No property in email: High Court sets the record straight

by Inbali Iserles

The High Court has ruled that there is no property in the content of an email.(1) In so doing, Edwards-Stuart J pointed out that the preponderance of case law suggests there are probably no proprietary rights in information per se. Companies seeking to protect the content of emails generated by their employees should consider their data protection, copyright and confidentiality policies and ensure they are sufficient to meet their business needs.

Background to the dispute

Philip Adkins (the first defendant) was the former CEO of Fairstar Heavy Transport NV, a Dutch shipping company. He had been employed via Cadenza Management Ltd, a Jersey-registered service company. Cadenza's email account was hosted by Claranet (the second defendant). The contract between Fairstar and Cadenza contained an exclusive jurisdiction clause under which all disputes were to be determined by the Dutch courts.

In July 2012, Fairstar was taken over and the Cadenza contract for Mr Adkins' services was terminated. Subsequently, Fairstar received demands for payment of substantial fees from a Chinese shipyard, apparently agreed by Mr Adkins before his departure. Fairstar denied knowledge of any such agreement, which Mr Adkins disputed. Fairstar also found itself the subject of a Norwegian stock exchange investigation in relation to its 2011 accounts.

Fairstar claimed that, in order to address these matters, it needed to examine emails held by Mr Adkins concerning his time as CEO. It said it did not have these emails as incoming messages had been automatically forwarded by Fairstar's server to Mr Adkins via Claranet, then deleted from that server, and emails sent by Mr Adkins were sent directly from his own computer. Mr Adkins refused to disclose the emails.

In order to avoid having to bring a claim in the Dutch courts as required by the "exclusive jurisdiction" clause in the contract with Cadenza, Fairstar decided to bring an action based on a proprietary claim to the content of the emails held by Mr Adkins.

No property in email

Dismissing Fairstar's application, Edwards-Stuart J held that there was no proprietary right in the contents of emails. The judge pointed to the considerable body of authority that the content of information itself cannot be owned. He went on to test his conclusion by reviewing possible ownership options:

• (a) title to the content stays with the creator: the judge observed that it would be strange if the creator could require any recipient to delete its email, however far down the chain. He concluded that this option was unworkable;
• (b) title to the content passes to the recipient: this option was both impractical and unrealistic as it would mean that the last recipient in an email chain was the owner of the content with an exclusive right to require its deletion. What if multiple people received the email?
• (c) title remains with the creator but the recipient has a limited licence to use the content: while workable, this alternative was very similar to a right in confidential information, except that it did not require the contents of the email to be confidential in order for the recipient's use to be legitimate. As, in practice, the sender was unlikely to be concerned with content that was not confidential, there was no compelling need to adopt this option;
• (d) title passes to the recipient but the creator has a limited licence to use the content: as with (c), there was no need to adopt this option as only confidential content was likely to be of concern, and that was already covered under the laws of confidence; and
• (e) title is shared between sender and recipient: if this was to apply, title would be shared by everyone to whom the message was subsequently forwarded. Such a complicated scenario would raise serious questions over the application and value of such rights.

As Fairstar was claiming ownership of emails both sent and received, it was simultaneously trying to assert options (a) and (b), even though these were inconsistent with each other.

"In my judgment it is clear that the preponderance of authority points strongly against there being any proprietary right in the content of information… although I would not go so far as to say that this is now settled law."(2)

Unsettled law

Despite his verdict, Edwards-Stuart J noted that the question of whether there is property in information was not settled law. There are usually alternative causes of action open to claimants, such as copyright infringement, misuse of confidential information, breach of data protection law or breach of contract. This issue continues to be the subject of considerable debate as the concept of "proprietary information" often comes up in contracts, particularly those involving parties based in the US. It will be interesting to see how this area of law develops, and we will be sure to keep you posted.

Please click on the links below for the other articles in the January 2013 IP/IT newsletter

• Sweet victory for Cadbury's purple colour trade mark
• Sky's NOW TV allowed to proceed as High Court rejects infringement claims
• World focus: Scandalous trade marks - an Australian perspective
• Football Dataco -v- Sportradar - ECJ ruling supports owners of database right
• RFU succeeds in forcing disclosure of ticket resellers

_Notes:

_{(1) Fairstar Heavy Transport NV v Adkins and another [2012] EWHC 2952 (TCC).
(2) Edwards-Stuart J in his closing remarks, [2012] EWHC 2952 (TCC) at 58.}