Freshasia Foods Ltd v Lu

Post-termination restraints in employment contracts are enforceable only where they protect a legitimate proprietary interest and go no further than reasonably necessary. A covenant is void for uncertainty where it distinguishes between “senior” and “non-senior” employees without supplying any criterion, particularly where the employee was not told which category applied. A non-compete clause may also be invalid if its geographic scope, duration or activities prohibited exceed what is reasonably required. Retention of confidential documents is not itself misuse of the information, although failure to delete documents may breach a contractual return obligation.

Freshasia employed Mr Jing as a marketing employee until September 2018. He then joined a competitor. Freshasia alleged breaches of restrictive covenants, misuse of confidential information, and copyright or database right infringement concerning documents retained on Mr Jing’s laptop and personal Google Drive.

The court considered the interpretation and validity of non-compete and non-solicitation clauses, the contractual obligation to return and delete documents, and whether retention or access amounted to misuse or infringement. Freshasia also sought relief concerning customer goodwill and confidential information.

1. Restrictive covenants. The non-compete and non-solicitation covenants were void or unenforceable. The leaving period depended on whether Mr Jing was a “senior” or “non-senior” employee, but the Employee Handbook supplied no criterion for making that distinction. Mr Jing had not been told that he was senior. Seniority was a relative concept and the relevant factors pointed in different directions. The clauses were therefore void for uncertainty.
2. The same conclusion applied to the non-solicitation clauses. The words “in the leaving period immediately prior to the date of termination” qualified only the immediately preceding reference to persons with whom the employee had business dealings or knowledge.
3. Even if the non-compete clause were valid and a 12-month period applied, Freshasia had not shown a legitimate interest requiring protection by a non-compete covenant. Customer contact had been minimal, and confidential information was protected by separate obligations and the equitable duty of confidence. The clause was also too wide geographically, extended across Europe although Freshasia operated in only nine European countries, prohibited employment in non-marketing roles, and lasted longer than reasonably necessary.
4. The non-solicitation clauses were also too wide. They prohibited accepting work from customers, designing promotional material used to solicit customers, and dealings with persons who lacked relevant customer goodwill. Freshasia therefore failed to establish enforceability.
5. Clause D required Mr Jing to deliver up electronic copies of Protected Documents which Freshasia did not already possess and to delete retained copies. Freshasia already had copies of all the Protected Documents. Mr Jing nevertheless breached clause D by retaining at least 17 documents until 30 November 2018.
6. Retention was not use, and therefore was not misuse, of confidential information. There was no evidence that Mr Jing had used, or threatened or intended to use, information akin to a trade secret. Nor was there evidence that he had accessed the Protected Documents after 30 November 2018. The copyright and database right claim therefore failed.
7. Result. Freshasia’s claims were dismissed except for the claim that Mr Jing breached clause D by retaining copies of Protected Documents between 28 September and 30 November 2018.