ALLEGATIONS AGAINST DEFENDANTS
30. The Claimant contends that in January 2007 Mr Rider and Mr Stimson had decided to set up a competing business. In February 2007 a document was prepared by them using the Claimant’s computer called “Critical Path Concept Fabrics”. This, the Claimant contends is a document showing the various steps the Defendants intended to take to set up a rival business. Although the Third Defendant (“Concept”) was not incorporated until May 2007 the Claimant contends that email facilities were operational by March 2007.31. Mr Rider gave notice on 4th March 2007 which was accepted on 5th March 2007 expiring on 8th June 2007. He plainly lied about what he intended to do. It is quite clear on the evidence (and Mr Rider acknowledged this ultimately in cross examination) that he told Mr Worrall falsely that he wanted to spend more time with his family and was taking up a new career change in the Housing Sector. He acknowledged also in his evidence that the reason for the lie was that if he had told them the truth the Claimant would have sent him home on garden leave. He did not reveal his true intentions until April when he told Mr Worrall falsely that he was going to join a competitor. What he did not say was that he and Mr Stimson were setting up the competitor. He thus lied to continue his employment actively whilst simultaneously taking steps to set up a rival business. When he revealed an apparent change of plan in April the Claimant did not send him on garden leave. Instead they gave him a task of setting up a Supplier Bible. This is one of the documents which the Claimant contends contained vital confidential information as it sets out all the details of the Claimant’s sources of products. It may be surprising that it entrusted the task to Mr Rider given his notice but at the end of the day the Claimant can say with some force that it trusted Mr Rider to continue with his duties, comply with his obligations and behave honourably. The Claimant’s attitude might have been different had Mr Rider told the truth (which he failed to do again) namely that he intended with Mr Stimson to set up a rival business from scratch.32. The Claimant contends that between February and June 2007 Mr Rider and Mr Stimson set about organising this competing business and that in so acting they were in breach of their fiduciary duties and their duties of good faith as employees. It is contended that during that period they ordered sample fabrics (for example) from Beaulieu which produced Crowson’s “Penshurst” range and that the use of the targeting of this material was as a result of Mr Rider using confidential information belonging to the Claimant.33. It is also alleged that Mr Rider used Crowson’s confidential and computer system on 20th April 2007 (shortly before he informed the Claimant on 26th April 2007 of his changed future plans) to produce a spreadsheet entitled “Concept forecast sales by customer”. This spreadsheet listed 3,500 of the Claimant’s customers ranked by level of 2007 sales with figures for each customer from 2006 and 2007 year to date. It also included an estimate for year 1 and year 2 sales by Concept to approximately 400 of the top ranked customers selected on the basis that those customers in question ordered Alaska and/or Penshurst fabrics from Crowson. Alaska is the Claimant’s most popular selling product. The final page estimated that Concept would make sales of £748,000 in year 1 and £1,182,500 in year 2 using the selected Claimant’s customers. Thus the projection contemplates sales based mostly on Concept successfully targeting the Claimant’s largest customers in its most popular lines.34. On 8th May 2007 Mr Stimson resigned with effect from 8th June 2007 stating that he was going to accept a position elsewhere with a direct competitor. The Claimant contends that he falsely told Mr Crowson that he intended to join a French company called Casamance as its Sales Manager. The Claimant contends that as Casamance was not seen to be a serious competitor they did not place Mr Stimson on garden leave either. I accept this evidence.35. Whilst working out the notice Mr Rider and Mr Stimson incorporated the Third Defendant and identified and acquired a substantial lease hold premises from which to operate a new business. Similarly a computer and email system for the Third Defendant including an email account
- MR JUSTICE PETER SMITH
- INTRODUCTION
- EVIDENCE
- THE CLAIM
- MR RIDER
- MR STIMSON
- THE COMPANY HANDBOOK
- ALLEGATIONS AGAINST DEFENDANTS
- [email protected]
- DEFENDANTS’ STANCE
- CONSIDERATION OF DEFENDANT GENERATED DOCUMENTS
- THE DEFENDANTS’ EXPLANATIONS
- “emphatic no orders were placed, deliveries taken or premises contracted for prior to 8th June. Any activities carried out in the notice period which related to Concept were no more that merely preparatory”
- EPI Environmental Technologies Inc & Anr v Symphony Plastic [2004] EWHC 2945 (Ch)
- IDC v Cooley [1972] 1 WLR 443.
- DEFENDANTS’ DUTIES
- “he came to rely on me to remember and know the operational details of the business”
- “Supplier Bible”
- Tesco Stores Ltd v Pook [2004] IRLR 618.
- Hanco ATM Systems Ltd v Cashbox [2007] EWHC 1599 (Ch).
- University of Nottingham v Fishel [2000] IRLR 471
- Helmut Intgrated Systems Ltd v Tunnard [2007] IRLR 126
- Helmut
- Nottingham University
- what the Defendants did.
- ACTS DONE BY THE DEFENDANTS
- “The Legitimacy of Preparatory Activity”
- ). In
- Balston Ltd & Anr v Headline Filters Ltd & Anr
- [1990] FSR 385 a former director who set up a rival factory and had taken a lease on future business premises and formed a company for his activity was held by Falconer J (at 412 ) neither to have breached his duty of good faith nor his fiduciary duty; he had merely taken preliminary steps to investigate the viability of his plan and to advance his intention.
- [2003] 2 BCLC decided that a director who has irrevocably formed an intention to engage in a competing business and has taken preparatory steps cannot rely upon the public interest in favouring competitive business as an answer to allegations of breach of fiduciary duty. He can only put an end to his fiduciary obligation by resigning his directorship. Until he has done so, preparatory steps taken in pursuance of an irrevocable intention to compete would generally amount to a breach of his fiduciary obligations as director (see para 89).
- Shepherd Investments Limited and Anr v Walters & Anr
- ]2006] EWHC 836 (Ch). He held that when former directors and employee set up a competing business, diverting business opportunities and misusing confidential information, they had acted in breach not only of their fiduciary obligations but their implied obligation of fidelity the moment that they procured the services of attorneys in the Cayman Islands to set up the rival business. On the facts of that case, he held that a former employee was also in breach of obligations as a fiduciary, whether or not he was to be regarded as a director, and that he was in breach of his duty of fidelity. The case affords an example, on its facts, of work of preparation which constituted breaches of both the implied duty of fidelity and fiduciary duties.
- USE OF INFORMATION
- Market Maker Beijing Co Ltd & Ors v CMC Group PLC & Ors [2004] EWHC 2208
- provided
- Seager v Copydex (No1) [1967] RPC 349.
- This is the collision between the first part of the Saltman judgment referred to above and the second part.
- It is well illustrated by the decision cited by Mr Prescott QC of O. Mustad & Son-v- Dosen (note) [1964] 1 WLR 109 (H.L.). Junior counsel for Symphony usefully also obtained the Court of Appeal decision from the Lincoln’s Inn Law Library.
- “The learned Judge discussed with the Jury what constitutes a trade secret, but of course it is no good discussing what constitutes a trade secret if the person who is the owner of the particular thing which is claimed to be a trade secret has never made a secret of it. For instance, it is no use suggesting that Thoring’s machine was a trade secret if as a matter of fact Thorings had allowed people to inspect the machine during construction or had exhibited it at a trade exhibition or something of that kind. It is no use saying it is very valuable; it is no use saying it might have been a trade secret if I had locked it up and allowed nobody to have access to it, and allowed nobody except a particular man to know how it was constructed, and so forth. No evidence seems to have been given about it – well, I will not say no evidence seems to have been given about it but it seems to have been treated at the trial as though the machine was a trade secret of Thoring’s, and a question was put to the Jury, and the only question put to the Jury was on the footing apparently that it was a trade secret, and that in spite of the fact that the only man who knew anything really about it (Dosen) did say, and said more than once in his evidence, that it never was a secret, and that Thorings never treated it as a secret, and that it was quite open to everybody in the works to know exactly what it was and how it had been made, and the progress it was making and all the rest of it. It does seem to me, when one is considering what ought to be done in this case, one cannot overlook the fact that there was before the learned Judge, and there was before Counsel, evidence that this machine really – if the point had been properly investigated – turned out not to be a trade secret at all. However, that point apparently has never been decided.”
- Faccenda
- Thomas Marshall (Exports) Ltd V Guinle [1979] 1 Ch 227
- LEGITIMATE USE
- Robb v Green [1895] 2 QB 1
- peculiarly valuable. He would be saved the expense and delay of searches, such as would be necessary to enable him to compile such a list for himself. Practically, to bring all those names together, even though singly each may appear in some directory or other, would be almost impossible; and it would obviously be much more difficult to ascertain whether they would be likely customers for pheasants' eggs. By making a copy of the order-book defendant was able to canvass at once each of his master's customers without trouble or expense; and the conversation with Mr. Barclay shows that he looked upon the list in that light. The collection together of these names and addresses in his order-book was the property of the plaintiff. It is the compilation which made the book and the list so valuable to the defendant, and facilitated his endeavours to entice his master's customers to the detriment of the latter.”
- copying or extracting such names and addresses.
- Roger Bullivant Ltd v Ellis [1987] ICR 464 C.A.
- Robb
- [1895] 2 Q.B. 315, affirming the very elaborate and illuminating judgment of Hawkins J. [1895] 2 Q.B. 1, as Greer L.J. described it in
- [1935] 2 K.B. 80, 85. Mr. Fitzgerald sought to avoid the application of the rule to the present case by relying on the evidence already quoted from paragraph 16 of the first defendant's second affidavit, which is to the effect that he only used the card index for the purpose of looking up the addresses, freely available elsewhere, of people who were already known to him personally. I will only say that that evidence falls short of convincing me that that would be found at trial to have been the first defendant's only use of material which, on his own evidence, was prepared at his request nearly five years after he joined the plaintiffs and only some two months before he gave in his notice. Be that as it may, and even allowing for some differences of fact between the two cases, I think that Mr. Fitzgerald's submission is effectively disposed of by a passage in the judgment of Hawkins J. in
- The value of the card index to the defendants was that it contained a ready and finite compilation of the names and addresses of those who had brought or might bring business to the plaintiffs and who might bring business to them. Most of the cards carried the name or names of particular individuals to be contacted. While I recognise that it would have been possible for the first defendant to contact some, perhaps many, of the people concerned without using the card index, I am far from convinced that he would have been able to contact anywhere near all of those whom he did contact between February and April 1985. Having made deliberate and unlawful use of the plaintiffs' property, he cannot complain if he finds that the eye of the law is unable to distinguish between those whom, had he so chosen, he could have contacted lawfully and those whom he could not. In my judgment it is of the highest importance that the principle of
- Bullivant
- “fully armed as it were”
- INTELLECTUAL PROPERTY CLAIMS
- Employee Competition"
- the Copyright and Rights in Database Regulations 1997
- Acts infringing Database right
- whether of financial, human or technical resources.
- Bullivant
- “Confidentiality”
- Crown Dilmun v Sutton [2004] EWHC 52 (Ch).
- World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2006] EWHC 184 (Ch).