Passing off and breach of confidence
The Intellectual Property Enterprise Court (IPEC) has found that a recruitment agent caused more than £80,000 in loss and damage when he claimed his new company was the new name of the claimant's business.
Background
In the case of PSN Recruitments Ltd v Ludley and another, Mr Ludley was a recruitment agent who resigned from his position at PSN, and started up a business on his own account. Before leaving PSN, he forwarded himself various documents and data, including a spreadsheet entitled 'live jobs', one entitled 'financials' and the names, organisations and contact details of people who had previously received marketing campaigns from PSN.
When Mr Ludley launched his new company, he emailed over 500 of the claimant's clients, saying that PSN had carried out a re-branding exercise and gave the name and contact details of his new business - pretending it was PSN.
PSN brought claims of passing off and breach of contract under Mr Ludley's employment contract and in equity.
Passing off claim
Passing off is a type of tort, or civil wrong. The classic form of passing off arises where:
- There is good will or reputation attached to goods or services offered by the claimant
- As a result of the defendant's intentional or unintentional misrepresentation, the public believes that goods or services offered by the defendant are in fact offered by the claimant
- There is damage caused to the claimant because of this incorrect belief
In relation to the passing off claim, Mr Ludley accepted PSN had goodwill and that he misrepresented his new business as being PSN. However, he denied the email caused damage, saying it was largely ignored and nobody did business with him believing his new business to be the re-branded PSN.
However, the IPEC found that PSN's business had in fact suffered a significant and immediate decline after the email was sent. Mr Ludley's business had immediately won new work and he was invoicing a former client of PSN just one month after he had sent the email. The passing off claim was upheld.
Breach of confidence
In relation to the breach of confidence claim, Mr Ludley denied that the client list he used to send the email was confidential information. He argued it comprised generally available information which could be found in trade publications and email finders, and that it could not be described as a secret capable of protection. The IPEC disagreed, finding that the list was confidential information for the purposes of his contract of employment. It also found that Mr Ludley was in breach of the equitable duty of confidence, having used confidential information amounting to a trade secret inconsistently with its confidential nature.
Comment
This is a useful example of when a company may bring proceedings for passing off in relation to the actions of a former employee. It is quite rare for a passing off claim to arise in the context of employee competition. A more likely scenario may relate to the misuse of confidential information. Employers who become aware of former employees misusing confidential information may wish to consider applying for a springboard injunction. This is an injunction that can be sought where a former employee has obtained an unlawful "head start" on a competitor as a result of misusing confidential information. The aim of springboard relief is to prevent a defendant from taking unfair advantage of the "springboard" they have built up by their unlawful acts.
For more information or advice regarding passing off and breach of confidence, please contact Gareth Edwards in our Employment team on 0117 314 5220, or complete the form below.