The High Court has held that a consultant was in breach of obligations of confidentiality to a former client, when he misused confidential information to develop a competing product for another party (Vestergaard Frandsen A/S and others v Bestnet Europe Limited and others). The parties, unusually, had agreed that the consultant's position should be taken to be analogous to that of an employee. The Court therefore applied the well-known principles in Faccenda Chicken v Fowler to determine whether the information involved amounted to a trade secret therefore could be protected once the relationship between the consultant and the client was at an end. The Court also found that there was an express term in the oral contract between the client and the consultant that he would keep information arising out of the work confidential and that products developed under the contract would belong to the client. This finding was supported by the fact that the consultant had assigned all his rights in the product he had developed and other inventions to the client. The High Court went on to hold that, even if there had been no express term, because of the nature of the relationship, it would have been an implied term of his consultancy agreement that he would keep the information arising out of the work confidential. The decision is a result of a particular set of facts and circumstances and the Court accepted that its approach would not apply to all consultants. Where the nature of a consultant's work involves exposure to and development of trade secrets, clients should protect their trade secrets and confidential information by entering into a written contract that imposes obligations of confidentiality on the consultant and assigns all rights in any work and inventions to the client.
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Consultant was in breach of confidentiality obligations
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