A court has thrown out a breach of confidentiality claim by an IT company against its service provider.
Qgen Ltd had taken its grievances before an arbitration tribunal, claiming that Aqubix Ltd had breached the strict confidentiality clause of a support and maintenance agreement binding the two companies.
Qgen Ltd had engaged Aqubix to provide support services in relation to existing software, referred to a QCHECK1, designed to assist in inputting clients’ data for due diligence purposes.
When the signed agreement expired, the working relationship between contractor and service provider continued on a good faith basis.
Some years later, Qgen Ltd requested Aqubix Ltd to develop new software, later referred to as QCHECK2, that would better allow it to process data inputted by corporate rather than personal clients.
The working agreement meant that the service provider had access to Qgen’s operating system and source code, as well as its clients list.
Subsequently, Qgen learnt that Aqubix Ltd had developed the ‘KYC Portal’ which, it alleged, was an exact replica of its own system.
Relations between the two companies turned sour and the matter proceeded to arbitration, where Aqubix rebutted the claimant’s arguments, insisting that KYC Portal and QCHECK2 were two completely different types of software.
Moreover, Aqubix claimed intellectual property rights over the software which it had developed.
The arbitrator found “no material similarities” between the two types of software and rejected Qgen’s claim.
The dispute landed before a court of appeal, where the appellant, Qgen, argued that the tribunal had ignored the breach of contractual and fiduciary obligations by the service provider.
Aqubix had based its KYC Portal on knowledge gained through sensitive commercial information cultivated by Qgen over the years, the appellant claimed.
The court, presided by Mr Justice Lawrence Mintoff, observed that Qgen, as licensed user of QCHECK, had made it available to its service provider so that the latter could perform the service requested.
When assessing the similarity between the two products, the court noted that whereas QCHECK required the manual verification of data by trained personnel, KYC Portal provided an automatic verification function and immediate risk level assessment of individual clients.
The only common factor between the two was the inputting of data by the client, the court said, thus concluding that the products “were fundamentally different.”
It could not be said “by any stretch of the imagination” that Aqubix had developed its product through information acquired from Qgen, said Judge Mintoff, concluding that the appellant had failed to prove its claims.
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