28 June 2018

Adinop Co Ltd v Rovithai Ltd & Anor [2018] SGHC 129

The Singapore High Court in Adinop Co Ltd v Rovithai Ltd & Anor held that, while customer information can and did, in this case, constitute confidential information, there was no misuse of such customer information by the defendants. On the facts, the court observed that the value of the customer information lay in its collection as a whole, including certain corollary information about those customers, but not in the names of those customers per se. The reference to the names of these customers to disseminate certain information to them therefore did not constitute misuse.

Facts

Adinop Co Ltd (“Adinop”), a distributorship based in Thailand, commenced an action in the High Court of Singapore against Rovithai Limited (now known as DSM Nutritional Products (Thailand) Ltd) (“Rovithai”) and DSM Singapore Industrial Pte Ltd (“DSM Singapore”) for breach under a confidentiality agreement and breach of the equitable duty of confidence.

For over 20 years, Rovithai had an arrangement with Adinop under which Rovithai sold products manufactured by the DSM group (“DSM products”) to Adinop to be then on-sold to food, beverage and nutritional (“FB&N”) manufacturers in Thailand for use in the production of a variety of products such as sauces, health drinks, and noodles (“Distributorship Arrangement”). There was no formal written contract to govern this general Distributorship Arrangement, although there were standard terms and conditions that governed the specific sale of products from Rovithai to Adinop.

In 2013, DSM Singapore required Adinop to enter into a confidentiality agreement with Rovithai and DSM Singapore (“Confidentiality Agreement”). DSM Singapore was keen on ensuring that there would be no misuse of proprietary information relating to its products. By this time, a considerable amount of information (including customer information) had already passed between Adinop and Rovithai in connection with orders for DSM products.

By 2014, the commercial relationship between Adinop and Rovithai had deteriorated, and Rovithai decided to bring an end to the Distributorship Arrangement. Following this, Rovithai took steps to identify a substitute distributor. Rovithai then reached out to customers of DSM products by way of a notice letter (“Notice”), including those that had dealt with Adinop, to update them about the change in distributorship. Adinop objected to the so-called termination of the Distributorship Arrangement. Adinop then commenced a claim in the Singapore High Court alleging that Rovithai and DSM Singapore had breached the Confidentiality Agreement by using its customer information to reach out to the relevant customers to inform them about the change in distributorship.

Decision of the Singapore High Court

In dismissing Adinop’s action against Rovithai and DSM Singapore, the Singapore High Court found that Adinop had compiled a list of key customers into a document containing the names of the customers and information about the DSM products that these customers purchased (“Key Customers List”). The court held that this Key Customers List constituted confidential information and contained useful information of some commercial value. In this regard, the court observed that it would have taken the defendants time and effort if it were to construct a similar list with substantially the same information from independent sources.

However, the court held that the defendants had not made any unauthorised use of the Key Customer List. In so holding, the court made the following points:

  • Under the law, it is ordinarily necessary to show that any misuse of confidential information relates to a “material part” of the information, if it can be shown that the defendant only used part of the information.
  • When disseminating the Notice, Rovithai used only the information in the Key Customers List to identify the names of the Thai FB&N manufacturers who were key customers of DSM products. There was no evidence that Rovithai used any other information in the Key Customers List.
  • The court further noted the circumstances surrounding the relationship between the parties and their respective interests in the Thai market for DSM products. In particular, the court noted that the defendants would have had a legitimate interest in informing the market and its customers of the change in distributorship, and that Rovithai was implicitly authorised to use its knowledge of the key customers to inform them of the termination of the distributorship.

Contrasting the facts and circumstances in this case against other cases where liability for breach of confidentiality obligations was found, the court observed that:

  • The Thai FB&N manufacturers had purchased products from Adinop because they wanted to use DSM products. It followed that after termination of the distributorship, Adinop would not have had any legitimate interest in stopping Rovithai from informing the FB&N manufacturers of the change in distributorship, and where they should go if they wished to continue using DSM products; and
  • The evidence showed that Rovithai had worked with Adinop to develop and expand Adinop’s business and customer base. In this connection, Rovithai could not be regarded as a competitor with Adinop for the supply of DSM products - the court observed that these were Rovithai’s products which it supplied to Adinop to begin with.

The court also noted that, in any event, any loss of customers for DSM products that Adinop would have suffered would have been the inevitable consequence of its loss of distributorship rights with Rovithai.

Comment

The Singapore High Court decision in Adinop Co Ltd v Rovithai Ltd & Anor
[2018] SGHC 129 recognises that customer information can constitute confidential information. However, that does not automatically mean that any use of that customer information will result in a finding that there was misuse. This decision shows that the court will undertake nuanced analysis to consider the purpose for which the information was used, the aspects of confidential information used, as well as the nature of the commercial relationship between the parties to determine if liability should be imposed in a particular case.

Allen & Gledhill Partner Ramesh Kumar represented the successful defendants.

 

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