Analysis of Breach of Confidence and Patent Law: KKL, Thor, and Odin

This assignment analyzes a case involving Keiko Kelda Limited (KKL), Thor, and Odin, focusing on issues of breach of confidence and patentability. The case involves a computer engineer, Odin, who works for his own company, Thor Pty Ltd, and is contracted by KKL to develop a program for spinning a new bulletproof yarn. The analysis explores whether Thor breached the confidence of KKL by potentially using confidential information when working for another company, Loki, and whether the fabric developed by Odin's wife, Frigg, can be patented. The assignment delves into legal precedents, including Coco v AN Clark, Thomas Marshall (Exports) Ltd v Guinle, Saltman Engineering Co Ltd v Campbell Engineering Co Ltd, and others, to assess the confidentiality of information, the elements of breach of confidence, and the criteria for patentability, considering aspects of inventive and innovative steps. The solution applies the relevant laws to the facts, evaluating the likelihood of success for each party and providing a comprehensive legal analysis of the case.

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Author Note

TABLE OF CONTENTS
QUESTION 1.....................................................................................................................................2
ISSUE.................................................................................................................................................2
LAW...................................................................................................................................................2
APPLICATION.....................................................................................................................................3
CONCLUSION.....................................................................................................................................4
QUESTION 2.....................................................................................................................................4
ISSUE.................................................................................................................................................4
LAW...................................................................................................................................................4
APPLICATION.....................................................................................................................................6
CONCLUSION.....................................................................................................................................6
REFERENCES..........................................................................................................................................6
QUESTION 1
ISSUE
Whether KKL has an action against Thor and Odin for equitable breach of confidence.
LAW
It was held Coco v AN Clark (Engineers) Ltd. [1969] R.P.C, that for an information to be
held as being confidential information, it is necessary that it must have been communicated in
a circumstance which would reasonably air an obligation of confidentiality. In particular,
where the relevant information was of an industrial know-how type where the value of such
information is to be gained from its commercial exploitation such as manufacture of a
product, and in a business’s context such as a joint venture, then a strong imputation would
be placed that the information being conveyed by the conveyor was assumed to have been
confidential and that party receiving such information also understood that it is confidential
in nature.
In Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227, it was held that to establish
confidentiality, the relevant information must have been such that the owner would
reasonably believe, that if divulged would provide an unfair advantage to his rivals and
thereby be injurious to him.

In Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 R.P.C. 203, CA at
215 Lord Greene M.R stated, "The information, to be confidential must … have the necessary
quality of confidence about it, namely, it must not be something which is public property and
public knowledge”.
There may be circumstances when it is not possible for the plaintiff to outright prove that the
specific confidential information supplied by him has been used been used in employment of
his competitor subsequently. In such cases, breach of confidentiality has to be proved by
citing circumstantial evidence. In the case of CMI-Centres v Phytopharm [1999] FSR 235, it
was held the confidential nature of information may be stated circumstantially by showing
that the defendant could not have reached such an advanced developmental stage of the
product without utilisation of the concerned allegedly confidential information, had he started
from scratch or by utilising only legitimate sources “without cutting any corners”.
However, the extent of confidentiality has to be reasonable. In the case of Wright v Gastweld
Pty. Ltd. (1991) 22 NSW LR 317, it was observed that that while enforcing the law of breach
of confidentiality, there has to be a balance struck between the rights of the employer to
protect confidential information, and the right of employment of the employee. In a case
where due to the technical nature of the job, the employee gains consideration skill and
experience regarding the job, he is free to use that skill and experience for a competitor
without specifically using the confidential information and thereby causing a breach.
APPLICATION
Applying the test in Coco v AN Clark Megarry J, the concerned information was indeed
supplied by KKL to Thor in a circumstance that would reasonable raise the assumption that it
was confidential in nature. Additionally, it was supplied in a clear business context. The facts
state that Thor had restricted access to materials when at the office of KKL. Further, even
when he used to work from home, he had to access the information using a four phase
security bypass. The information, i.e. the silk worm fibre was proprietary and not in the
public domain –which satisfies the test of confidentiality laid down in Saltman Engineering
Co Ltd v Campbell Engineering Co Ltd. Lastly, since KKL took so many measures to protect
the information – letting Thor has limited access in office, not letting all employees have
authorisation of access, and having a four phase security for bypass, it is no doubt that he
believed that divulging such info would be injurious to KKL against its competitors. Thus, it

very reasonable to establish that the information supplied by KKL to Thor was confidential in
nature.
It is not known to KKL as to how much of the info was used by Thor while working for Loki.
However, given the highly specialised and technical nature of the work and the fact that
within 1 year of Thor leaving employment with KKL Loki has the confidence to make a
public statement that their product would rival that of KKL, it can be contended by KKL that
Thor had used confidential information while working for KKL – as per law established in
CMI-Centres v Phytopharm.
Finally, however, it may be contended by Thor that as he was already an established engineer
with his own company working for clients in the field of textile weaving programs, he didn’t
have to use confidential information supplied by KKL to work for Loki, but only his
expertise and skills gained from the experience of working with KKL – which is protected
under law established by Wright v Gastweld.
CONCLUSION
It has already been established that the information supplied by KKL was confidential.
Though, it is true that the expertise and skill gained by Thor while working for KKL can be
used in the course of his employment with Loki, it is highly unlikely that such an
advancement in the developmental stage can be obtained within a mere 1 year. Thus, KKL
will succeed in proving an equitable breach of confidentiality by Thor by applying CMI-
Centres v Phytopharm.
QUESTION 2
ISSUE
Whether the fabric developed by Frigg can be patented.
LAW
The law of patents is governed in Australia by the Patents Act, 1990 (the Act). To qualify for
a patent there must be an inventive step or an innovative step. According to Section 7(2) of

the Act, an invention is considered to have an inventive step when it is not obvious to a
person considered skilled in the relevant art after considering all prior general knowledge and
prior art in regards to the subject. According to section 7(4) of the Act, an innovative test is
said to have been constituted when there has been a substantial contribution to the working of
an invention existing before.
In Minnesota Mining & Manufacturing Co v Beiersdorf (Australia) Limited (1980) 144 CLR
253 Aickin J stated (at 292) that common general knowledge ‘involves the use of that which
is known or used by those in the relevant trade. It forms the background knowledge and
experience which is available to all in the trade in considering the making of new products,
or the making of improvements in old, and it must be treated as being used by an individual
as a general body of knowledge’.
In HPM Industries Pty Ltd v Gerard Industries Ltd 98 CLR 424, 437 Williams J law laid
down the test of non-obviousness. It stated that an inventive step would not be said to have
been constituted when the application ‘lacked inventive ingenuity because the solution would
have been obvious to any person of ordinary skill in the art who set out to solve the problem’.
The case of Tetra Molectric Ltd v Japan Imports Ltd [1976] RPC 541, held in an application
of patent for implementing the solution, if a design problem could have been easily solved by
a person skilled in the art, then it would fail the test of non-obviousness.
As stated in Lucas and Another v Gaedor Ltd and Others [1978] RPC 297 at 358, “If an
invention has resulted in the solution of a problem which has been troubling industry for
years and achieves immediate success upon its introduction, then the suggestion after the
event that the step was obvious inevitably rings a little hollow.” Thus, a novel solution to a
difficult problem would qualify for a patent as being inventive or innovative.
Similarly solving a problem after many failed attempts (Technograph Printed Circuits
Limited v Mills and Rockley (Electronics) Limited [1972] RPC 346 at 353) would constitute
an inventive step.

According to Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411, if the solution
is not routine at all and required complex laborious steps, involving a lot of trial and error and
dead ends, the test of inventive step would be satisfied.
Where the solution offered a surprising or unexpected advantage, then also the test of non-
obviousness would be satisfied and the applicant would be held to have ‘directly led to the
invention’ as per Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59; (2002)
212 CLR 411.
APPLICATION
Before the invention of the bullet-proof fabric by Frigg using spider silk, there only existed
bulletproof fabric which used Kevlar and prior patent Stamicarbon B.V. Australian Patent
Number 1988023380. Kevlar is radically different and inferior than fabric created by weaving
spider silk as it weighs 175 grams per square meter contrasting with 4.43 grams per square
meter as weighed by the spider silk fabric. Thus, the material was not known the general
body of knowledge prior and would not be obvious to a person skilled in the art. Thus, the
material would survive the test of non-obviousness as laid down in Minnesota Mining &
Manufacturing Co v Beiersdorf (Australia) Limited and HPM Industries Pty Ltd v Gerard
Industries Ltd 98 CLR 424, 437.
The facts state that the fabric was weaved using proprietary technology of KKL and Odin
after complex laborious steps. Thus, the design problem could not have been easily solved
satisfying the requirement of law in Tetra Molectric Ltd v Japan Imports Ltd., and
Aktiebolaget Hassle v Alphapharm Pty Ltd.
Also, the thin spider silk fabric solved a long troubling problem in the industry about bullet-
proof clothing capable of being worn every day, unlike Kevlar which was too bullky. Thus, it
also been the criteria of non-obviousness i.e. solving a long standing problem in the industry
as laid down in Lucas and Another v Gaedor Ltd and Others.
CONCLUSION
The fabric developed by Frigg is different from prior products, non-obvious to a person
skilled in prior art, solves a long-standing industry problem and developed using special

technology using a long-complicated process. Thus, it checks all the boxes for non-
obviousness and inventive step and can be patented.
REFERENCES
Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411
Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59; [2002] 212 CLR 411
Coco v AN Clark (Engineers) Ltd. [1969] R.P.C
CMI-Centres v Phytopharm [1999] FSR 235
HPM Industries Pty Ltd v Gerard Industries Ltd 98 CLR 424, 437
Lucas and Another v Gaedor Ltd and Others [1978] RPC 297
Minnesota Mining & Manufacturing Co v Beiersdorf (Australia) Limited [1980] 144 CLR
253
Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1948] 65 R.P.C. 203, CA
Technograph Printed Circuits Limited v Mills and Rockley (Electronics) Limited [1972] RPC
Tetra Molectric Ltd v Japan Imports Ltd [1976] RPC 541, 58
Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227
Wright v Gastweld Pty. Ltd. [1991] 22 NSW LR 317