The Spanish High Court rendered a Judgement on 8 October 2007 that declared that the behaviour of a group of employees that left the company for which they had worked, set up a new company, and attracted the clients of their former company by using its lists of clients and contract models was unfair, ordering them to compensate their former company for the losses and damages caused.
The facts occurred in the year 1996, when two workers of SCHINDLER corporation, which specialises in the maintenance of lifts, left the company and created a new company with the same business purpose. During the ten days that followed their departure from the company they managed to sign sixty contracts with Schindler's clients, a figure that subsequently soared, until they had attracted more than eighty-six clients.
SCHINDLER initiated legal proceedings against its former employees citing actions of unfair competition, but both the Court of First Instance and the Appeal Court dismissed the claim based on the idea that, in principle, attracting clients belonging to someone else did not constitute an act of unfair competition, unless the clients were attracted by improper means; neither was there a violation of confidentiality, given that in most lifts there is an inscription that mentions the name of the maintenance company, which means that the list of clients cannot be confidential; nor was it deemed to be an act of contract imitation, since the claimant has no right of exclusivity over said contracts; lastly, it was decided that there was no contractual infraction given that the defendants had simply offered their prices and contracts to the clients, who, in turn, accepted them freely.
However, the High Court considered a Right of Appeal on the basis that unfair conduct can exist in the two cases described below:
a) Imitation of contract models.
The Court considered that the defendants appropriated, by means of a reproduction technique and without sacrificing anything on their part, the work of a third-party in order to exploit it in the market, and that even though the Claimant does not enjoy an exclusive right over the contract models, the use of the latter represents an act of unfair competition because it involves an improper use of another person's efforts, in accordance with section 11.2 of the Unfair Competition Act.
b) Attracting a high percentage of clients in a short period of time.
The High Court considered that the fact that the former employees attracted 40% of the company's clients within fifteen calendar days means that the defendants contacted potential clients while they were still working for their former company, and that they used their former company’s lists of clients, the knowledge and relationships of said company, and, thus, their goodwill.
The High Court considered that this behaviour falls within the scope of section 5 of the Unfair Competition Act, which shall apply in order to prevent behaviours that go against general ethics and good faith, in an objective sense of the word, i.e. that violate the values of integrity and loyalty, the fair distribution of one’s credit and, in general, those behaviours that are not based on the competitor’s own merits.
Thus, the behaviour of the defendants can be considered to be improper or irregular from the point of view of the objective meaning of the term good faith, given that they altered the competitive structure and the normal functioning of the market, which is why the defendants are ordered to compensate the claimant for losses and damages with an amount that exceeds 230,000 Euros.