legal regime of a know-how, the English right gives variety enough effective remedies of a legal protection in case of illegal reception, disclosure and (or) know-how uses.

So, absence of criminal sanctions does not mean, that deliberate assignment and know-how use will strictly not be pursued in civil legal proceedings, under a condition, however, that the claimant will prove the importance, privacy and value of the information which has been illegally appropriated. English courts regularly take out judgements on restriction of disclosing of the information, and corresponding lawsuits are quite often considered in the closed sessions of the court [196].

In the English right there are no restrictions concerning a circle of data which can be protected as a know-how. These data include as the information which can contain in the patent demand (in this case protection of the information as a know-how is way of protection of the patentable technical decision before the publication of the corresponding patent demand), and wider categories of the information, for example:

• insignificant or inkrementalnye (differently,

Not patentable) product or process improvements;

• the information which can be demanded for maintenance of peak efficiency of any kind of industrial operations or commercial activity;

• other commercially valuable information, for example, lists of clients [171], rates of a commission [176], the information on a world crop of cocoa in the given season [192], containing in accounts on payment the information on names of clients and the sum which they have paid [182].

Nevertheless, courts not always take of an identical position. In 2014 in business Smith and Nephew vs. Convatec the High Court has given up in satisfaction of the requirement of company Smith and Nephew to provide confidentiality of the information which it has opened in the litigation connected with procedure of reception of the permission to release on the market of a dressing as the court has not estimated value of data from the point of view of their integrated approach and all nuances which are comprised by process of reception of the permission to output on the market. At the same time, the Court has agreed to provide confidentiality of the documents concerning strategy of manufacture and tests, and also conducting business operations of company Smith and Nephew.

To be protected as a know-how by the English right, the information should be:

Confidential by the nature - to have so-called źnecessary quality of confidentiality╗ (“necessary quality of confidence”), that is not to be publicly accessible or well-known (the court has paid attention to the given circumstance in business Saltman Engineering Co Ltd vs. Campbell Engineering Co Ltd);

To reveal to other person only under condition of putting on on such person of the obligation on confidentiality (the court has paid attention to the given circumstance in business Coco vs. A N Clark (Engineers) Ltd).

Let's consider in more details conditions of protection of the know-how, stated above. So, in business Saltman Engineering Co Ltd vs. Campbell Engineering Co Ltd [201] court has specified, that to be confidential, the information should possess necessary quality of confidentiality, that is the information should not be well-known or be a common use subject. At the same time it is quite possible, that a certain document, for example, as the plan or the sketch representing result of work, executed with use of popular materials was confidential; thus, the circumstance doing such document confidential, is that fact, that at document creation its author źused the intelligence, and the result received thus can be received only the person which has passed through the same process of intellectual activity╗ [175].

Such position has been developed in business Coco vs. A N Clark (Engineers) Ltd [153] in which the court has specified: any information created only on the basis of popular materials can possess necessary quality of confidentiality (“necessary quality of confidentiality”) whereas something new and confidential has been realised as a result of application of abilities, skills and not ordinary thinking of human intelligence. Differently, use of human intelligence at creation of any product can be sufficient to allocate the information on such subject with property of confidentiality.

Within the limits of research of a legal regime of a know-how and the confidential information in the English right it is represented interesting to consider the lawsuits connected with relations of workers and employers in investigated area of legal relations.

As it was already marked by us by doctrine consideration about inevitable disclosing in the USA, the big problem is that the confidential information remains in memory of the worker and can be used the last after transition to work to other employer therefore the former employer can lose competitive advantages in the market which it had owing to possession confidential informations. In this case a question of principle is on what basis of criteria it is possible to define, that the information is received by the worker as a result of application of own knowledge by the last and abilities at work and, hence, further can is free be used by the worker after end of labour activity at the employer.

In business Printers and Finishers Ltd vs. Holloway [195] court has specified the following:

1. The fact of that the confidential information does not contain in any classified document, but remains in memory of the worker should not act as a sufficient basis for removal concerning the worker of a judicial interdiction for use or disclosing of such information;

2. However if the information can be considered as a certain separate part of knowledge of the worker, which the person źusual honesty and intelligence╗ (“ordinary honesty and intelligence”) would recognise as the property of the former employer of which the worker has not the right to dispose at own discretion then the court if will consider that there is a danger of use or information disclosing by the former worker to the detriment of interests of the former employer, can impose a judicial ban on purpose to prevent such use or disclosing.

As we see, it is far not all data, which steels are known to the worker in connection with labour duties, can be confidential. Thereupon, it is represented interesting to consider case Faccenda Chicken Ltd. vs. Fowler [170]. The Essence of the matter is that. Company Faccenda Chicken Ltd. Was engaged in manufacture and delivery of chicken meat in butcher's shops and public catering establishments. Mister Fowler, working in the company as the manager on sales, has thought up and has realised idea to carry out sale of chicken meat in special vans-refrigerators. Each seller was responsible for certain territory on which it, at least, once a week visited customers, bringing in such vans of the goods in quantity, sufficient for performance of firm orders for the caused quantity of the goods of each customer; thus customers could get bolshee or smaller quantity of the goods in comparison with usually bought quantity in those or other situations. For each customer the prices have been established. Later mister Fowler has left company Faccenda Chicken Ltd. Also has based the own company in which has enticed five sellers of company Faccenda Chicken Ltd., which knew clients Faccenda Chicken Ltd., routes of sale and planned schedules of deliveries, also sale of chicken meat began to carry out, competing with the former employer. Company Faccenda Chicken Ltd. Has submitted against mister Fowler the claim for infringement of confidentiality of such information.

In business Faccenda Chicken Ltd v. Fowler the court has specified, that all information which became known in employment to the worker, depending on confidentiality level can be divided into three categories:

1) the General business information (“trivia of the business”);

2) the Information with certain confidential elements;

3) really confidential know-how (“truly confidential trade secrets”).

The general business information (“trivia of the business”) is an information which cannot be confidential by the nature; from the worker it is impossible to demand, that it abstained from its disclosure even in employment, let alone the period of time after the termination of labour relations. It is the information on business or the industry which is accessible to the public, both as a whole, and on demand, and also about customs and the developed practice in trade. For example, in business Faccenda Chicken Ltd. vs. Fowler the court has carried the information on routes of sale and planned schedules of deliveries to the information of the given category.

The information with certain confidential elements - this category the information includes, first of all, the information which the worker gets owing to performance of the labour duties and which becomes an integral part of a professional knowledge, skills, abilities and experience of the worker. The employer can demand from the worker of observance of confidentiality of such information only in employment as after the termination of labour relations the employer should forbid to apply to the worker the knowledge, skills on other place of work. In business Faccenda Chicken Ltd v. Fowler to such information the court has carried a method of sales of chicken meat from the vans-refrigerators, being a part of knowledge and abilities of mister Fowler owing to what as has specified court, to forbid mister Fowler to apply the given method after the termination of labour relations it is not obviously possible.

The second category is constituted by the information on customers, the prices, technologies, and also names and addresses of other workers which the leaving worker can have intention to suggest found a job in other place, otherwise, can to "entice". It is necessary to notice, that volume of a duty of the worker to observe confidentiality of the given category of the information and as a whole to show conscientiousness and discretion after labour relations depends on the maintenance of its labour duties. Abundantly clear, that from the worker who within the limits of employment had no direct access to the confidential information, the employer cannot demand confidentiality observance in such volume and the same terms after the termination of labour relations as from the worker, character of which labour duties is that, that it regularly has access to the confidential business information. Anyway, any certificate of unconscientiousness of behaviour of the former worker is valid the proof only if such information really was confidential and the worker in full to a measure realised it. Unlike the first category of the information with separate elements of confidentiality, concerning the second category of the information considered by us the English right supposes inclusion in labour agreements of the obligation of the worker to abstain from disclosure of such information not only in employment, but also during the limited period of time after the termination of labour relations. Thus such period of time should not exceed two years.

In business Faccenda Chicken Ltd v. Fowler the court has noticed, that the information on the prices is confidential, however, as company Faccenda Chicken Ltd. Demanded to recognise as confidential all set of the information including, besides other, the information on plans of deliveries of production (which the court has carried to a category of the general not confidential business - information) the court did not recognise all set of such information as confidential.

As to the third category of the confidential information - really confidential know-how (“truly confidential trade secrets”) - that workers should observe confidentiality of this information both during the employment, and after the termination of labour relations, and is quite admissible to impose on the worker a duty to observe confidentiality of such information during the uncertain period of time, that is, as a matter of fact, is termless.

It is necessary to notice, that English courts do not give the accurate list of the information which falls under a know-how category. There is only a general definition, according to which know-how is an information which is used in business or the trade which distribution is limited or is completely prevented by its owner and which disclosure can do essential valid harm to its owner. The given approach is useful in the sense that he establishes level of importance of the information: if information disclosure is capable to entail only insignificant or short damage for the owner such information cannot be considered as a know-how.

That the information was protected as a know-how by the English right, it is necessary to observe following [175].

First, to provide, that information disclosing was carried out in the circumstances assigning to the addressee of such information (as a rule, that is the worker or the counterpart) obligations to observe its confidentiality. So, dogovory in which frameworks disclosing of the confidential information can be carried out, should contain accurate and clear positions so that the addressee realised confidential character of the information opened to it and a condition of such disclosing. In particular, it is necessary to define accurately the purposes for which achievement the addressee can use the confidential information, and also provide positions about the subsequent return or destruction of the transferred carriers of the confidential information to certain cases;

Secondly, it is necessary to take following measures on confidentiality observance:

1) access Restriction to the confidential information.

It means, that the information can be opened in the volume necessary for achievement of the purpose of such disclosing, for example, restriction of quantity of copies of carriers of the confidential information and persons, having to it access, and also marks of each page of the document by a signature stamp "Confidentially" (“Confidential”).

It is necessary to note, what even imperceptible features

Industrial operations can be protected, if actually any competitor of the owner of such information does not use such process, process is not documented in any popular source and possibility to observe of process realisation in operation is not given to visitors of the enterprise. Anyway, on a measure possibility it is necessary to accept a policy of restriction of access in areas in which such processes are carried out or technological workings out are led.

2) the Written account of all operations concerning the confidential information.

It is necessary to notice, that such written account can constitute the important part of evidentiary base at any possible subsequent proceeding, in particular, will allow to establish, which information is confidential.

3) the Explanation to leaving workers, and also counterparts, the contract with which stops, about lasting character of obligations on confidentiality observance. In particular, from such persons it is necessary to demand return or destruction of all material and electronic carriers of the confidential information, and also all copies (copies) made such persons; corresponding obligations should be reflected in the agreement in which frameworks the confidential information reveals.

Within the limits of the present research it is obviously important to consider the problem on what actions are qualified in the English right as confidentiality infringement (“breach of confidence”).

Obligations on confidentiality observance can be broken as owing to wrongful use of the information, and disclosure to the third parties. So, use of the confidential information with a view of, the distinct from purposes for which achievement it has been opened to the addressee, admits confidentiality infringement even if the situation when as a result of such use the information will be opened to any third party is not inevitable.

Also chances when the confidential information constitutes a basis for new technical workings out. Use of such derivative material (“derivative material”) will admit by the English right as infringement of confidentiality of the original confidential information, only if the derivative material actually is the disguised embodiment (“disguised embodiment”) the original confidential information. At the same time, if the original information at the moment of creation of a derivative material is confidential such derivative material far can be not always qualified as an embodiment of the original confidential information.

In the English right the contracts mediating granting to the third parties the right of use of a know-how, are licence dogovory about technology granting (“technology transfer licences”) and agreements on granting of technical support (“technical assistance agreements”).

Licence dogovory about technology transfer (“Technology transfer licences”) represent the "mixed" licences in which the right of use of certain technology in a certain scope and in the volume necessary for practical introduction of technology by the licensee and, for example, for manufacture of an end-product is given to the licensee. As a rule, such licence dogovory assume granting of the licence for a know-how, and also on one or several objects IP. Licence dogovory about a technological transfer have mixed character in the sense that a necessary subject of the licence acts as a know-how, not admitting the English right as "classical" intellectual property; thereupon such licences should be distinguished from so-called źpure licences for intellectual property╗ (“pure intellectual property licences”) which subject objects patent can be, the copyright or trade marks.

The second version of the contracts mediating transfer by a know-how, agreements on granting of technical support (“technical assistance agreements”) are. In the given agreements the intellectual property is not the basic subject of the transaction. In them the licensor agrees to give consultation and to carry out demonstration of work of technology for the licensee; besides, such agreements can contain conditions about an order of rendering of auxiliary services in consultation and technical support. Agreements also provide conditions about granting of the licence for technology which quite often represents set of a know-how.

As a rule, licences for a know-how often enough include positions about granting of technical support as granting of the documentary description of a know-how can be insufficient, considering, that the licensee can be less formed in the technical plan, than the licensor. Technical support can be given by various ways, for example, carrying out of training seminars for workers of the licensee on know-how application (so-called “show-how” which cannot be issued in written form); granting of the equipment and the software necessary for introduction of a know-how; a direction on the enterprises of the licensee of technical experts and (or) granting of the personnel for technological and marketing divisions.


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A source: Nesterova Nadezhda Vladimirovna. of FEATURE of the LEGAL REGIME of the KNOW-HOW ON the EXAMPLE of the RUSSIAN, FOREIGN And INTERNATIONAL EXPERIENCE. The dissertation on competition of a scientific degree of the master of laws. Moscow -.

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