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MPT Group Limited v Peel & Ors [2017] EWHC 1222 (Ch)

Despite some suspect behaviour by the Defendants, the High Court refused to grant a springboard injunction to the Claimant for breach of confidence because the balance of evidence did not support the conclusion that any advantage had been gained through misuse of confidential information.

Edward Pepperall QC, sitting as a Deputy High Court Judge, produced an admirably clear judgment in this recent case and demonstrated even more admirable restraint in avoiding any puns about mattress springs and springboard injunctions.

The Facts

The Claimant (“MPT”) is a leading producer and supplier of mattress machinery, equipment and parts. The Defendants are 1) two former senior employees of MPT and 2) the company they set up after leaving, which trades in (you guessed it) the design, production, and supply of mattress machinery.

Having previously been the only company manufacturing these machines in the UK, MPT were not best pleased by their former employees’ actions and were even more aggrieved when their new company (“MattressTek”) started marketing three machines MPT considered were very similar to their own, just six months after Mr Peel and Mr Birtwistle (the ex-employees) had left. MPT contended this was particularly suspicious because it usually took them 18 months to develop a single machine from concept to point of sale, yet the Defendants had seemingly got three machines ready for sale in a third of that time.

MPT decided not to take matters lying down and issued a slew of claims alleging that:

Mr Peel and Mr Birtwistle had:

  • Wrongly downloaded, misused and divulged MPT’s confidential information;
  • Solicited each other from MPT;
  • Failed to answer questions truthfully as to their future intentions;
  • Wrongly solicited, dealt and contracted with MPT’s clients during the six-month period covered by restrictive covenants in Mr Peel’s and Mr Birtwistle’s contacts;
  • Wrongly interfered with MPT’s supply chain;

MattressTek had induced Mr Peel and Mr Birtwistle to breach their contracts; and

All three Defendants had:

  • Misused MPT’s confidential information to design, produce and supply the three machines mentioned above;
  • Infringed MPT’s database rights;
  • Infringed MPT’s copyright in its technical drawings; and
  • Wrongly conspired to use unlawful means with the intention of injuring MPT.

In addition to financial compensation, MPT sought a springboard injunction and a permanent injunction to enforce Mr Peel’s and Mr Birtwistle’s confidentiality obligations. MPT also sought directions for a speedy trial.

The Law

The basis for granting a springboard injunction and the terms on which it should be made do not seem to have been in dispute between the parties, leaving the Judge simply to repeat the eight key principles articulated by Haddon-Cave J in QBE Management Services (UK) Ltd v Dymoke [2012] EWHC 80 (QB).

More contentious was whether the Judge should be applying the usual American Cyanmid principles, which would only require the Claimant to establish there was a serious issue to be tried, or whether as the Defendants argued, a more detailed consideration of MPT’s prospects at trial was necessary by reference to Lansing Linde Limited v Kerr [1991] 1 WLR 251, which establishes this may be required in cases where it will not be possible to hold a trial before the period for which the claimant is entitled to an injunction has entirely or substantially expired.

As a springboard injunction is designed to deprive defendants of any time-based advantage (“head start”) they have obtained through wrongdoing, springboard injunctions should only last for the length of time it would have taken the defendants to achieve lawfully what they have achieved unlawfully.

Applying this principle, the Judge held that at trial the Court was likely to conclude any advantage obtained by the Defendants would subsist for no more than 16 months from the date Mr Peel and Mr Birtwistle left MPT (1 September 2016). As it was not feasible to have a trial, even of the speedy variety, before September 2017, the Judge concluded that the period during which MPT may have been entitled to a springboard injunction would have expired or substantially expired by the time of judgment. Accordingly, the Judge held that the approach in Lansing was the appropriate one, leading him to undertake a reasonably detailed examination of the evidence presented thus far.

Decision on Springboard Injunction  

The primary basis of MPT’s application for a springboard application was the argument that the Defendants had misused MPT’s confidential information in designing and producing three machines, which MPT claimed were substantially the same as MPT’s own.

Mr Peel and Mr Birtwistle admitted that before leaving MPT they had copied a significant quantity of MPT’s data, including databases containing details of customers, suppliers, machinery drawers, manuals, machine component lists and costings, sales quotations, orders, price lists and discount structures. However, as the Judge noted, the taking of confidential information is not enough in itself to establish a springboard advantage; the information must have been used and used fruitfully.

As to this, the Defendants admitted they had made some limited use of MPT’s data but contended this was so minimal that they had not obtained any advantage as a result. However, as Mr Peel and Mr Birtwistle had first failed to respond to MPT’s solicitor’s letter asking them to return any of MPT’s data and had then taken the entirely unsuspicious step of throwing away the devices on which they had stored the copied data once proceedings looked likely, the Judge felt able to treat their evidence with scepticism. Accordingly, he concluded that MPT had established a prima facie case that their confidential information had been used.

However, fatally for MPT, the Judge went on to conclude that the balance of evidence, including expert evidence, on the various MPT and MattressTek machines indicated that (save in one instance) the latter’s machines had been developed without use of MPT’s confidential information. As such, no advantage had been obtained by the misuse of confidential information and no springboard injunction could be granted.

Decision on Other Causes of Action

In the remainder of the judgment, the Judge briefly considered the other causes of action advanced by MPT, but concluded that none of these would support a springboard injunction because even if they were made out at trial, they would not give rise to the relevant kind of advantage.

Of particular interest from this section - and not just because it included two references to the most recent edition of Goulding’s Employee Competition - is the Judge’s consideration of the requirement on employees to answer questions truthfully, something that has been held to be one incident of the duty of good faith.

MPT argued that Mr Peel and Mr Birtwistle had breached this requirement by telling MPT that they were leaving MPT to be a freelance CAD designer and work in panel wiring respectively, and because both had explicitly denied any intention of going into partnership together and Mr Peel had said he would not be working in MPT’s industry.

However, noting that the requirement to answer truthfully is subject to a number of exceptions, including an employee’s entitlement to refuse to answer questions about his/her private life, the Judge concluded that the duty of fidelity would not extend to meaning that “when asked a straight question a departing employee is under a contractual obligation to explain his own confidential and nascent plans”. 

Click here for the full judgment. 

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