Overview

In a trial decision[1] released on January 11, 2011, the Honourable Mr. Justice Spence of the Commercial List section of the Ontario Superior Court of Justice held that the International Air Transport Association ("IATA") was permitted to use information transmitted to it by Sabre Inc. ("Sabre") in IATA's own commercial products. Justice Spence found that although the commercial data delivered by Sabre to IATA may have been commercially valuable, it was not communicated in circumstances giving rise to a duty of confidence. As a result, IATA is free to use the information in its commercial products which are competitive with Sabre's own commercial products. It is clear from the decision that parties hoping to protect information they assert is confidential should do so in writing.

The Facts

IATA is an airline trade association comprised of the world's major airlines. IATA has established 87 Billing and Settlement Plans ("BSPs") worldwide to assist with the flow of data and the settlement of payments associated with the purchase and sale of airline tickets.

Sabre is a major Global Distribution System (or GDS) which was once owned by American Airlines. Travel agents use a GDS such as Sabre to book airline tickets and to send information to BSPs so that the tickets can be paid for.

IATA and Sabre entered into a series of agreements called ETSPAs, which governed Sabre's transmittal of data to the IATA BSPs. The ETSPAs did not stipulate that the data being transmitted was confidential to Sabre.

Sabre uses the booking information it gets from travel agents to create a product called MIDT. This product is sold to airlines, and provides information about airline bookings made by all travel agents using the Sabre GDS.

In 2005 IATA began using the information it collected through the BSPs to create a market intelligence product called PaxIS. PaxIS competes with MIDT in the marketplace, and some of the information used to create PaxIS is the information sent to IATA by Sabre (through the BSP process described above).

Sabre brought an action against IATA, wherein Sabre alleged that IATA's use of the information transmitted by Sabre (to the BSPs) in PaxIS was a breach of confidence. Sabre claimed that the data transmitted to the BSPs was only to be used by IATA for billing and settlement purposes and it alleged that IATA was acting improperly by using the data for a different purpose namely the PaxIS product. The case proceeded to trial where Sabre sought a world wide permanent injunction enjoining IATA from using the data in question for commercial products, plus substantial damages.

Decision

The Court rejected Sabre's breach of confidence argument and dismissed the action.

The test for breach of confidence is well established.[2] Thus, in considering whether IATA's use of information transmitted to it by Sabre amounted to a breach of confidence, the Court considered:

  1. whether the information being conveyed had the necessary quality of confidence;
  2. whether the information was communicated in confidence; and
  3. whether the information was misused by the party to whom it was communicated.

In order to succeed a claimant must establish all three elements of the test.

In the Sabre v. IATA case, Justice Spence focused on the second branch of this test and ultimately ruled that the data was not communicated in circumstances of confidence or imposing a duty of confidence on IATA towards Sabre.

When determining whether information is communicated in confidence, the appropriate standard is one of reasonableness. In this case, the Court considered whether IATA, when entering into the ETSPA, would have realized, if it were acting reasonably, that the information Sabre would be transmitting to the BSP would be given on the confidential basis alleged by Sabre, i.e. that the information was to be used only by IATA for billing and settlement purposes.

The Court determined that IATA, acting reasonably, would not have considered that the information Sabre would transmit would be given on a confidential basis. The Court considered the following factors:

  1. There was no evidence that Sabre asserted the information was confidential during the negotiation of the ETSPA. Moreover, there was a confidentiality clause in the ETSPA imposing confidentiality obligations on Sabre, not on IATA. The Court concluded that a reasonable person in the position of IATA, at the time the agreement was entered into, would have considered that, if confidentiality were an issue for Sabre, Sabre would have addressed this concern. The Court specifically observed that the parties to the ETSPA were sophisticated companies who could be taken to be familiar with the use of confidentiality clauses in agreements contemplating the disclosure of information. In this regard, the Court's analysis centered around the time period when the parties entered into the agreement governing their relationship.
  2. Sabre claimed that the data transmitted to IATA reflected its creative work in providing "advice" to travel agents in the form of itinerary options and that this gave rise to a confidentiality interest in the data. The Court rejected this argument noting that the data sent to the IATA BSPs did not disclose the "advice" given by Sabre and that IATA's PaxIS product did not show which GDS had transmitted the ticket information.
  3. There was no reason why IATA would consider that Sabre would have a confidential interest in the data. IATA would be concerned about protecting the information in relation to member airlines, but not in relation to Sabre.
  4. The ETSPA provides for the transmittal of future ticket sale data, but not data in existence when the ETSPA was entered into. Further, Sabre only had access to the data in question because it entered into the ETSPA in the first place. The Court found that Sabre's acceptance of the ETSPA was a condition of participating in the BSP, and that there was nothing in that arrangement to suggest a duty of confidentiality to Sabre. Significantly, the Court noted that a party in receipt of transmitted data would not have reason from that transmission function alone to believe that the transmitting party expected that the transmitted data would be held in confidence in favour of the transmitting party.
  5. Sabre's central argument was that the data was being sent to IATA for the "sole" purpose of billing and settlement. However, the Court found that there had been other instances (prior to PaxIS) where the data had been used for other purposes with no objection from Sabre;
  6. An internal email disclosed by Sabre and admitted as evidence at trial demonstrated that Sabre was of the view that there was nothing to stop the airlines from pooling their ticket information sent by Sabre and creating a market share product. This was a factor in the Court's rejection of Sabre's contention that "it would have been obvious 'to all concerned' that the information was confidential".
  7. Sabre did not communicate its concerns about the misuse of "confidential" data to IATA until Sabre began formulating its legal case against IATA. The Court noted that Sabre did not complain about the provision of market share information except when it saw its commercial interest being potentially threatened. The Court further noted that although the prospect of commercial detriment was a valid reason for a company to try to protect itself, that interest alone did not give rise to a cause of action.
  8. Finally, there was no basis for awarding Sabre the injunction it was seeking. Sabre could terminate the ETSPA upon 60 days notice, and could end the alleged "misuse" of the data at any time by so terminating.

Conclusions and Observations

This case is a strong indication of the Court's unwillingness to recognize confidentiality interests in data where a party gains access to the data through a mere transmittal function. This is especially true where the party asserting the interest fails to negotiate a contract designed to protect the alleged interest expressly. Parties are best advised to protect their data with contractual provisions. Parties must also be vigilant on a continuing basis to protect what they say is their confidential information. A failure to do so may result in a finding that the information is not confidential at all.