Marathon Asset Management LLP & Anor v Seddon & Ors

Damages for misuse of confidential information must respond to the wrong actually proved. Copying and retaining documents, without use that causes loss or yields a gain, ordinarily supports nominal damages only. Licence fee damages are a gain-based remedy, not compensation for risk or an unused opportunity. The court must select the appropriate remedy and value only the actual misuse. A hypothetical licence is inappropriate where the information could not realistically have been licensed or an equivalent benefit obtained. Employees owe duties of fidelity and confidence, but a broad post-termination restraint on using information carried in the employee’s head is unenforceable; documentary confidential information remains protectable.

Marathon brought claims against former members of its Global investment team concerning the copying and retention of confidential business documents before they left its employment. Mr Bridgeman admitted copying and retaining files. Mr Seddon disputed that he had assisted him, and Marathon also alleged common design liability, conspiracy and breach of a duty to report misconduct.

The parties settled the separate loss-of-profits claim under Part 36 of the Civil Procedure Rules 1998. The trial concerned liability for misuse of confidential information and Marathon’s claim for approximately £15 million in licence fee damages. The central issues were whether Mr Seddon was liable for the 33 files he shared with Mr Bridgeman and whether substantial damages were available despite the limited actual use of the documents and the absence of proved financial loss or gain.

Liability. Mr Bridgeman was liable in contract and under the general law for copying confidential files for his own purposes, retaining them after leaving Marathon and making limited subsequent use of them. Mr Seddon was liable for copying 33 files to a shared drive intending that Mr Bridgeman should retain them for possible future use. The court applied the principles of employee fidelity and confidence reflected in Faccenda Chicken Ltd v Fowler [1987] Ch 117 and Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] UKSC 31.

1. Mr Seddon was not jointly liable for the other files copied by Mr Bridgeman. The evidence established no wider common design. Nor was there an implied duty to report Mr Bridgeman’s conduct. The two men were colleagues of equal standing, the file contents were unknown, and no criminality or financial loss was shown.
2. Licence fee damages and an account of profits are gain-based remedies. The court, rather than the claimant, must select the appropriate measure. The principles in Attorney General v Blake [2001] 1 AC 268 and Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323 require compensatory damages to be inadequate and a legitimate interest in preventing the defendant’s profit-making activity.
3. The remedy must match the wrong actually committed. Copying and retaining files, without actual use that produced a benefit or caused loss, did not justify valuing an unrestricted hypothetical licence. The subsequent use of the files was limited, and no financial gain or loss was proved. The court rejected the proposed valuation of all possible future use.
4. Marathon had advanced only its disavowed “jackpot” basis for substantial damages. It would be procedurally unfair to devise and award damages on an alternative actual-use basis without a properly advanced case and an opportunity for cross-examination and submissions.

Judgment was entered for Marathon against both defendants, but only nominal damages of £1 were awarded against each.