Supreme Court: Breach of Confidentiality

Thanks to Michael Reed, Employment Legal Officer at the Free Representation Unit, for preparing this case summary.

Can an employee be liable for breach of confidence if they start a new business with others who, without the first employee knowing about it, misuse confidential information?  No, said the Supreme Court in Vestergaard Frandsen v Bestnet Europe Ltd.

Mrs Sig worked for Vestergaard (producer of mosquito nets). She left, with Mr Larsen and Dr Skovmand, to form Intection.

Intection's product design was based on confidential information Dr Skovmand took from Vestergaard. Mrs Sig did not know this until proceedings began.  The Supreme Court considered two issues:

• Contract: The express confidentiality term in Mrs Sig's contract did not apply. It dealt with knowledge gained by her during employment, not knowledge gained by others. Nor could a term be implied to make her liable for assisting in the misuse of confidential information when she was unaware of the information or its misuse.
   
• Common Design: Individuals could be liable for breach of confidence through a common design. Mr Larsen was liable on that basis; he knew Dr Skovmand was misusing confidential information and helped him. But involvement in a common design required knowledge that confidential information was being misused. Mrs Sig did not know.

The Supreme Court emphasised the general need to balance protection of intellectual property with free competition.