Judgment has just been handed down by His Honour Judge Hacon in one of the first intellectual property cases to look at the Trade Secrets Regulations which came into force in 2018.  The case in question is Trailfinders Ltd v Travel Counsellors Ltd and others

Case Background

The background to the case was as follows.

  • The second, third, fourth and fifth Defendants had worked at Trailfinders before they left their employment at Trailfinders and began working for Travel Counsellors as franchisee travel consultants.
  • When the case went to trial, only Travel Counsellors and two of the four individual Defendants were being pursued while the case against the other two individual Defendants had been stayed.
  • When the second, third, fourth and fifth Defendants left Trailfinders, it was alleged that they had taken away with them valuable and potentially confidential information from a variety of sources, but which belonged to Trailfinders. The information taken included personal and contact details of clients, details of trips they had booked with Trailfinders (including itineraries and pricing), details of budgets and preferences and information in regards to significant dates e.g. honeymoons and anniversaries.  Trailfinders argued that by doing this, the individual Defendants were in breach of either implied terms in their employment contracts and/or equitable obligations of confidence. 
  • Travel Counsellors were alleged to be in breach of confidence by having received this confidential information and having allowed the other Defendants to exploit it for profit. Alternatively, it was Trailfinders’ argument that Travel Counsellors were vicariously liable for the other Defendants’ actions as their employer or that the individual Defendants had acted as Travel Counsellors’ agents thus making Travel Counsellors liable as principal. 

The Court’s Decision

In coming to its decision, the Court considered the law of confidence, including the Trade Secrets Regulations and the types of information which are classed as confidential as set out in the case of Faccenda Chicken Ltd v Fowler

The Court unequivocally decided that the information taken by the individual Defendants was confidential.  This was because the information was highly characteristic of information long regarded by the Courts as confidential.  Therefore, the individual Defendants owed both an implied term of confidence pursuant to their employment contracts and an equitable obligation of confidence.  The Court rejected the Defendants argument that the information had not been sufficiently protected by Trailfinders.  The Court found that Trailfinders had taken steps to ensure the information was not openly available as it required use of a password or access to the information was limited to those people who knew the client name and booking reference. 

The Court also held that the implied terms in the individual Defendants’ employment contracts restrained them from using or disclosing the information except in relation to Trailfinders’ business interests.  Whilst the Court held that this obligation had come to an end when the individual Defendants had stopped working for Trailfinders, the Court found that the Defendants liability remained to the extent that they had breached this duty by copying or deliberately memorising the information for use post-employment.  The Court’s decision was similar in regards to the equitable obligation of confidence was similar although the Court held that this obligation did not cease when the individual Defendants had stopped working for Trailfinders and also could not be enforced in relation to experience and skills acquired during their employment at Trailfinders. 

After extensive cross-examination at trial, it transpired that the second Defendant had used one of Trailfinders’ information systems to transcribe customer details with the intention of providing this information to Travel Counsellors.  The Court held that this copying was in breach of the second Defendant’s employment contract, in breach of his equitable duty of confidence to Trailfinders and a breach of the Trade Secrets Regulations.  The Court reached a similar conclusion in regards to the fifth Defendant’s actions in supplying Travel Counsellors with a list of contacts compiled using one of Trailfinders’ databases. 

Finally, the Judge also found that Travel Counsellors owed an equitable duty of confidence to Trailfinders because it received information which it knew or ought to have known was confidential.  The Court went even as far to say that Travel Counsellors’ entire business model was based around encouraging this type of breach of confidence.  On the basis that the Court held Travel Counsellors to be directly liable, the Court did not consider the issues of either vicarious liability or principal and agent. 

What can we learn from this case?

This case provides useful guidance on the existing laws relating to breach of confidence.  In cases which involve ex-employees using their ex-employers confidential information for the benefit of their new employer, the implied duty not to breach confidence will still apply even where the relevant employment contracts do not contain express terms in relation to confidential information. 

This case also provided much-needed clarification on traditional excuses to breach of confidence claims, such as, that information available in the public domain is not a defence if the defendant did not attempt to source the information from a public domain. 

In regards to the Trade Secrets Regulations, this perhaps wasn’t looked at by the Judge as closely as some might have liked.  The Judge provided a very succinct quote in regards to the Regulations which was: “A number of the provisions of the Directive, in particular the provisions of Chapter II and Articles 6, 7 and 16, have been implemented in the United Kingdom by the principles of common law and equity relating to breach of confidence in confidential information, and by statute and court rules”.  This suggests that the Trade Secret Regulations will be interpreted differently in the jurisdictions in which they have been implemented.  Nevertheless, the Courts in England and Wales have a history of robustly protecting confidential information. 

Further Information

Our specialist Commercial Litigation team regularly advises on issues relating to confidential information, data protection and reputation management.  If you need advice on any of these topics, please do not hesitate to contact a member of the team today on 01619414000 or email lawyers@myerson.co.uk

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