In the case of Sectrack NV v Satamatics Ltd. & Anr. [2007] EWHC 3003 (Comm), the English High Court addressed the issue of the misuse of confidential information. Sectrack, claimed that Satamatics Ltd. colluded with an ex-employee of Sectrack, to poach some of their customers by misusing confidential information in breach of the distribution agreement between Sectrack and Satamatics.

Sectrack is an international wholesaler of electronic satellite navigation and tracking equipment while Satamatics manufactures and supplies satellite communication products and provides airtime services for those products. Sectrack obtained an injunction, without notifying Satamatics, restraining them from using confidential information for approaching Sectrack’s customers, which, Sectrack claimed, was in breach of Satamatics’ obligations under the distribution agreement. Satamatics sought to set aside the injunction.

The Court decided to continue the injunction until trial. The Court considered the cases of FSSTravel and Leisure Systems v Johnson [1998] IRLR 382 and Cross J in Printers & Finishers Ltd -v- Holloway [1965] 1 WLR 1 and found that the “customer list” to which the ex-employee had access during his employment was confidential information as the list included substantial business information in respect of Sectrack’s customers. This was neither public nor readily available information and was later used by the ex-employee, as an agent of Satamatics, with the intention, as established by evidence, to gain an unfair competitive advantage. This was found to be arguably in breach of the distribution agreement between Sectrack and Satamatics. It also amounted to a breach of confidence by the ex-employee, of which Satamatics was aware and from which it had derived a commercial benefit.

The continuation of the injunction without notice was held to be justified given the insufficient disclosure by the exemployee which made it impossible to assess the amount of unfair commercial advantage that had been obtained by Satamatics using the confidential information in question. Damages, as an alternative remedy against Satamatics, were held to be inadequate, as they would lead to loss of business for Sectrack.

The decision is interesting in that it clarifies the definition of confidential information which, in this case, involved customer lists and other business information to which employees generally have access. Such information was distinguished from the general skills and knowledge of an employee that are gained in the course of his employment. The case also highlighted the extent to which such information can be protected even if it is misused by an employee after termination of his employment. It also illustrates that confidential information can be used as an effective tool against unfair competition in certain circumstances.