First Conferences Services Ltd & Anor v Bracchi & Anor

An employee who appropriates an employer’s database and confidential business information to obtain a competitive head start may be restrained by a permanent injunction, particularly where the misuse continues. Competition alone is not actionable, and an employee may use public information or knowledge retained in memory, unless it was improperly obtained. Passing off arises where a competitor deliberately suggests that its conferences or business are a continuation of, or associated with, the former employer’s events. Extraction of a database created through substantial investment may breach article 16 of the Copyright and Rights in Database Regulations 1997.

The claimants organised business conferences and employed the first defendant as a conference organiser. After leaving, he established the second defendant and organised competing conferences. The claimants alleged passing off, misuse of confidential information, infringement of database rights and breach of the first defendant’s employment contract.

The evidence concerned the transfer of customer contacts, sales information and other database material to private accounts and to the second defendant, the use of domain names, and communications suggesting that the defendants’ conferences were follow-ups to the claimants’ events. The central issues were whether the defendants had passed off their business, misused confidential information, infringed database rights and breached the employment contract.

1. The claimants established all claims except the claim concerning lack of effort or reduced efficiency during the first defendant’s employment. That claim was dismissed.
2. The defendants’ communications with speakers misleadingly presented their conferences as follow-ups to conferences previously organised by the claimants. This amounted to passing off. The defendants’ use and rebranding of domain names connected with the claimants’ business provided further instances of passing off.
3. Competition itself was not actionable in the absence of a restrictive covenant. Nor could the claimants restrain the use of information that was public, not a trade secret, or retained in the defendant’s memory, unless the information had been improperly obtained. The defendants’ conduct went beyond legitimate competition because they had downloaded and used the claimants’ database material before and after the termination of employment.
4. The transfer of large quantities of customer contacts and sales information to private accounts, its onward transfer and subsequent use, together with continued access to the claimants’ systems, established misuse of confidential information. The conduct created a springboard and gave the second defendant an unfair advantage.
5. The claimants had made substantial investments in obtaining, verifying and presenting the database contents. The extraction and copying of the database therefore breached article 16(1), and also article 16, of the Copyright and Rights in Database Regulations 1997.
6. The court considered Vestergaard Frandsen A S v Bestnet Europe Ltd [2009] EWHC 1456, but held that it did not support the defendants’ contention that a permanent injunction could not restrain benefit from past misuse. The present case involved continuing misuse and passing off. The court treated Crowson Fabrics Ltd v Rider & Ors [2007] EWHC 3942 (ch) as the closer analogy and applied its approach.
7. Permanent injunctions were granted in relation to the established passing off and confidential information claims. Further orders, including ancillary relief and costs, were reserved for submissions.

Not an appeal. The judgment was a first-instance decision of the High Court (Chancery Division).