Vestergaard makes mosquito nets that contain insecticide in their filaments, and the technique for doing this is a closely guarded corporate secret. Trine Sig worked for the company in sales and marketing, and had signed an employment agreement with a clause requiring her to keep knowledge gained in the course of her employment confidential -- even if she ceased to work for Vestergaard. Sig quit her job in 2004 to work with another former Vestergaard employee and a consultant who had helped to develop Vestergaard's techniques; they came up with a product which competed directly with that of Vestergaard. All this took place in Denmark, where Vestergaard issued proceedings for breach of trade secrets; Sig shifted operations to the United Kingdom, where Vestergaard started all over again in the courts.

That culminated in Vestergaard Frandsen A/S v Bestnet Europe Ltd, [2013] UKSC 31, which has considered the claim for misuse of confidential information against Sig and her company, Bestnet. The English trial judge concluded that Sig had misused her former employer's confidential information. He was of the view that she was liable for her use of the information after she left the company, even though she would not have known that the information she got from her two business partners was actually derived from Vestergaard's trade secrets. The Court of Appeal disagreed with this particular conclusion: this was to read in an implied term of 'harsh extent' that imposed strict liability. Vestergaard appealed, advancing three different arguments: (1) Sig was liable under her employment contract, either pursuant to an express or implied term; (2) she was liable as party to a common design to manufacture a product based on Vestergaard's trade secrets; and (3) she was party to a breach of confidence.

Each of the three arguments failed in the UK Supreme Court. Sig did not herself acquire any trade secrets and was unaware that the competing product had been manufactured on the strength of them. One can be liable for another's misuse of confidential information if one becomes aware that there has been misuse by that person (or turns a blind eye to it), but this was not the case with Sig. On point (1), the information in question had been obtained by the consultant in the course of his work (and he clearly was in breach of confidence) -- but not by Sig in the course of her employment. It was too much to say that the clause in Sig's contract contained an implied term preventing her from assisting in another's misuse in circumstances where she did not even possess the trade secrets or know of their misuse. As to (2), common design can be the basis of liability for breach of confidence, but here again Sig lacked the requisite level of knowledge; she simply didn't have the trade secrets or the knowledge they were being misused. Under (3), it could not be said that Sig must be liable because she knew she was 'playing with fire' when she started the new business, because there was no evidence that she had acted dishonestly in doing so. This was, in the end, an honest attempt on Sig's part to compete with her former employers.

http://www.bailii.org/uk/cases/UKSC/2013/31.html