Crowson Fabrics Ltd v Rider and Ors (Smith J; [2007] EWHC 2942 (Ch); 20.12.07)

On 20 December 2007, Mr Justice Peter Smith handed down his judgment in a case brought by Crowson seeking to restrain the Defendants from using confidential information and requiring them to deliver up copies of documents containing confidential information. The decision followed an expedited hearing on liability.

Crowson was a company engaged in fabric design, production and supply. The three Defendants were, respectively, two former employees of Crowson and the company which they set up in competition with Crowson. Crowson alleged that the ex-employee Defendants, while still in its employ, copied and retained various documents belonging to Crowson including customer contact details, sales figures and profit margins and suppliers' details.

Confidential information

Crowson submitted that the information copied by the Defendants was confidential. Smith J held that an ex-employee cannot be prevented from using material that was in the public domain provided that he found it from the public domain. Absent a restrictive covenant on the ex-employees, information does not become confidential merely because the parties give it that label. The Judge accepted the evidence of the two ex-employee Defendants that the information alleged to be confidential was either in the public domain, was easily discoverable by them (eg addresses and phone numbers) or was in their heads. If the information was in the public domain it is capable of being used even if it is derived from the Crowson’s documents. Accordingly, he found that the information could not be protected by confidentiality.

Citing Faccenda Chicken v Fowler & Sons [1987] 1 Ch 117, the Judge also found that it is impossible to prevent an ex-employee from using his own gathered skills and expertise earned over the period of his employment including information which is confidential (with the exception of information constituting trade secrets).

Legitimate use

The Judge held that the ex-employee Defendants had not made legitimate use of the information and were in breach of their duty of fidelity. The Defendant who had been a more senior employee was also found to be in breach of his fiduciary duty.

Database protection

Crowson submitted that the ex-employee Defendants had infringed its database rights under The Copyright and Rights in Database Regulations 1997 by a substantial extraction of information from its database into information held on the Defendant company's computer system. The Judge found that the documents satisfied the requirements in the Regulations that for there to be a right protected, the database must be arranged in a systematic or methodical way and be individually accessible by electronic or other means and that Crowson had made a substantial investment in the database. 

The Judge rejected the Defendants' submission that there had been no copying of the database, pointing out that the actions admitted by the Defendants were a substantial extraction. The Defendants' submission that they had made minimal use of the extraction was not relevant to this issue. Accordingly the Judge found that Crowson had made out its claim on its database rights.