Dyson Technology Ltd v Pellerey

A post-termination restraint is enforceable where, construed objectively, it protects legitimate interests in trade secrets or confidential information and goes no further than reasonably necessary. The assessment of reasonableness is made at the date of the contract, while the decision whether to grant an injunction remains fact-sensitive and discretionary at trial. A restriction may protect research and development concerning products not yet marketed, and may extend to associated companies where their businesses are commercially integrated with the employer’s business. A notification clause requiring disclosure of approaches from competitors is not ordinarily a restraint of trade. An injunction may be granted where non-notification enabled access to confidential information and there remains a real risk of inadvertent disclosure which damages would not adequately compensate.

Dyson Technology Ltd employed Pierre Pellerey as a motor drives engineer. His contract contained confidentiality obligations, a notification clause concerning approaches from potential competitors, and a 12-month non-compete covenant. After accepting a conditional offer from Tesla, Mr Pellerey was assigned to Dyson’s confidential electric-car project without informing Dyson. He later resigned and proposed to work for Tesla on electric-car motor development.

Dyson sought injunctions enforcing the restrictive covenant, restraining misuse of confidential information, and alternatively preventing Mr Pellerey from obtaining an unfair advantage from his breach of the notification obligation. The central issues were the construction and enforceability of the covenant, whether the proposed employment constituted competition, and whether injunctive relief was appropriate.

1. Restrictive covenant. The covenant’s opening words, requiring conduct to be undertaken so as to compete with Dyson or a group company, qualified the operative prohibition. “Business being carried on” was not confined to external sales. It included Dyson’s research and development activities, including work on products not yet marketed.
2. Dyson had legitimate interests in protecting trade secrets and confidential information equivalent to trade secrets. The covenant was reasonably necessary when assessed at the date of the employment contract. Its coverage of associated companies was justified because Dyson’s research and development business was commercially integrated with the manufacturing and retail businesses of the group, and the employee had to have relevant personal involvement. The 12-month period and worldwide scope were also reasonable.
3. At the date of resignation, Tesla’s electric-car business was a restricted business and Mr Pellerey’s proposed technical role would involve competition. Competition was not excluded because Dyson’s project was less advanced or because Mr Pellerey was expected to focus on acoustic noise. The interrelated nature of vehicle design meant that his work would contribute to the design of a competing car. The covenant was therefore enforceable and applicable.
4. Discretion. The grant of an injunction was not mechanistic and did not require exceptional circumstances before refusal. The prima facie position was that an injunction should be granted, with the burden on the defendant to show why it should not. The risk of inadvertent disclosure, the difficulty of monitoring compliance, the commercial sensitivity of the project specifications, and the inadequacy of damages justified relief despite Mr Pellerey’s good faith and career hardship.
5. Notification and springboard relief. The notification clause imposed a continuing obligation while an approach or series of approaches remained operative. It was valid and was breached when Mr Pellerey failed to disclose Tesla’s conditional offer after learning of Project E. Because that breach enabled him to obtain confidential information that he would otherwise not have received, and a continuing risk of inadvertent disclosure remained, an injunction would also have been an appropriate response.
6. The court granted an injunction restraining Mr Pellerey from working for Tesla until 15 June 2016, subject to cessation if Dyson discontinued its electric-car project. No separate confidentiality injunction was granted because the non-compete injunction removed the identified risk.

First-instance decision. No prior appellate decision is stated in the judgment.