Thursday, May 21, 2009, 5/21/2009 01:06:00 PM

The Trade Secrets of Mosquito Nets - England and Wales High Court Zaps Defendant

By Todd

Citing only common law principles, oral contract and common sense, the England and Wales High Court (Chancery Division) has found a departed scientist liable for trade secret misappropriation of a former employer. The 700+ page decision is attached above.

Dr Skovmand was a consultant to Danish company Vestergaard Frandsen, where he helped them to develop a mosquito net which was injected with insect repellent. He later worked for Bestnet Europe, a company formed by two ex-Vestergaard Frandsen workers which developed a competing net.

Vestergaard Frandsen sued Bestnet, claiming that it had breached its confidence by using details from its database in developing its product. It said that test results and information about the best chemical mixes to use were its trade secrets, and were used by Bestnet having been transferred to them by Skovmand.

Bestnet said that the database information was not a trade secret, that it was simply the knowledge and experience someone would gain in the course of their work. It also said that it was not used in the development of its product.

Bestnet had previously argued that the case did not merit a full trial, and that the information used had been in the public domain. That argument was rejected, leading to this trial.

Mr Justice Arnold found that Skovmand did owe Vestergaard Frandsen a duty of confidence, and that this was expressed in their oral contract. Even if it weren't, there would be an implied term of the contract that confidence was owed.

The judge listed 11 reasons why the duty of confidence was owed, including that Skovmand was a consultant employed to develop new products; he was subject to the company's direction; much of the work was carried out by people employed by the company; the material was the result of advice from other people as well as Skovmand; and the company had paid for the raw materials used in the work.

Mr Justice Arnold said that it was clearly understood that his inventions while there belonged to Vestergaard Frandsen. "It cannot have been intended that Dr Skovmand would be able to exploit the information created during the course of his work for VF [Vertergaard Frandsen], and in particular the information in the Fence database, for his own benefit either during or after the termination of his relationship with VF. Nor can it have been intended that Dr Skovmand would license third parties to do so," he said.

The Court found that this would have been true even if there had been no contract at all between Skovmand and Vertergaard Frandsen. "Even if there was no contract between Dr Skovmand and VF, I consider that he was subject to an equitable obligation to keep the information confidential to VF," said the judge.

The Court said that Skovmand was permitted to use his own skill, knowledge and experience gained while working for Vertergaard Frandsen for his own benefit or anybody else's, but that he was not allowed to use the company's trade secrets. The judge said that Skovmand was, in this case, in the position of an employee.

"While I am not sure that this approach would apply to all consultants, in the particular circumstances of the present case I am prepared to adopt the agreed position of counsel," he said.


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