Confidential information v trade secrets

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Richard Baker Harrison Ltd v Brooks and others – [2021] All ER (D) 94 (Oct) offered the opportunity for a further exploration of the new legal relationship between trade secrets and confidential information, yet ultimately the case demonstrates how the legal community remains comfortable addressing trade secrets through the prism of confidentiality.

Richard Baker Harrison Limited (“RBH”) is a leading distributor of minerals and chemical raw materials which it supplies to manufacturers worldwide. Whilst not in itself a manufacturer it occupies a key position within the plastic, rubber, coating, adhesive and sealant, composite, ceramic and polishing sectors. In this case RBH sought to enforce obligations of non-competition, confidentiality, and post-termination restrictions against two former employees – Mr Brooks and Mr Sambrook – who had left RHB to establish SBS Sourcing Limited (a mineral sourcing and supply services business).

It was not in dispute that Brooks and Sambrook owed express obligations to protect RBH’s confidential information under their contract of employment but both defendants accepted that their contracts of employment also included the implied term of good faith and fidelity. Deputy High Court Judge Margaret Obi noted, “[T]his abstract concept includes an obligation to refrain from conduct which would be regarded as unacceptable by reasonable and honest people. In essence, it is no more than an obligation to loyally carry out the role of an employee. However, unlike a fiduciary duty, it does not require the employee to act solely in the interests of the employer … and mere preparations to set up a competing business after the termination of the employment are not necessarily a breach of contract.”

Mr Brooks admitted that he was under a duty, whilst employed, to maintain the confidentiality of RBH’s trade secrets and/or confidential information, and not to use any information obtained in confidence as a consequence of his employment to the detriment of RBH. However, he denied that there were any equitable duties in relation to trade secrets and/or confidential information that were not covered by the express terms or applicable implied terms of the contract. Accepting this submission Judge Obi denied the existence of any equitable duty relating to misuse of trade secrets.

Finding it to be “trite law that during the currency of the employment relationship the employer is entitled to protect confidential information whether it amounts to a trade secret or not”, Judge Obi was satisfied that RBH’s “customer/supplier connections, the stability of its workforce and the protection of its confidential information are all legitimate business interests requiring protection”.

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