In this mammoth English judgment the court dealt with a dispute between two motor insurance providers and claims of misuse of confidential information used to jointly develop an insurance rating model for the broker’s new start-up insurance business.
The claimant insurer sought both an interdict and damages against its former broker and the insurer to whom the broker had moved the claimant’s business.
The dispute largely turned on the information provided by the claimant insurer for the rating engine used by the broker during the time of their relationship.
The broker was accused of filching the claimant insurer’s advanced algorithms enabling policies to be appropriately priced based on the customer’s risk profile so as to establish its insurance company and build its business.
It was also alleged that the broker had breached its contractual and fiduciary duties by transferring the claimant insurer’s customers to the new insurance business.
The court found that the broker had taken the claimant’s intellectual property and failed to provide customer details when requested by the claimant insurer, breaching its duties under the parties’ agreed terms of business.
It had also been argued that the broker had passed off its insurance policies as its own when persuading customers to renew their policies and did not make it sufficiently clear that the new policy was with a different underwriter. That claim was dismissed. The court said the branding of the product had always been that of the broker with the claimant insurer mainly mentioned in small print. The renewal documents had to be looked at as a whole including important elements such as a statement regarding the change of underwriter. In that regard there was no misrepresentation.
The court also said however that in certain circumstances where there had been misuse of confidential information, the benefit may have been insignificant and “more in the nature of incidental, and almost accidental breaches, some of them in the context of a situation in which Marshmallow was conscientiously trying to avoid the use of Mulsanne material.”
Unsurprisingly both parties claimed victory.
The judgment contains a detailed consideration and analysis of how the courts determine what is protected by law as confidential when two parties contribute know-how and information to developing proprietary technology and the relationship then breaks down; whether that technology can then be rewritten to eliminate direct use of confidential information; how it is made clear to customers that the corporate arrangement has changed; and where goodwill has accrued how one avoids passing off products of a former partnership as those of the new venture.
