Confidential information – termination of employment – information acquired used to establish new business – absence of post termination restraint clause H invented a ventilator for patients with breathing disorders.
To market the invention, H and his two brothers set up DA and three other Liechtenstein companies and a UK subsidiary. The companies entered into agreements with outside investors, which restricted sales and marketing activities and imposed non competition clauses on H and his brothers.
Subsequently, H had a dispute with his brothers and was removed as a director. He then set up another company to manufacture a new ventilator embodying more advanced features than that sold by DA whose sales deteriorated as a result. DA sued H for misusing confidential information and breach of fiduciary duty.
Held, refusing the claims, that H was only bound for the duration of his contract of employment as there was no term to prevent him using the confidential information in his memory post termination. H could therefore use that information as it formed part of his acquired skill and knowledge.
DA had failed to show that H had used information that could be described as trade secrets in his new business, Faccenda Chicken Ltd v. Fowler  Ch. 117,  C.L.Y. 1167, Ocular Sciences Ltd v. Aspect Vision Care Ltd (No 2)  R.P.C. 289,  C.L.Y. 3894, FSS Travel & Leisure Systems Ltd v. Johnson  I.R.L.R. 382, , C.L.Y. 2193 and AT Poeton (Gloucester Plating) Ltd v. Horton  I.C.R. 1208,  C.L.Y. 4064 applied.
The claim for breach fiduciary duty failed as a director who resigned could not be put in a worse position than an employee who could not be prevented from using information acquired during his previous employment. Dranez Anstalt v. Hayek  1 B.C.L.C. 693, Evans-Lombe, J.,Ch D.
Current Law: October 2002