THE COMPANY HANDBOOK
23. The Claimant contends that both Mr Rider and Mr Stimson were bound by the terms of a Company Handbook. This document had been in preparation from 2006. Both Mr Rider and Mr Stimson were aware it was being prepared for issue. This contains some express restrictions not to be found in the earlier documentation (Mr Stimson had none of those of course). Thus paragraph 1.14 stated that an employee could not be involved directly in any other business or other work without the Claimant’s consent. Mr Rider acknowledged in cross examination that that was common sense but I do not regard that acknowledgment as being an acknowledgment by him that he agreed this provision. 24. Section 4 (paragraph 4.1) provided that no confidential information belonging to the company should be disclosed during and after the period of employment and that the provision continued after termination of the employment until the information came into the public domain. Clause 4.2 obligated the employee upon termination to return all equipment, correspondence, records etc which were in their possession, power custody or control.25. The Handbook was not issued until 1st June 2007 when Mr Rider and Mr Stimson had left 7 days of their notice to run. They were not given a copy. Indeed the evidence was when copies of the Handbook were handed out they were expressly told there was not one for them. 26. I find it a fact that the Terms of Employment between the Claimant and Mr Rider and Mr Stimson did not include the Company Handbook. There is in my view no evidence to show that the parties agreed the Handbook would bind them in the future and I do not see that the Claimant can unilaterally vary the terms of the contract of employment for these employees when they were working out their notice. They gave notice in accordance with the then terms. Suppose for example the Handbook imposed a restrictive covenant which operated for (say) 12 months. I do not see that it could be argued that the issue of the Handbook 7 days before the termination of the employment could in effect unilaterally impose a new and onerous obligation on the employee working out his notice. Taking all of those into account I do not accept therefore that the Handbook has any relevance to the issues before me.
THE CLAIM
27. The Claimant contends that Mr Rider (ignoring the claims in respect of the Handbook) as an employee owed a duty of good faith and fidelity, was subject to an implied obligation not to copy, remove or misuse any of the Claimant’s confidential business information with a view to use in a competing business. In addition the Claimant contends by reason of the seniority of his employment he owed a fiduciary duty to act in good faith, not to act so as to place himself in a position of conflict between his personal interests and those of the Claimant, a duty not to use or cause to be used any information or opportunity available to him by reason of his employment and his position as a fiduciary for any purpose other than furthering the interests of the Claimant, a duty to account to the Claimant for any personal gain or profit made using information or an opportunity that became available to him by reason of his employment and position of fiduciary and a duty to disclose to the Claimant any misconduct or breach of contract or duty by himself or Mr Stimson.28. The Claimant contends that Mr Stimson was subject to the same employee obligations and fiduciary duties and similarly was in breach of those duties.29. In voluntary further information served 2nd November 2007 the Claimant identified the references to confidential information contained in the Particulars of Claim. The list is as follows:- (i) Names, addresses, contact names, telephone numbers or email addresses or the Claimant’s customers; (ii) Sales figures for the Claimant’s customers; (iii) Profit margins for the Claimant’s customers; (iv) Details of goods ordered by the Claimant’s customers or priced paid by said customers; (v) Names, addresses and contact details of the Claimant’s suppliers; (vi) The Claimant’s suppliers‘, agents’ names, addresses and contact details; (vii) The Claimant’s suppliers’ carriage costs, lead times, types of products available, trade shows visited, or the cost negotiated with such suppliers
- 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).
