Furnishing fabric company Crowson took the two ex-employees, a
Mr Rider and a Mr Simpson, to court along with the new company they
founded, Concept Textiles.
An expert in database law said that the case could revive
interest in the Database Directive after a ruling from the European
Court of Justice (ECJ) in a case involving the British Horseracing
Board and William Hill knocked confidence in the law. That ruling
weakened the protection given to databases.
"People are put off bringing database right actions because of
the havoc wreaked by the ECJ in the British Horseracing Board
versus William Hill case which prompted the European Commission to
suggest that the entire Database Directive would have to be
re-written if it were to provide the protection originally
envisaged," said Iain Connor, a partner of Pinsent Masons, the law
firm behind OUT-LAW.COM. "This case shows that there is still life
in the database right regime even as restrictively interpreted by
the ECJ."
Rider and Simpson did not dispute that they had taken a list of
Crowson's customers and information about sales to them as well as
email addresses from the company.
Crowson claimed that the pair broke an implied duty not to
remove confidential business information from it, but the High
Court ruled that the information they had taken did not qualify as
confidential.
For information to be confidential there needs to be an
obligation of confidence, and the information must be confidential
in nature. Judge Peter Smith said that material did not become
confidential just because an employer deemed it so.
Smith said that the information was not confidential, that it
was either in the public domain, as in the case of addresses and
phone numbers, or it counted as the skills and expertise that an
employee would naturally build up, and was therefore not able to be
restricted by the employer.
Crowson, though, had also made claims under the UK regulations
implementing the European Database Directive. It claimed that the
taking of details from its customer database was a violation of its
database rights. Database rights are not as frequently relied on in
litigation as other intellectual property rights.
Smith ruled that Rider and Simpson's taking of information from
the database was an infringement and was not the only one. He also
said that the transfer of 70 email addresses to one of the men's
Hotmail webmail accounts was also a database rights
infringement.
"Companies often have problems with departing employees taking
customer lists and other commercially sensitive data," said Connor.
"However, it can be difficult for the aggrieved company to satisfy
the legal test for a breach of confidence action that the
information has the 'necessary quality of confidence' because, for
example, it may be public knowledge that a big contract was awarded
to the company."
"But the same information when stored in a database combined
with other data about the company's clients can be protected by
database right regardless of whether the information is
confidential or not," he said.
The two ex-employees argued that they had not committed an
infringement because they made only light use of the information,
but Smith said that the case was that they had infringed by taking
the information in the first place, and that they had done
this.
Smith also said that the defendants had not made legitimate use
of the information once they did have it. He said that the use to
which they put the information meant that they had breached the
duty of fidelity that all employees owe their employers.
Some senior employees have a more serious duty to employers
called a fiduciary duty, which means that they must put the
interests of the company ahead of their own. Smith ruled that
Stimson, the more senior ex-employee, owed and broke his fiduciary
duty to his ex-employer.
