The ‘springboard’ injunction is a favourite tool used by employers to protect confidential information when employees leave a business. The springboard nickname applies to circumstances where a former employee uses information from their former employer to gain a competitive advantage – a springboard to business success. They are powerful and effective, but are they always appropriate? In two recent cases – MPT Group Ltd v Peel and others, and Utilitywise PLC v Northern Gas & Power Ltd and others – courts were unconvinced.
In the first matter, two senior employees of the mattress machinery company MPT Group Ltd. left their jobs, waited for the six months during which restrictive covenants in their contracts banned their dealing MPT customers with whom they had worked in the past, and then went into partnership and set up a business in direct competition – MattressTek Ltd. They had given MPT no previous indication that they intended to do so.
MPT applied for a springboard injunction to prevent their dealing with MPT customers and suppliers, and for an unlimited injunction to prohibit them from disclosing or using MPT’s confidential information. Its argument was that the two former employees, Mr Peel and Mr Birtwistle, were using confidential information to gain an unfair advantage.
Peel and Birtwistle admitted that they had copied confidential information, but stated that they had not used it and had subsequently destroyed it. The court was satisfied that there was no evidence to contradict that, and the judge felt, therefore, that there was little chance of MPT’s being able to prove significant misuse of its data. MPT being unable to satisfy the judge that the defendants had even used confidential information, let alone that any unfair advantage had been gained, the springboard injunction was refused. The judge was also unconvinced that there had been any obligation on Peel and Birtwistle to disclose their intention of setting up a new business to MPT.
In the second matter Utilitywise PLC applied for a blanket injunction after Northern Gas & Power poached 75 of its staff. The case was strong, but unfortunately not every one of the 75 employees had non-competition clauses in their clauses, and for those who did the clauses weren’t identical. Utilitywise applied for a blanket injunction to save having to analyze 75 separate contracts, but in doing so they created a situation in which the court felt unable to rule on 75 cases as one when, clearly, they were not all the same. By extension, Utilitywise appeared somewhat unprepared.
Certainly it could be argued that in the latter case the refusal of an injunction was more on procedural grounds than because there were no cases to answer. Basic common sense dictates that 75 employees do not resign from one company and all join another at the same time by coincidence. But although neither of these matters sets a binding precedent they do prove that employers cannot rely in law on what a departing employee tells them of their plans having left, that restrictive covenants need to be consistent in the contracts of a workforce and enforceable if necessary, and that to gain an injunction it will be very helpful if an applicant can prove wrongdoing.
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