Dyson Technology Ltd v Strutt
| Jurisdiction | England & Wales |
| Judge | SIR DONALD RATTEE,MR JUSTICE PATTEN,Mr Justice Patten |
| Judgment Date | 24 July 2007 |
| Neutral Citation | [2007] EWHC 1756 (Ch),[2005] EWHC 2814 (Ch) |
| Docket Number | Case No: CH/2006/PTA/886,Claim No: HC05C01533 |
| Court | Chancery Division |
| Date | 24 July 2007 |
[2005] EWHC 2814 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Court 53
Royal Courts of Justice
The Strand
London WC2A 2LL
Sir Donald Rattee
Claim No: HC05C01533
MR A HILLIER QC and MR J TURNER (instructed by Wragge & Co LLP) appeared on behalf of the Claimant.
MR M SUPPERSTONE QC and MR T MITCHESON (instructed by Hammonds) appeared on behalf of the Defendant.
AMENDED JUDGMENT
The claimant is a member of the Dyson group of companies, founded by Mr James Dyson to develop and exploit his innovative design of vacuum cleaners using a cyclonic system of dust extraction, which he had invented and which avoided the needed for a dust collection bag on vacuum cleaners using that technology.
The claimant company is a member of the group which carries out the research and development of new engineering ideas for application in such vacuum cleaners manufactured and sold on the open market by another company or companies in the group. It employs a research and development team of engineers for that purpose. Prior to reorganisation of the group in 2004 that role was carried out by another group company, called Dyson Limited, from 1st January 2001 and, prior to that date, by yet another group company, called Dyson Research Limited.
The defendant, Mr Strutt, is a very able young engineer employed by Dyson Limited, and subsequently by the claimant, in its research and development business. Mr Strutt began working for Dyson Limited on 22nd January 2001 and was transferred to the claimant as part of the group reorganisation in 2004. He continued to work for the claimant until 22nd April 2005, when he left the Dyson Group. He had given notice of resignation by a letter dated 22nd March 2005. Mr Strutt then took employment as a design engineer with Black & Decker, a company in the business of designing, manufacturing and selling power tools of various sorts, including vacuum cleaners.
The present litigation between the claimant and Mr Strutt arises out of concern on the part of the Dyson Group that Mr Strutt may use, for the benefit of Black & Decker's business, confidential information about the Dyson Group's vacuum cleaner business.
When Mr Strutt first took up employment with Dyson Limited, he signed a contract of employment, which contained provisions relating to such confidential information. I should refer to some of its terms. The contract was expressed to be made between the claimant's predecessor, Dyson Research Limited, as employer, and Mr Strutt as employee, although Mr Strutt's initial employer was Dyson Limited, which by the time of his employment had already taken over research and development functions for the Dyson Group. However, it is common ground that the contract, as originally drawn, should be construed as though references therein to Dyson Research Limited were references to Dyson Limited. In fact, when the claimant took over the employment of Mr Strutt in 2004, it is agreed that there was a novation of the contract so that it should now be read as though references to Dyson Research Limited had been references to the claimant. Thus, in particular, clause 1, which in fact defined Dyson Research Limited as "the company", must be read as though it defined the claimant as "the company".
The contract contains the following provisions which have featured in the argument in this case, and which I should read. Clause 17.1 provides as follows:
"It is part of each employee's duties to contribute to ways of improving company products, processes and systems and to advise his or her manager promptly of any and all new ideas and inventions. By virtue of the Patents Act 1977, any inventions made by you in the course of your duties belong to the company and therefore the company is entitled free of charge to sole ownership and exclusive use of any and all such inventions."
Clause 18 provides as follows:
"The contractual relationship between the company and its employees is founded on trust. You shall not, either during your employment or at any time after its termination, disclose to any person or use for your own purposes other than those of the company any private, confidential or secret information specific to the business of the company. Any breach of this trust by you, such as the unauthorised disclosure to a third party of private, confidential or secret information relating to the business of the company will render an employee liable to disciplinary action and/or to civil proceedings to restrain the employee from disclosing the information to a third party or of making use of it without authority or for damages, if loss to the company results from the unauthorised disclosure."
Clause 19 provides, so far as material for present purposes:
"Obligations after employment.
"You will not, for the period of 12 months immediately after the termination of your employment, whether as principal or agent and whether alone or jointly with or as a director, manager, partner, shareholder, employee or consultant of any other person, directly or indirectly:
"1. So as to compete with the company, carry on or be engaged, concerned or interested in any business which is similar to and competes with any business being carried on by the company at the termination of the employment and with which you were involved at any time during the period of 12 months immediately preceding the termination of the employment."
Clause 20 provides as follows:
"The restrictions contained in clauses 19.1 to 19.6 above are for the protection of the legitimate business interests of the company or any such affiliate company and are considered reasonable. The parties agree that:
"20.1. Each restriction shall be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason, the remaining restrictions shall not be affected.
"20.2. If any restriction is found to be void that would be valid and enforceable if some part of it were deleted, that restriction shall apply with such deletion as may be necessary to make it valid and enforceable."
Unfortunately, the term "such affiliate company" is inapt, in that the agreement contains no other reference to, or definition of, an "affiliate company".
It is common ground that at the commencement of his employment in the Dyson Group both Mr Strutt and his employer expected that in the course of his employment he would acquire confidential information about his employer's business, which would be of value to a competing business if disclosed to a new employer engaged in such a business. It is also common ground that Mr Strutt did in fact acquire such confidential information, which the claimant has a legitimate interest in protecting from disclosure to a competing future employer.
In August 2004 Mr Strutt was headhunted by a recruitment consultant for a job with Black & Decker in the north- east of England, which the headhunter told Mr Strutt might relate to vacuum cleaner development. Mr Strutt was quite keen at the time, for personal reasons, to go and live in the north- east and decided to apply for the job. He was interviewed for the job by two representatives of Black & Decker on 8th September 2004. He told them of the existence of the restrictive covenant in clause 19.1 of his employment contract with the claimant. However, he did not get that job; he was told that Black & Decker did not think the job was suitable for him. However, a few weeks later Mr Strutt was asked by Black & Decker to go for another interview with them for a different job, involving general innovative design work across the whole product rage of Black & Decker. He was eventually offered the job and accepted it.
As I have already said, he gave one month's notice of resignation to the claimant on 22nd March 2005 and left its employment on 22nd April. He started work with Black & Decker on 23rd May. Unfortunately, when, on the occasion of handing his notice of resignation to Mr Peter Gammack (the head of his department in which he was employed by the claimant), he was asked whether he had a new job lined up. Mr Strutt replied untruthfully that he had not. He also subsequently, and equally untruthfully, told the claimant's head of intellectual property that he was:
"… looking to move north and maybe work in the medical products area."
His explanation in his evidence for these lies was that he was afraid, judging by the experience of other employees who had left the claimant to go to possibly competing businesses of other employers, that, if he told the claimant he had a job with Black & Decker, he would be immediately and unceremoniously evicted from the claimant's premises, rather than being allowed to serve his period of notice. The claimant denies that there was any justification for such fear. Whether there was or not is immaterial, but Mr Strutt's lack of candour with his employer, when discovered by the claimant, naturally gave it some cause for concern. In fact, shortly after his resignation took effect, Mr Strutt himself telephoned Mr Gammack to ask for a reference and told him of his new job with Black & Decker.
On 17th May, still before Mr Strutt started work with Black & Decker, his former head of department, Mr Gammack, phoned him and asked him to confirm what he would be working on with Black & Decker. Mr Strutt told him that he understood that he would be working on power tools and outdoor products. Mr Gammack asked him if he would confirm that to Mr Martin Bowen, the head of Dyson's legal department. Mr...
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