Awbury Technical Solutions LLC v Karson Management (Bermuda) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Butcher |
| Judgment Date | 28 January 2019 |
| Neutral Citation | [2019] EWHC 233 (Comm) |
| Docket Number | Case No: CL-2018-000835 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 28 January 2019 |
[2019] EWHC 233 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND
AND WALES
COMMERCIAL COURT (QBD)
The Rolls Building
7 Rolls Building
Fetter Lane
London, EC4A 1NL
Mr. Justice Butcher
Case No: CL-2018-000835
Mr. David Head QC (instructed by Hogan Lovells International LLP) appeared for the Claimant/Applicant.
Mr. Orlando Gledhill QC and Mr. Matthew Cook (instructed by Morgan, Lewis & Bockius LLP) appeared for the Defendant/Respondent.
The Claimant (to which I will refer as “Awbury”) applies for interim injunctive relief to compel the Defendant (to which I will refer as “Karson”) to return what it says is confidential information belonging to Awbury and to prohibit the use of such information.
Awbury is an insurance solutions structuring and execution boutique based in Connecticut in the United States. Its business focuses on complex financial and economic risks. In the evidence which has been put in for this application it is said that it creates funded opportunities which involve the use of specialised insured financing, the proceeds of which are used to meet, among other things, capital commitments to one or more investment funds. Awbury states that the funded opportunities transactions which it concludes are complex arrangements. It has, it says, executed dozens of funded opportunities transactions to date.
Karson describes itself as an independent financial market structuring and platform development company that designs and executes risk, reserve, capital and collateral financing solutions for regulated financial institutions.
It appears that a core part of both companies' business is putting together insured financing deals.
In insured financing, the investor/financing company limits its risk of loss through an insurance and/or reinsurance policy.
The present dispute arises in the context of the use of insured financing for the acquisition of investments in collateralised loan obligations or CLOs.
Awbury has been doing CLO insured financing business for several years. It is a new asset class for Karson.
On 13th December 2017 a reinsurer with whom Awbury does business (to whom I will refer as “the Reinsurer”), proposed Karson to Awbury as a potential funder for a particular funded opportunities transaction. Awbury consented to the Reinsurer disclosing details of Awbury's business and intended structures and pricing for this proposed transaction to Karson and the Reinsurer did so.
On the same day, Awbury and Karson executed a non-disclosure agreement, to which I will refer as the “NDA”. It is this NDA which is at the heart of the present dispute and application.
The NDA contains, amongst other things, the following provisions:
“ 3.1 Nondisclosure. Recipient agrees (a) to keep secret and maintain the Confidential Information as confidential; (b) to exercise all reasonable precautions to prevent unauthorized access to the Confidential Information; (c) to return promptly to the Discloser at any time upon the Discloser's request, any and all materials pertaining to or containing any Confidential Information. Recipient shall not disclose the Confidential Information to any person or entity not a party to this Agreement other than Recipient's and its Related Parties' employees or agents or Recipient's professional modeling consultants who (i) have a need to know the Confidential Information for the Permitted Purpose; and (ii) are apprised of the confidential nature of the Confidential Information and of the restrictions set forth herein.
“ 3.2 Use Restrictions. Recipient agrees (a) to use the Confidential Information solely for the Permitted Purpose; and (b) not to assert any intellectual property right in any Confidential Information or any software or other invention or Derivative Information developed using the Confidential Information. Recipient shall not attempt to (1) reverse engineer, decompile, disassemble or reverse translate any software or other deliverable provided by the Discloser, (2) attempt to discover the source code of or trade secrets in any such software or other deliverable, or (3) circumvent any technological measure that controls access to such software or other deliverable. The Confidential Information will not be used to provoke an interference with any intellectual property right owned by the Discloser or with any application for any such intellectual property right that the Discloser has filed with respect to any part of the Confidential Information, and will not be used directly or indirectly by Recipient to amend or add any claim in any patent application of any inventor to allow such claim to read on, cover, or dominate any invention (whether or not patentable) disclosed in the Confidential Information.”
In those provisions “Recipient” means the party to the NDA receiving confidential information thereunder. The “Discloser” means the party disclosing or on whose behalf disclosure is made of Confidential Information. “Confidential information” is defined as follows:
“ Confidential Information means all (i) Information disclosed to Recipient by the Discloser or by any Related Party orally, visually, in writing or by way of any other Media; and (ii) all Derivative Information; whether or not such Information or Derivative Information, as the case may be, is marked as confidential except (in either case) any portion thereof that:
“(a) was known to the Recipient before receipt thereof from or on behalf of Discloser or any Related Party;
“(b) is disclosed to the Recipient by a third person who has a right to make such disclosure without any obligation of confidentiality to the Discloser;
“(c) is or becomes generally known to the public without violation of this Agreement by the Recipient; or
“(d) is independently developed by the Recipient or Recipient's employees without reference to the Discloser's information;
“ provided that only the specific Information that meets the exclusion shall be excluded and not any other Information that happens to appear in proximity to such excluded portion (for example, a portion of a document may be excluded without affecting the confidential nature of those portions that do not themselves qualify for exclusion). All Information (including without limitation, data, software, algorithms, methods and approaches) contained or discerned from any model or other deliverable provided by Karson to Counterparty (other than such Information contained therein that was supplied by Counterparty) is the Confidential Information of Karson. All Information (including without limitation, data, software, algorithms, methods and approaches) contained or discerned from any model or other deliverable provided by Counterparty to Karson (other than such Information contained therein that was supplied by Karson) is the Confidential Information of Counterparty.”
Clause 7 of the NDA provides as follows:
“ Remedies. The parties agree that any breach or threatened breach of this Agreement by a Recipient would cause not only financial harm, but irreparable harm to the Discloser; that money damages will not provide an adequate remedy. In the event of a breach or threatened breach of this Agreement by a Recipient, the Discloser shall, in addition to any other rights and remedies it may have, be entitled to an injunction (without the necessity of posting any bond or surety) restraining the Recipient from disclosing or using, in whole or in part, any Confidential Information.”
By clause 10 of the NDA it is provided that English law is to apply and that the parties agree to English jurisdiction.
On 18th December 2017, a meeting was held in which Awbury's David Goldman explained to Mr. Davies and Mr. Hendrix of Karson certain features of the then proposed transaction.
On 20th December 2017, Mr. Meynell of Awbury emailed Mr. Hendrix and Mr. Davies of Karson a document entitled “Awbury Funded Opportunities Insurance Business [ ] CLO Risk Retention Vehicle”. This document has been referred to as the Concept Summary and I will call it that. The Concept Summary contained a diagram or transaction schematic of the structure which Awbury had conceived and contemplated for the proposed transaction. It also explained the way in which the main components of the transaction were intended to work, including descriptions of the proposed financing and insurance arrangements. Indicative terms of these financing facilities and of the nonpayment insurance policy were given.
The Concept Summary stated:
“This document is furnished on a confidential basis exclusively to the named recipient … The information contained herein should be treated in a confidential manner and may not be transmitted, reproduced or used in whole or in part for any other purpose, nor may it be disclosed without the prior written consent of [Awbury]. By accepting this material, the Recipient agrees not to distribute or provide this information to any other person.”
The covering e-mail under which the Concept Summary was sent by Awbury to Karson stated:
“Please note that this is highly confidential and may not be distributed by [the Reinsurer] or Karson without the express written consent of Awbury.”
In the event Karson did not participate in the proposed transaction and did not become a commercial partner of Awbury, the discussions having ended in early 2018.
Awbury has since come to fear that Karson has used or will use confidential material from the Concept...
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