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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 [1987] Ch. 117, [1996] C.L.Y. 1167, Ocular Sciences Ltd v. Aspect Vision Care Ltd (No 2) [1997] R.P.C. 289, [1997] C.L.Y. 3894, FSS Travel & Leisure Systems Ltd v. Johnson [1998] I.R.L.R. 382, [1998], C.L.Y. 2193 and AT Poeton (Gloucester Plating) Ltd v. Horton [2000] I.C.R. 1208, [2001] 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 [2002] 1 B.C.L.C. 693, Evans-Lombe, J.,Ch D.

Current Law: October 2002