In Crowson Fabrics Ltd v Paul Rider, Warren Stimson and Concept Textiles Limited  EWHC 2942 (Ch), Crowson Fabrics claimed that their former employees had illegitimately taken information from the company to use for a competing business.
The case originally came before the judge as an interim application by Crowson to restrain the Defendants from using the information. The judge ordered that this should be resolved by a speedy trial, so speedy in fact that the trial commenced just five days later.
At the trial, Crowson contended that the Defendants’ actions were in breach of confidence, their fiduciary duty and duty of fidelity, and infringed Crowson’s database right. The relevant employment contracts did not, however, expressly cover these issues. The Defendants disputed the confidentiality of the information, challenged the database right and denied copying the database. However, the Defendants’ position was somewhat undermined by being found to have attempted to deceive the court.
The judge held that the information in question was not confidential as the information was either in the public domain, was easily discoverable by the Defendants , or was in their heads. Further, in the absence of restrictive covenants in their contracts of employment, former employees are entitled to do business in competition with their former employers using the expertise and information acquired during the course of their employment. Ex-employees cannot be barred from using their own accumulated skills and knowledge.
The Court, has to be satisfied, however, that ex-employees do not go beyond using their own accumulated personal skills by helping themselves illegitimately to the ex-employer’s material as a short cut. The judge explained that deliberate copying, or even memorizing, of information by former employees for use after their employment has ceased amounts to illegitimate use of the employer’s information, even when the information is not confidential. The first and second Defendants were therefore in breach of their duty of fidelity. Only the first Defendant, being a former director of Crowson, was found to have a fiduciary duty towards the Claimant, a duty which was also breached by these actions.
It was further held that the Defendants had infringed Crowson’s database rights by substantially extracting information from its database and transferring it onto their own computer system without Crowson’s consent. The Defendants had argued that no database right existed, as Crowson had not shown that they had made the substantial investment required for a database right to exist. However, as the Defendant didn’t challenge any of Crowson’s evidence on this point, the judge found in favour of Crowson. The Defendants’ contention of minimal subsequent use of the information was immaterial, as only extraction is required to infringe a database right.
This case shows how employers can seek to take action against former employees for copying their information, even if that information is not confidential. However, it also highlights the importance of employers expressly incorporating enforceable restrictive covenants and intellectual property rights clauses into employment contracts.