Maggbury Pty Ltd v Hafele Australia Pty Ltd

Facts

Maggbury Pty Ltd disclosed to Hafele Australia Pty Ltd the design of an innovative folding ironing board under a confidentiality agreement, which provided that the information was to remain confidential and that Hafele would not use or exploit it without Maggbury's consent. After negotiations for a commercial arrangement broke down, Hafele nonetheless proceeded to commercialise a product embodying the disclosed design. Maggbury sought to enforce the confidentiality agreement as a restraint on Hafele's use of the information.

Issues

1. Whether a contractual obligation of confidence, expressed to be perpetual in duration, is enforceable as a matter of contract law where the information the subject of the obligation has entered the public domain. 2. Whether such a clause constitutes an unenforceable restraint of trade.

Holding

The High Court held, by majority, that the contractual obligation of confidence could not be enforced to restrain use of information that had become publicly available, and that construed as a perpetual restraint on the use of public information it was unenforceable as an unreasonable restraint of trade.

Ratio decidendi

A contractual clause purporting to impose a perpetual obligation of confidence over information that has entered the public domain operates as a restraint of trade and will be unenforceable unless it can be justified as reasonable in the interests of the parties and of the public; equity will not grant an injunction to enforce confidentiality obligations in respect of information that is no longer confidential.

Obiter dicta

The majority observed that parties are free to contract for obligations that go beyond equitable duties of confidence, but such contractual extensions must still satisfy the reasonableness requirement of the restraint of trade doctrine where they prevent a party from making use of publicly available information in the course of trade.

Significance

Maggbury is the leading Australian authority on the intersection of contractual confidentiality obligations and the restraint of trade doctrine, establishing that contractual confidentiality clauses cannot validly extend to information that has entered the public domain and that such clauses will be scrutinised under restraint of trade principles.

Key authorities

• Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269applied
• Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414considered
• Coco v AN Clark (Engineers) Ltd Coco v AN Clark (Engineers) Ltd [1969] RPC 41considered
• Peters (WA) Ltd v Petersville Ltd Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126cited
• Saltman Engineering Co Ltd v Campbell Engineering Co Ltd Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203considered
• Attorney-General v Guardian Newspapers Ltd [No 2] Attorney-General v Guardian Newspapers Ltd [No 2] [1990] 1 AC 109considered