Trailfinders Ltd v Travel Counsellors Ltd

JurisdictionEngland & Wales
JudgeHacon
Judgment Date12 March 2020
Neutral Citation[2020] EWHC 591 (IPEC)
Date12 March 2020
Docket NumberCase No: IP-2018-000134
CourtIntellectual Property Enterprise Court
Between:
Trailfinders Limited
Claimant
and
(1) Travel Counsellors Limited
(2) Andrew La Gette
(3) Laki Economos
(4) Simon Clifford
(5) David Bishop
Defendants

[2020] EWHC 591 (IPEC)

Before:

HIS HONOUR JUDGE Hacon

Case No: IP-2018-000134

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

INTELLECTUAL PROPERTY ENTERPRISE COURT

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Gavin Mansfield QC and Alexander Robson (instructed by Lewis Silkin LLP) for the Claimant

Ian Mill QC and Tom Cleaver (instructed by Pinsent Masons LLP) for the First Defendant

Michael Lee (instructed by JMW LLP) for the Second and Fifth Defendants

Hearing dates: 29–30 January 2020

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.

HIS HONOUR JUDGE Hacon

Hacon Hacon Judge

Introduction

1

The Claimant (‘Trailfinders’) is a travel agent with 37 branches in the UK and Ireland, employing over 700 sales consultants. The Second, Third, Fourth and Fifth Defendants are former sales consultants at Trailfinders. In 2016 they left to join the First Defendant (‘TCL’), as did about 40 others by the date of the Particulars of Claim.

2

TCL trades using a franchise model with franchisee travel consultants. The Second to Fifth Defendants are therefore now at least nominally self-employed, although the precise form of this model has become an issue between the parties due to an allegation of vicarious liability on the part of TCL.

3

Trailfinders alleges that when the Second to Fifth Defendants left they took with them the names, contact details and much other information about their clients. It is further alleged that after they left they accessed a Trailfinders' customer database to obtain further information. Trailfinders says that the Second to Fifth Defendants were thereby in breach of implied terms in their contracts of employment and/or were in breach of equitable obligations of confidence owed to Trailfinders.

4

TCL is also alleged to have been in breach of confidence through having received the other defendants' confidential customer information and having allowed those defendants to exploit the information for TCL's and their benefit. Alternatively, TCL is said to have employed the other defendants and is accordingly vicariously liable for their acts. By way of a further alternative argument, it is said that the Second to Fifth Defendants have acted as agents of TCL, making TCL liable for those acts as principal.

5

For reasons of economy and to ensure that the trial would be completed in two days, Trailfinders elected two of the four individual defendants against whom to pursue the case to trial. They chose the Second Defendant (‘Mr La Gette’) and the Fifth Defendant (‘Mr Bishop’). The action was stayed as against the other two individual defendants.

6

Gavin Mansfield QC and Alexander Robson appeared for Trailfinders, Ian Mill QC and Tom Cleaver for TCL and Michael Lee for Mr La Gette and Mr Bishop.

Directive 2016/943

7

Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition entered into force in 2016. The articles in Chapter II of the Directive set out the circumstances in which ‘trade secrets’ as defined in Chapter I may be lawfully acquired, used and disclosed and the circumstances in which they may not. Art.6 sets out the general obligation imposed on Member States, namely to ensure the availability of civil redress against the unlawful acquisition, use and disclosure of ‘trade secrets’.

8

The Directive was implemented in the UK in June 2018 by The Trade Secrets (Enforcement, etc.) Regulations 2018, to the extent that was thought necessary. This did not include any change in the law to comply with either Chapter II or art.6. The explanatory note states:

“A number of the provisions of the Directive, in particular the provisions in Chapter II and Articles 6, 7 and 16, have been implemented in the United Kingdom by the principles of common law and equity relating to breach of confidence in confidential information, and by statute and court rules.”

9

It is therefore to be assumed that the substantive principles governing the protection of confidential information under English law, including that afforded by terms implied into contracts of employment and by equitable obligations of confidence, are unaffected by the Directive. However, the Directive shines an occasional light on those principles.

10

Articles 1 to 7 provide:

CHAPTER I

Subject matter and scope

Article 1

Subject matter and scope

1. This Directive lays down rules on the protection against the unlawful acquisition, use and disclosure of trade secrets.

Member States may, in compliance with the provisions of the TFEU, provide for more far-reaching protection against the unlawful acquisition, use or disclosure of trade secrets than that required by this Directive, provided that compliance with Articles 3, 5, 6, Article 7(1), Article 8, the second subparagraph of Article 9(1), Article 9(3) and (4), Article 10(2), Articles 11, 13 and Article 15(3) is ensured.

2. This Directive shall not affect:

(a) the exercise of the right to freedom of expression and information as set out in the Charter, including respect for the freedom and pluralism of the media;

(b) the application of Union or national rules requiring trade secret holders to disclose, for reasons of public interest, information, including trade secrets, to the public or to administrative or judicial authorities for the performance of the duties of those authorities;

(c) the application of Union or national rules requiring or allowing Union institutions and bodies or national public authorities to disclose information submitted by businesses which those institutions, bodies or authorities hold pursuant to, and in compliance with, the obligations and prerogatives set out in Union or national law;

(d) the autonomy of social partners and their right to enter into collective agreements, in accordance with Union law and national laws and practices.

3. Nothing in this Directive shall be understood to offer any ground for restricting the mobility of employees. In particular, in relation to the exercise of such mobility, this Directive shall not offer any ground for:

(a) limiting employees' use of information that does not constitute a trade secret as defined in point (1) of Article 2;

(b) limiting employees' use of experience and skills honestly acquired in the normal course of employment;

(c) imposing any additional restrictions on employees in their employment contracts other than restrictions imposed in accordance with Union or national law.

Article 2

Definitions

For the purposes of this Directive, the following definitions apply:

(1) ‘trade secret’ means information which meets all of the following requirements:

(a) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question.;

(b) it has commercial value because it is secret;

(c) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret;

(2) ‘trade secret holder’ means any natural or legal person lawfully controlling a trade secret;

(3) ‘infringer’ means any natural or legal person who has unlawfully acquired, used or disclosed a trade secret;

(4) ‘infringing goods’ means goods, the design, characteristics, functioning, production process or marketing of which significantly benefits from trade secrets unlawfully acquired, used or disclosed.”

CHAPTER II

Acquisition, use and disclosure of trade secrets

Article 3

Lawful acquisition, use and disclosure of trade secrets

1. The acquisition of a trade secret shall be considered lawful when the trade secret is obtained by any of the following means:

(a) independent discovery or creation;

(b) observation, study, disassembly or testing of a product or object that has been made available to the public or that is lawfully in the possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret;

(c) exercise of the right of workers or workers' representatives to information and consultation in accordance with Union law and national laws and practices;

(d) any other practice which, under the circumstances, is in conformity with honest commercial practices.

2. The acquisition, use or disclosure of a trade secret shall be considered lawful to the extent that such acquisition, use or disclosure is required or allowed by Union or national law.

Article 4

Unlawful acquisition, use and disclosure of trade secrets

1. Member States shall ensure that trade secret holders are entitled to apply for the measures, procedures and remedies provided for in this Directive in order to prevent, or obtain redress for, the unlawful acquisition, use or disclosure of their trade secret.

2. The acquisition of a trade secret without the consent of the trade secret holder shall be considered unlawful, whenever carried out by:

(a) unauthorised access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced;

(b) any other conduct which, under the circumstances, is considered contrary to honest commercial practices.

3. The use or disclosure of a trade secret shall be considered unlawful whenever carried out, without the consent of...

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1 cases
  • Travel Counsellors Ltd v Trailfinders Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 19 January 2021
    ...ON APPEAL FROM THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY COURTS, INTELLECTUAL PROPERTY ENTERPRISE COURT His Honour Judge Hacon [2020] EWHC 591 (IPEC) Royal Courts of Justice Strand, London, WC2A 2LL Covid-19 Protocol: This judgment was handed down remotely by circulation to the parti......
2 firm's commentaries
  • Trade Secrets Directive Has Not Changed Substantive English Law Principles Protecting Confidential Information
    • United Kingdom
    • Mondaq UK
    • 24 April 2020
    ...recent judgment of the Intellectual Property Enterprise Court (IPEC), Trailfinders Limited v Traveller Counsellors Limited & Ors [2020] EWHC 591 (IPEC), it has been held that the 'Trade Secrets Directive' has not affected the substantive principles governing the protection of confidenti......
  • Brexit And Trade Secrets: 6 Key Things To Know
    • United Kingdom
    • Mondaq UK
    • 26 November 2020
    ...Secrets Directive). Recent case law from the High Court suggests that the common law principles are unaffected (Trailfinders v TCL [2020] EWHC 591 (IPEC), Senior v Celgard [2020] EWCA Civ 1293). The application of settled principles of English law protecting confidential information and tra......

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