Court Confirms Consultant's Breach Of Confidence

The Chancery Division of the High Court has ruled in

favour of the Vestergaard Group of Companies after defendants -

including two ex-employees and a consultant - went to work for a

competing company to develop rival products.

Facts

Claimant Vestergaard makes and sells insecticidal mosquito nets.

Defendants Bestnet Europe Limited and others set up in competition

with the claimant to develop a similar product.

Vestergaard claimed that in developing the competing product the

defendants' misused information on a confidential database, and

which contained technical trade secrets.

The court ruled that the consultant was in breach of his duty of

confidence to Vestergaard, and the judge confirmed that even if

there was no express term in his contract with Vestergaard, it was

an implied term of the contract that he would keep information - in

particular that on the database - confidential.

Reasons behind the ruling were:

The consultant was hired to develop new products for

Vestergaard and paid an hourly rate and all expenses.

Whilst he may have been given considerable freedom by

Vestergaard, he was subject to Vestergaard's direction through

the product development committee and director of development. The

judge held that the consultant's status was akin to that of a

senior employee, even though he was not employed by Vestergaard and

did not work full-time.

Although the consultant carried out some development work

himself, much was done by Vestergaard employees or other

personnel.

Vestergaard paid for the raw materials used in the development

work.

Most of the information recorded in the database was advice

paid for by Vestergaard or results-generated tests paid for by

Vestergaard.

Vestergaard paid for the compilation of the database

itself.

It cannot have been intended that the consultant would be able

to exploit the information contained in the database or indeed any

other information created as a result of his working with

Vestergaard for his own benefit either during or after the

termination of his relationship with Vestergaard. Nor can it have

been intended that the consultant would licence third parties to do

so.

The judge confirmed that this is not a situation in which an

exclusive licence would suffice. Vestergaard needed to be able to

both exploit the information without restriction and be able to

enforce its rights against others.

The judge concluded that even if there had been no contract

between the consultant and Vestergaard, the...