Clear Edge - UK Ltd & Anor v Elliot & Ors

Springboard relief is available where serious breaches of employment obligations give a former employee or a third party an unfair competitive advantage which remains operative when relief is sought. The jurisdiction is not confined to misuse of confidential information. It may also address coordinated competitive activity involving breaches of fidelity or fiduciary duty.

For interlocutory relief, the ordinary American Cyanamid principles apply where a speedy trial means that the injunction will not substantially determine the claim. The court must identify a serious issue to be tried, inadequacy of damages and a favourable balance of convenience. Relief must be no wider or longer than necessary to remove the unfair advantage.

The claimants, companies in the Clear Edge group, sought a speedy trial and interim injunctions against three senior employees who had resigned and intended to work for Haldor Topsoe A/S. The claimants alleged coordinated defection, breaches of fidelity and fiduciary duty, misuse and destruction of confidential information, and a resulting unfair competitive advantage in relation to competing ceramic filtration products.

The first defendant remained employed during his notice period. The other two defendants’ employment had ended. The central issues were whether there was a serious issue to be tried, whether springboard relief could rest on breaches other than confidentiality, and whether the requirements for interlocutory relief were met.

1. Speedy trial and injunction. A speedy trial was ordered for the earliest available opportunity on or after 16 January 2012. Interim injunctions were granted pending trial.
2. Springboard jurisdiction. Following Helmet Integrated Systems Ltd v Tunnard [2006] EWCA Civ 1735, an employee owes a duty of fidelity, but that duty does not prevent competition after employment ends. Preparatory conduct may nevertheless breach fidelity, particularly where senior employees conceal coordinated competitive activity threatening the employer’s business. The court agreed with UBS Wealth Management (UK) Ltd v Vestra Wealth LLP that springboard relief is not confined to confidential information cases. It may prevent future or further serious economic loss caused by an unfair start arising from serious breaches of employment obligations, provided the unfair advantage remains and would continue without restraint.
3. The evidence showed a sufficiently arguable case that the defendants had acted as a coordinated team, concealed their plans, retained or destroyed company information, and intended to assist Topsoe in developing a competing product. It was also arguable that each owed fiduciary duties, but that issue was not critical because the alleged conduct was independently capable of breaching fidelity obligations.
4. Confidential information. Most of the information was arguably trade-secret or equivalent information within the third category identified in Faccenda Chicken Ltd v Fowler [1987] Ch 117. Information retained in an employee’s head was not thereby outside protection, following Johnson & Bloy (Holdings) Ltd v Wolstonenholme Rink Plc [1989] 1 FLR 135. Limited dissemination or inspection did not necessarily put information into the public domain, as explained in Lansing Linde v Kerr [1991] 1 WLR 251.
5. Interlocutory test. The ordinary American Cyanamid Co v Ethicon Ltd [1975] AC 396 principles applied. The claimants showed a serious issue to be tried, damages would be inadequate because the threatened loss was substantial and difficult to quantify, and the balance of convenience favoured short-term restraint. The injunction was proportionate because it was limited to the period before the speedy trial and was no wider than necessary to remove the unfair advantage.
6. The first defendant was additionally restrained on the garden-leave basis because his contract and duty of fidelity continued during his notice period. The defendants were also required to comply with delivery-up obligations. The final orders were interim and did not determine the merits, which remained for trial.

First-instance decision. No appellate history was stated in the judgment.