Mantis Surgical Ltd v Tregenza
| Jurisdiction | England & Wales |
| Judgment Date | 29 June 2007 |
| Neutral Citation | [2007] EWHC 1545 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ06X01378 |
| Date | 29 June 2007 |
[2007] EWHC 1545 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
His Honour Judge Brunning
(Sitting as a Judge of the High Court)
Case No: HQ06X01378
Gerard Clarke (instructed by Barlow Robins LLP) for the Claimant
Charles Béar QC (instructed by Jones Day) for the Defendant
Hearing dates: 13, 14, 15 and 18 June 2007
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.
The Claimant Mantis Surgical Ltd is a distributor of surgical equipment. It does not manufacture such equipment but has a series of distribution agreements with a number of manufacturers. The Mantis business is nationwide, supplying various tools and equipment to NHS and private hospitals for laparoscopic and vascular surgery.
The Defendant was employed by the Claimant as a Sales Territory Manager in September 2005. She was promoted to the position of Field Sales Manager for the South of the United Kingdom in March 2007. On April 12 th 2007, she gave notice terminating her employment having accepted employment with Applied Medical Distribution Corporation (Applied). Applied is a manufacturer which up to the 31 st March 2007 permitted its products to be distributed by the Claimant. From that date it seeks to sell them directly.
The Claimant immediately asserted that the Defendant was bound by restrictive covenants in her contract of employment with it. Those covenants were required, and accepted by the Defendant, to protect its business connections and confidential information from competitive exploitation by a business rival. Having failed to obtain any undertakings from the Defendant, the Claimant issued proceedings. On the 24 th April, HHJ Seymour QC granted an injunction prohibiting the Defendant, in terms of the covenants in her contract of employment, from serving a business which competes with the Claimant in areas with which she was concerned to a material extent on behalf of the Claimant; from soliciting away from the Claimant to her new employers, customers with whom the Defendant had material personal contact or dealings on behalf of the Claimant; and from disclosing any confidential information as defined in the Contract.
These present hearings over 4 days have been to consider whether the injunction should be continued or discharged.
There is no common ground between the parties. The Defendant takes issue with much of the factual matrix relied on by the Claimant. The Defendant denies that there is a contract of employment with the Claimant. If there is such a contract, the Defendant denies that the covenants within it are reasonable. If they are found to be reasonable, the Defendant denies that she will be in breach of them if she takes up employment with her prospective employer. Even if she were to be in breach, relief should be refused on equitable grounds, including material non-disclosure on the without notice application. In short, the Defendant robustly asserts that the Claimant must fail.
There are further issues raised in relation to confidential information. The Defendant asserts that no case is established for the threatened breach of confidence and the Defendant says that the Claimant cannot obtain relief on this ground.
The multiplicity and extent of issues raised calls of course for careful analysis. But the Court must seek to identify those issues which are central, and not merely peripheral. It must deal with those central matters whilst leaving others which, though of interest to one or other party and invested by that party with significance, are not in the Courts view necessary to determine in order to come to a just conclusion in this case.
The nature of the business
Laparoscopic surgery is increasingly the preferred option of surgeons and patients. Demand for equipment with which it can be performed has thus grown rapidly.
To gain access to the abdomen, the surgeon makes one of more small incisions. A tube is then inserted through the incisions and the abdomen inflated to give the surgeon access and visibility. Cameras and tools for surgery are then inserted through the tubes to enable the surgeon to perform whatever operation is necessary.
It is essential to describe the various pieces of equipment used in such procedures, as much evidence in the case has been concerned with the availability of the various pieces.
The tubes which are used are called cannulas. The pointed instrument which fits into the cannula is called a trocar. The trocar is used to make the incision required. A sharp pointed insert which is used to puncture the abdominal wall is called an obturator. A further refinement is a separator which is described as an atraumatic trocar. Its purpose is to prise apart, rather than sever, the fibres of the muscle, and minimise the risk to organs. Seals are necessary to allow instruments to be inserted via the cannula while at the same time preventing the air or gas from escaping from the abdominal cavity and thus deflating the abdominal wall.
The cannulas are required in a range of sizes. The complete range is of 5mm, 8mm, 11mm, 12mm and 15mm. Choice depends upon the nature of the operation to be performed and the preference of the surgeon performing it. The equipment itself has of course undergone development and refinement. The evidence before me was that equipment is either partly reusable metal with disposable parts like the seal, or increasingly is wholly disposable, being made of plastic. The latter is supplied in sterile packages and is disposed of after the operation.
All this equipment is manufactured by a limited number of companies in America, the United Kingdom and Europe. Some manufacturers have their own distributors in the form of associated companies selling directly to the customer. Others rely upon distribution agreements of the kind which was in place between the Claimant and Applied, prior to Applied's decision to sell its own products through its own sales force.
The market in the UK is a substantial one. It is also fragmented in the sense that there are a very large number of NHS trusts, hospitals and private hospitals which buy independently. There is no centralised purchasing organisation at present, nor, in general, any regional or area purchasing organisation.
The result is that there are a large number of outlets and a large number of people involved in purchasing decisions. The evidence before me is that the process is best described as taking place within a triangle of influence. In an individual hospital or trust there are three groups which have input into the decisions made whether the products of one or other potential supplier should be taken. Those people are the clinical teams, especially the surgeons but also the theatre sister and others involved; the hospital business managers; and the procurement staff at the hospital. The evidence from Mr Ford on behalf of the Claimant was that it is what he called “a people business”. It is the surgeons who have most influence. Their clinical considerations and requirements are generally although not always the overriding factor.
The sales person thus needs to make contact with three groups within a hospital. Relationships must necessarily be formed in order to facilitate the demonstration of the merits of particular equipment and to encourage the potential purchaser to buy. The Defendant's witness Mr Foster said that such relationships are extremely important. People with experience can as a result of those relationships influence changes. He candidly says that that is why Applied wanted a sales force with people with that understanding and approach. The Defendant, Ms Tregenza, is such a person.
It is possible to get hold of a wide variety of information about the people involved from hospital yearbooks, and the internet. In those documents and on the internet are to be found the names of business managers, procurement staff and surgeons. There is an organisation called CMA Medical Data which provides data of directories and other information.
But a sales representative is required to build up a network of contacts and relationships with key people. These are particularly the surgeons involved. The representative will have to explain new procedures and techniques, to demonstrate the new equipment and will frequently go into theatre with surgeons as they try new equipment. All this process takes a great deal of time and energy on behalf of the sales person. This expenditure of time and effort may in due course bear fruit in the form of orders for the equipment.
The selling process is thus a lengthy and protracted one with the formation of relationships at its centre.
These are key findings which I make and which inform the decisions I reach later in this judgment.
The Parties
The Claimant Mantis Surgical Ltd is based in Basingstoke. It employs 15 people and in the financial year, 2005, 2006–7 had a turnover of £7.629m. Its parent company is United Drugs plc. Unitec UK is an unincorporated non-trading name used for the purpose of consolidated accounts.
The two central Mantis employees throughout the period with which I am concerned were James Clarke and Simon Ford. Mr Clarke is the sales director. He has some years experience in the marketing of surgical equipment and the training and management of field sales persons. He is clearly an important and influential part of the management team of Mantis.
Mr Ford is the UK Sales Manager of Mantis. Mr Ford is an impressive man who was trained as an operating theatre technician, and in that sphere he worked for some years...
To continue reading
Request your trial