Vestergaard makes mosquito nets that contain insecticide in
their filaments, and the technique for doing this is a closely
guarded corporate secret. Trine Sig worked for the company in sales
and marketing, and had signed an employment agreement with a clause
requiring her to keep knowledge gained in the course of her
employment confidential -- even if she ceased to work for
Vestergaard. Sig quit her job in 2004 to work with another former
Vestergaard employee and a consultant who had helped to develop
Vestergaard's techniques; they came up with a product which
competed directly with that of Vestergaard. All this took place in
Denmark, where Vestergaard issued proceedings for breach of trade
secrets; Sig shifted operations to the United Kingdom, where
Vestergaard started all over again in the courts.
That culminated in Vestergaard Frandsen A/S v Bestnet Europe
Ltd,  UKSC 31, which has considered the claim for misuse
of confidential information against Sig and her company, Bestnet.
The English trial judge concluded that Sig had misused her former
employer's confidential information. He was of the view that
she was liable for her use of the information after she left the
company, even though she would not have known that the information
she got from her two business partners was actually derived from
Vestergaard's trade secrets. The Court of Appeal disagreed with
this particular conclusion: this was to read in an implied term of
'harsh extent' that imposed strict liability. Vestergaard
appealed, advancing three different arguments: (1) Sig was liable
under her employment contract, either pursuant to an express or
implied term; (2) she was liable as party to a common design to
manufacture a product based on Vestergaard's trade secrets; and
(3) she was party to a breach of confidence.
Each of the three arguments failed in the UK Supreme Court. Sig
did not herself acquire any trade secrets and was unaware that the
competing product had been manufactured on the strength of them.
One can be liable for another's misuse of confidential
information if one becomes aware that there has been misuse by that
person (or turns a blind eye to it), but this was not the case with
Sig. On point (1), the information in question had been obtained by
the consultant in the course of his work (and he clearly was in
breach of confidence) -- but not by Sig in the course of her
employment. It was too much to say that the clause in Sig's
contract contained an implied term preventing her from assisting in
another's misuse in circumstances where she did not even
possess the trade secrets or know of their misuse. As to (2),
common design can be the basis of liability for breach of
confidence, but here again Sig lacked the requisite level of
knowledge; she simply didn't have the trade secrets or the
knowledge they were being misused. Under (3), it could not be said
that Sig must be liable because she knew she was 'playing with
fire' when she started the new business, because there was no
evidence that she had acted dishonestly in doing so. This was, in
the end, an honest attempt on Sig's part to compete with her
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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