Vestergaard developed a mosquito net. Two employees left to set up their own company, Bestnet. Bestnet developed a rival product. Vestergaard engaged Dr Skovmand as a consultant, but he defected to join Bestnet. There was no written consultancy agreement between Vestergaard and Skovmand, but Vestergaard alleged that Bestnet was not entitled to use information supplied by Skovmand.
The High Court agreed with Vestergaard. Although there had been no written agreement, Skovmand had breached an express term of the oral contract that he had had with Vestergaard to the effect that the consultant would keep information arising out of his work for them confidential. Even if there had been no express term, though, it was an implied term of the contract that he would keep the information confidential. Once Skovmand had stopped working for Vestergaard, the scope of the obligation of confidence only extended as far as ‘trade secrets’. This approach for consultants was analogous to the position of employees. After the relationship had terminated, the consultant could use information forming part of his own skill, knowledge and experience – whether for his own benefit or for third parties – even if it was learnt during the course of the relationship. The information used by Skovmand here – technical details kept in a database – had amounted to Vestergaard’s trade secrets.
- The judge said that the following factors would help to decide whether any particular information amounted to a trade secret:
- The nature of the work – here, the consultant was engaged in a role likely to produce inventions.
- The nature of the information – experiment results should be protected as trade secrets, just as are formulae and manufacturing processes.
- Engager’s attitude – Vestergaard regarded the information as confidential.
- Steps taken to protect the information – Vestergaard took lots of steps to protect the information.
- Separability of the information – the information could be separated from Skovmand’s general skill and knowledge.
- Commercial value of the information – the information was clearly regarded has commercially valuable here.
- Usage and practices of the trade – little evidence was available on this factor in this particular case.
The case has now gone to the Court of Appeal. The Court of Appeal largely upheld the High Court’s ruling, although it found that one of the employees had not breached the confidence on the particular facts of the case. As far as the consultant’s expertise was concerned, the Court of Appeal ruled that Skovmand could have scientifically reached the particular formulation from his own research, but that did not mean that he actually did so rather than take the short-cut of use of Vestergaard’s trade secrets. There was enough evidence relied upon by the High Court to justify its ruling that Vestergaard’s database had been relied on to create the competing product; it was not simply a matter of Skovmand’s general skill and knowledge.