EC Medica Group UK Ltd & Ors v Dearnley-Davison & Ors

An overarching contract of employment requires sufficiently concrete mutual obligations during periods when no work is performed. The ability to refuse individual shifts is relevant but not decisive. The court must assess whether the arrangement created mutual legal obligations or merely reflected mutual convenience.

Preparatory competition is not automatically a breach of fidelity. The question is whether the particular activities impaired the employee’s ability to serve the employer faithfully, or involved work for the competing business during working time or misuse of the employer’s resources or confidential information.

Similarity between designs does not itself establish copying. The evidence must be assessed as a whole, including access, the strength of any inference of copying and explanations of independent derivation.

The claim arose from the establishment of a competing medical-device business by former employees of EC Medica. The claimants alleged breaches of fidelity, misuse of confidential information, infringement of UK unregistered design rights and entitlement to design rights in products developed by Mr Berman. The defendants denied liability and counterclaimed for unjustified threats concerning Community design rights.

A preliminary issue was whether Mr Berman remained employed under an overarching contract after returning to his degree course, or was engaged only on days when he made himself available. The court also had to determine whether particular design work and preparatory activities breached duties of fidelity, whether design rights vested in EC Medica, whether copying was established, and whether communications to a manufacturer and hospitals amounted to unjustified threats.

1. Employment status. The arrangement after September 2014 was one of mutual convenience, not mutual obligation. Mr Berman worked when available around his academic commitments and could decline particular days. He was therefore not engaged under an overarching contract of employment and owed duties of fidelity only during time actually worked for and paid by EC Medica.
2. Confidential information and copying. The court applied the three elements identified in Coco v A.N. Clark (Engineers) [1968] FSR 415. The similarities between the CSM2510 and CL10.3 cushions, considered with the design history and access evidence, did not establish that the CL10.3 files had been used. The copying claim therefore failed.
3. Fidelity. Preparatory activities such as insurance, domain names and regulatory registration were not breaches where undertaken in spare time without EC Medica’s resources. Work undertaken during EC Medica’s working hours and using its equipment for the box-type cushion and Allen cushion was a breach. The other alleged activities were not established as breaches.
4. Design rights. Under Copyright, Designs and Patents Act 1988, EC Medica owned rights in the box-type cushion because it was created during Mr Berman’s working hours on the company’s premises using its software. It did not own rights in the other CS Medical products, including the CSM2510, because those designs were not shown to have been created during working time.
5. Threats. The letter to Interfoam and the email to hospitals were unjustified threats under Regulation 2 of the Community Design Regulations 2005. A threat may be veiled, covert, conditional or future. The claimants were liable on the counterclaim, and Mr Bennetts was jointly liable for the email but not the solicitors’ letter.
6. The claimants succeeded only in relation to the box-type confidential design and the corresponding fidelity breaches. Remedies for those claims were reserved for further submissions; an inquiry as to damages was sought for the threats.

First-instance decision. The judgment records an earlier interim injunction decision by a Deputy Judge of the High Court on 8 July 2016, which dismissed the claimants’ injunction application, struck out the Community design claims and restrained further design-right threats.