Vestergaard Frandsen A/S & Ors v Bestnet Europe Ltd & Ors

Where confidential information has been misused, the claimant is generally entitled to an injunction against further use or disclosure if there is a sufficient risk of repetition. The injunction must be proportionate to the continuing wrong. Publication ends the duty of confidence in the information itself. Information may nevertheless retain limited confidentiality where it can be reconstructed from public sources only with time and effort. A limited injunction may then be appropriate. The court may restrain manufacture or sale of a derived product where that activity amounts, having regard to the extent and importance of the original misuse, to continued use of the confidential information. The ordinary remedy for past misuse is financial relief.

The judgment concerned remedies following the court’s earlier decision that the defendants had breached confidence by misusing the claimants’ trade secrets. The defendants sought to reopen several factual findings, but both sides ultimately withdrew their applications, although the defendants indicated that they wished to pursue the points on appeal.

The claimants sought injunctions restraining use and disclosure of the trade secrets, manufacture and sale of insecticide-treated nets, delivery up, publication of the judgment, disclosure for election between financial remedies, costs, and expansion of a confidentiality club. The central issues were the principles governing injunctions for breach of confidence, the springboard doctrine, derived products, and the appropriate scope of relief.

1. Liability. The court adhered to its earlier findings. Mr Larsen and Mrs Sig were liable for breach of contractual confidentiality obligations. A person subject to such an obligation may be liable without conscious awareness that particular conduct constitutes misuse.
2. Injunction principles. Where a claimant establishes an invasion of a legal right and a sufficient risk of repetition, an injunction will generally be granted save in exceptional circumstances. The approach in Shelfer v City of London Electric Lighting Co. [1895] 1 Ch 287 applies directly or by analogy when deciding whether financial relief is adequate.
3. Confidentiality. The duty of confidence applies only while the information remains confidential. Publication by the confider, a stranger, or the confidant ends the duty in respect of the information itself. The springboard doctrine does not justify an injunction against continued misuse after confidentiality has wholly ended. It may recognise limited confidentiality where information can be reconstructed from public sources with time and effort.
4. Derived products. An injunction may restrain manufacture or sale of a derived product where, considering the extent and importance of the original use, continued exploitation is properly viewed as continued use of the confidential information. Otherwise, the remedy for products derived from past misuse is financial. Relief must not place the claimant in a better position than if there had been no misuse.
5. Application. The claimants were entitled to an injunction against use or disclosure of the Fence database information, subject to a public-domain proviso. The court refused to restrain dealings with Dr Skovmand or Intelligent Insect Control and refused an injunction directed merely at benefiting from past misuse. It granted an injunction against manufacture and sale of the first Netprotect product, but not the later product submitted for WHOPES II evaluation, because the latter was sufficiently different and the broader injunction would be disproportionate.
6. Ancillary relief. The court ordered delivery up, publication of a statement, limited disclosure concerning sales and profits, indemnity costs, interest, an interim payment of £1.5 million, and expansion of the confidentiality club. Permission to appeal was granted concerning the injunction but refused on the other matters.

This was a first-instance remedies judgment following the court’s earlier liability judgment in the same proceedings, [2009] EWHC 657 (Ch). Permission to appeal the injunction decision was granted; permission on the other matters was refused.