Encryption as confidentiality marker

[Nicholas Bohm]

At 06:53 AM 6/30/1999 +0100, David Swarbrick wrote:
>
>In Mars UK Ltd v Teknowledge Ltd, recently reported in the Times, (23
>June 1999) encryption gets an interesting if limited mention.
>
>Mars use vending machines which apply software to stored data to analyse
>and identify coins inserted in their machines. Encryption is used to
>protect that software/data as a valuable commercial product.
>
>Teknowledge appear to have been able to work past the encryption in the
>course of reverse engineering and reproducing the mechanisms.
>
>In the course of the action Mars (among many other assertions), claimed
>that the use of encryption was enough to fix Teknowledge with an
>awareness of the confidentiality of the protected information, and this
>also with a duty of confidence.
>
>J Jacobs rejected the argument. The report I have is very limited, and
>says almost nothing more, but however brief, it does perhaps challenge
>some of the assumptions made about the use of encryption.
>
>It is sad that Mars should use encryption which is beatable in this way.

According to the judgment (available on the Court Service page
http://www.courtservice.gov.uk/ under the Patents Court) the processor was
not powerful enough to handle more serious encryption.

>It is sad also that encrypting text is not a sufficient 'hands off'
>notice. I acknowledge that the law of confidence requires additional
>elements beyond the fact of something being kept private, but the case
>does muddy the waters perhaps.

The judge said:

"There is nothing obviously confidential about the machine he gets. There
is no marking "confidential" and indeed there is not even any indication of
encryption. By the time one gets to find out about the encryption it is, in
my judgment, far too late to impose a duty of confidence. I do not think
even an express statement would work to override the buyer's entitlement to
find out how his machine worked."

This sounds like a fairly conventional application of the principle that
you can't introduce new contract terms by a notice on the back of the hotel
room door if the contract was made when you checked in downstairs.  And
bear in mind that Teknowledge lost the action on copyright infringement
grounds.

Regards,

Nicholas Bohm

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