High Court Grants An Injunction After Former Employee Passes On Confidential Information To Competitors

The High Court in Seatreiver International Holdings Ltd v Daly and others [2018] EWHC 2424 (Ch) granted a wide-ranging injunction against competitors of a group of companies that supplied party balloons, after a former international sales director leaked confidential information.

An internal leak

Proceedings had been brought against the former global sales director, concerning allegations of contractual post-termination restraints and misuse of confidential information. In disclosure, a significant amount of valuable confidential information, including customer lists and design and pricing details, had been handed over to competitors, in what appeared to be a clear conspiracy to ensure those competitors could copy products and target the Claimant’s existing client list.
In granting the injunction against the competitors, the High Court judge agreed the competitors had access to information known to be confidential. In addition, although the Claimant’s existing customer list had not yet been targeted, the Court was satisfied there was a serious issue to be tried in that respect. There was also evidence of actual or potential misuse in terms of product copying. It was clear that any such use could not be justified and if the information was misused, it would provide an unfair advantage to competitors.
The Court stated it was proportionate to put in place a ‘springboard’ injunction for a period of 12 months, which, amongst other things, prohibited the competitors from supplying certain products to eight of the Claimant’s main customers. The competitors had never supplied products to these customers or said they had any intention of doing so, therefore the Court could not see how the injunction could result in any economic harm.

Comment

The Court’s decision clearly illustrates that an injunction to prevent unfair competition can be sought and granted provided it is proportionate. Employee leaks of confidential information is a pressing concern of every company, especially those whose business models are based on valuable intellectual property, such as tech start-ups.

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