Hattons of London Limited v The Knightsbridge Collection Limited & Ors

Customer databases containing contact details, purchasing history and related commercial information may constitute trade secrets or equivalent highly confidential information. An employee’s duty of confidence may continue after employment where the information has that character. Contractual confidentiality obligations and database rights provide additional protection.

Unlawful means conspiracy requires combination, unlawful means, knowledge, causation, damage and intention. In a small specialist market, using confidential customer information to obtain sales for a competing business may establish the necessary intention to cause loss, even where injury is not the predominant purpose. Inducement to breach requires proof of causative persuasion, encouragement or assistance and is not established merely because employees act together.

Hattons of London Limited claimed that its former employees and a competing company had copied and exploited confidential customer information from Hattons’ Zoho CRM database. The claims included breach of confidence, breach of contract, unlawful means conspiracy, inducement to breach of contract and infringement of database right.

An interim order had required delivery up of confidential information and affidavits. Disclosure obtained through the liquidators of the competing company revealed extensive use of Hattons’ customer data and sales to Hattons’ customers. The central issues were whether the information was protectable, whether the defendants had misused it, whether the elements of the pleaded torts were established, and what final relief should be granted.

1. Liability. The claim succeeded against the relevant Individual Defendants. The evidence established a common plan to establish and operate a competing coin business using Hattons’ confidential customer information.
2. Breach of confidence and contract. The CRM information was confidential and amounted to trade-secret or equivalent information. Its nature, the specialist customer market, Hattons’ substantial investment and the contractual NDAs supported that conclusion. The duty of confidence continued after employment. The defendants misused the information, contrary to their contractual confidentiality and fidelity obligations and their NDAs. The Eighth Defendant was liable under the confidentiality provisions but not under the continuing employment obligations.
3. Unlawful means conspiracy. The requirements were satisfied: combination, unlawful means, knowledge, damage, instrumentality and intention. The unlawful means included copying confidential information and breaching duties owed to Hattons. The use of that information to make sales to Hattons’ customers directly caused loss. The defendants’ commercial objective did not prevent an inference of intention to cause harm, since gains from diverting customers in a small specialist market necessarily involved losses to Hattons.
4. Inducement. Although the defendants acted in concert, the evidence did not identify conduct by which any defendant induced another particular defendant to breach an employment contract. That part of the claim was not established.
5. Database right. Hattons’ Zoho CRM system was a database within section 3A of the Copyright, Designs and Patents Act 1988. Hattons made a substantial investment in obtaining, verifying or presenting its contents and was the maker of the database. The defendants infringed database right by extracting and reusing its contents without consent.
6. Relief. A springboard injunction was granted for 18 months from the date of the order. Further delivery-up, imaging and affidavit orders were refused as they would add little to the existing evidence. Referral for contempt proceedings was refused as exceptional and inappropriate on the facts. Costs and the precise form of the final order were reserved for written submissions.