Optus chases Telstra confidentiality breach ruling

Potential claim against Telstra's long-distance call profits.

Optus has appealed to a full bench of the Federal Court to find Telstra breached confidentiality when it used Optus' call information to prepare internal market share reports.

A positive finding could pave the way for Optus to claim a percentage of Telstra's profits as damages - as long as it was proven that Telstra had profited from having and using the information.

Today's hearing was a branch in a long-running case between the two telcos.

In previous judgements, the presiding judge declined to make a finding that confidence was breached, only that Telstra was in breach of its access agreement with Optus.

Optus was pursuing separate damages related to the breach of contract.

Optus alleged that between 1993 and 2000 its confidential long distance traffic information was provided by Telstra Wholesale to Telstra Retail.

The retail division used it to prepare reports marked "secret - do not copy" that Optus alleged "formed the basis of marketing and advertising attacks in the long distance call market to lure Optus customers back to Telstra and gain market share".

Addressing a full panel of the Federal Court in Sydney today, Optus' lead barrister Mark Leeming SC detailed one of the reports from January 4, 1997.

It allegedly stated that Telstra's share of the STD call market had decreased 2.1 percent compared to the previous week, partly because of an Optus promotion offering $2 calls on Saturdays.

Leeming alleged Telstra was able to see on a weekly basis its share of the long distance market and "estimated competitor revenue".

"The fact that Telstra indicates surprise that the average call duration for the competitor was now 11 minutes shows the insights being gained by Telstra, and they're right up to date," barristers said.

Telstra's lead barrister Robert Newlinds SC countered that the information wasn't confidential because it belonged to Telstra.

"The traffic information is Telstra's property. It owns it. It's information that runs through its wires [and] it's always available to Telstra," Newlinds said.

"[Telstra] has to be able to count these phone calls to bill its customers and to bill Optus so [Optus] can bill its customers.

"The traffic information is aggregated to a very high level. It doesn't say which user rang a number at what time. It simply tells you the aggregate of calls to a place at a various time."

Newlinds said the information was Telstra's because, at the time, Optus' customers were Telstra's.

"All those people were also Telstra customers because in those days they had to use Telstra for local calls. So they were all Telstra customers but some used Optus for long distance calls," Newlinds stated.

The fact that Optus customers had to dial a code to connect to Optus before they made a long distance call told Telstra the customer was making an Optus call "so Telstra could record that", he said.

That interpretation would mean the information was given to Telstra by the customer, not by Optus.

But the panel of three justices questioned Newlinds' interpretation. They asked if the aggregation of that information - rather than the information by itself - was grounds for Optus to claim confidentiality?

"In circumstances where Telstra as a competitor were put in a position where they could uniquely aggregate and draw inferences and deductions from [the information], wouldn't you say Optus clearly would want to be protected from the use of the aggregated [information]?" the justices asked Telstra.

Newlinds responded that Telstra "was always going to know what it's market share was".

"It has to because it has to bill whoever it has got arrangements with for what their customers have used, so they can rebill," Newlinds said.

"Whatever's left by process of elimination is their market."

Both telcos disputed to what extent the access agreement limited the potential remedies available to Optus should it succeed in gaining a finding that their confidentiality was breached.

The agreement allegedly contained liability clauses for payments between $5 million and $30 million, liability caps and exclusions.

Newlinds hotly contested Optus' right to claim damages, potentially in the form of an account of profits from having that "confidential information", outside the scope of the agreement.

The panel of judges was considering its decision.