Freshasia Foods Ltd v Jing Lu
| Jurisdiction | England & Wales |
| Judge | Mr Justice Arnold |
| Judgment Date | 20 March 2019 |
| Neutral Citation | [2019] EWHC 638 (Ch) |
| Date | 20 March 2019 |
| Docket Number | Case No: IL-2018-000206 |
| Court | Chancery Division |
[2019] EWHC 638 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
INTELLECTUAL PROPERTY LIST (CHANCERY DIVISION)
Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Arnold
Case No: IL-2018-000206
Douglas Campbell QC (instructed by Myerson LLP) for the Claimant
Stephanie Thompson (instructed by Virtuoso Legal) for the Defendant
Hearing dates: 7–8, 11 March 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Contents
| Topic | Paragraphs |
| Introduction | 1 |
| The Restrictive Covenants | 2–8 |
| Procedural history | 9–23 |
| Application to amend the Defence | 24–34 |
| The witnesses | 35–44 |
| The facts | 45–129 |
| Frashasia's business | 45–48 |
| Mr Jing's employment by Freshasia | 49–50 |
| Was Mr Jing Freshasia's Head of Marketing? | 51–66 |
| Salaries | 67–73 |
| Was Mr Jing told that he was a senior employee? | 74–77 |
| Credit card | 78 |
| Customer contact | 79–87 |
| The Apple laptop and Google Drives | 88–94 |
| Alleged bullying culture at Freshasia | 95 |
| Mr Jing's resignation | 96–98 |
| The handover meetings | 99–103 |
| King Fu's business | 104 |
| Mr Jing's employment by Kung Fu | 105 |
| Other Freshasia employees employed by Kung Fu | 106–109 |
| Double Eleven discount | 110 |
| Kung Fu cookery demonstrations | 111 |
| Allegations of customer contact | 112–115 |
| Deletion of documents by Mr Jing | 116–117 |
| Copying the Form | 118–119 |
| Alleged loss of sales | 120–129 |
| Interpretation and validity of the non-compete and non-solicitation Restrictive Covenants | 130–136 |
| The non-compete clause | 131–136 |
| Senior/non-senior | 132–133 |
| European | 134 |
| The non-solicitation clauses | 135 |
| Senior/non-senior | 135 |
| In the leaving period | 136 |
| Enforceability of the non-compete and non-solicitation Restrictive Covenants | 137–147 |
| The law | 138 |
| Assessment | 139–143 |
| The non-compete clause | 139–143 |
| The non-solicitation clauses | 144–147 |
| Severance | 148 |
| Should an injunction be granted to enforce the non-compete Restrictive Covenant? | 149 |
| Retention of Protected Documents | 150–151 |
| The claim for misuse of confidential information | 152–154 |
| Retention of the documents | 153 |
| Misuse of the information | 154 |
| The claim for copyright/database right infringement | 155 |
| Result | 156 |
Introduction
This is an ex-employee dispute. The Claimant (“Freshasia”) manufactures and supplies Asian foods, particularly frozen Chinese dumplings and sliced meats, to customers in the UK and a number of other European countries. The Defendant (“Mr Jing”) was employed by Freshasia from 12 January 2015, initially as a Marketing Assistant and from 26 January 2015 as Marketing Advertising Manager, until 28 September 2018. Since 1 October 2018 Mr Jing has been employed by a competitor to Freshasia, Oriental Food Express Ltd trading as Kung Fu (“Kung Fu”), as its Business Development Manager. Freshasia alleges that Mr Jing is in breach of certain restrictive covenants in his contract of employment (“the Restrictive Covenants”) and that he has misused confidential information contained in, and has infringed the copyright or database right in, 59 documents copies of which are contained in Annex 8 to Freshasia's Particulars of Claim (“the Protected Documents”).
The Restrictive Covenants
As explained in more detail below, the Restrictive Covenants relied on by Freshasia are contained in clauses B, C and D of the “Safeguards” section of Freshasia's Employee Handbook.
Clauses B(1)(a) and (b) provide as follows:
“a. You must not, whether during your employment with Company or after the end of it, whether you resign or are dismissed by the Company, unless expressly authorised in writing by your Manager, disclose to any unauthorised person or use any confidential information relating to the business affairs or trade secrets of the Company. This includes any detail about the Company's products, technical data, any matter relating to the company or its business, customers and employees, actual potential or past and all details relating to information on the Company's data base.
b. For this reason you hereby agree that you will not during your employment with the Company or any associated or subsidiary companies, or for a period of six months (for non-senior employees) or twelve months (for senior employees) (hereinafter referred to as ‘the leaving period’), in respect of any aspect of the business which the Company undertakes, solicit or attempt to solicit the custom of, or sell, or deliver to or accept work for private gain and/or for any third party, from any private individual, firm or company or otherwise deal with any person who at the date of termination of your contract is a customer or potential customer of the Company to whom you have personally sold and/or delivered the Company's products on behalf of the Company, or whom you had introduced to the Company, or approached on behalf of the Company, or with whom you had any business dealings or knowledge in the leaving period immediately prior to the date of termination of your contract.”
Clause B(1)(c) is a more detailed covenant against misuse of confidential information, but for the purposes of this case it adds nothing to clause B(1)(a).
Clauses B(2)(a) and (b) provide as follows:
“a. One of the most valuable assets of the Company is the contact that you will have and the relationship that you will be encouraged to build up with the Company's Customers. You acknowledge that this contact and the relationship is capable of being misused unfairly against the Company if after you have left the Company's employment it is exploited for your own benefit or that of another person in competition against the Company.
b. For this reason you hereby agree that you will not during your employment with the Company or any associated or subsidiary companies, or for a period of six months (for non-senior employees) or twelve months (for senior employees) (hereinafter referred to as ‘the leaving period’), in respect of any aspect of the business which the Company undertakes, solicit or attempt to solicit the custom of, or sell, or deliver to or accept work for private gain and/or for any third party, from any private individual, firm or company or otherwise deal with any person who at the date of termination of your contract is a customer or potential customer of the Company to whom you have personally sold and/or delivered the Company's products on behalf of the Company, or whom you had introduced to the Company, or approached on behalf of the Company, or with whom you had any business dealings or knowledge in the leaving period immediately prior to the date of termination of your contract.”
Clauses C(a) and (b) provide as follows: “a) You agree not to:
(a) Directly or indirectly compete with the business of the Company and its associated companies during the period of employment and for the leaving period and notwithstanding the cause or reason for termination.
(b) For the leaving period; directly or indirectly compete with the business of the Company on your own behalf or in conjunction with any person, company, business entity or other organisation whatsoever, solicit, assist in soliciting, accept or facilitate the acceptance of, or deal with, in competition with the Company, the custom or business of any Customer or Prospective Customer with whom you had substantial person contact or dealing on behalf of the Company during the period of employment.
b) This non-compete agreement shall extend for a location in UK and European countries. The term ‘not compete’ as used herein shall mean that you shall not own, manage, operate, consult or be employed in a business substantially similar to or competitive with, the present business of the Company or such other business activity in which the Company may substantially engaged during the term of employment.”
Clause D provides:
“All written material, whether held on paper, electronically or magnetically which was made or acquired by you during the course of your employment with us, is our property and our copyright. At the time of termination of your employment with us, or at any other time upon demand, you shall return to us any such material in your possession.”
The Employee Handbook also contains certain other restrictive covenants which are not relied upon by Freshasia, such as a covenant against soliciting employees of Freshasia to leave that employment.
Procedural history
The procedural history is relevant to some of the substantive issues, and it is therefore necessary for me to set it out. Before doing so, I should first explain that Mr Jing is a Chinese national whose ability to work in the United Kingdom is (subject to the point discussed below) dependent on him having a Tier 2 visa which is in turn dependent on him being employed at a salary of at least £30,000 per annum by a sponsoring employer recognised by the Home Office.
Freshasia discovered that Mr Jing was working for Kung Fu on 12 October 2018. On 16 October 2018 Freshasia instructed solicitors. On 23 October 2018 Freshasia's solicitors sent a letter before claim to Mr Jing, in which they referred to restrictive covenants contained in the contract of employment Mr Jing signed on 12 January 2015. No reference was made in the letter to the Employee Handbook. Freshasia's solicitors alleged that Mr Jing was in breach of covenants against competition, soliciting customers and soliciting employees. For reasons that will appear, it is important to note that, although this was not mentioned in the letter, those restrictive...
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