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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Prosoft Resources Ltd v Griffiths [1999] ScotCS 96 (13 April 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/96.html Cite as: [1999] ScotCS 96

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The pursuers describe themselves in the summons as a leading edge computer software company. They aver that their intellectual property rights and technical know-how comprise major assets which are critical to the future of their business. The defender, who is a young man, and, I was informed, is married with a young family in Aberdeen, entered the pursers' employment in November 1996. His employment was regulated by a Trust and Confidence Agreement between the parties dated 4 November 1996. On 26 June 1998 he left the pursuers' employment on amicable terms. In terms of Clause 4.2 of the Agreement the defender was bound within the Grampian and Highland areas for the period of twelve months thereafter, not to hold any material interest in any person, firm or company which required or might reasonably be thought by the pursuers to require him to disclose or make use of any confidential business information in order properly to discharge his duties or to further his interest in such person, firm or company.

The pursers aver that the defender, while in their employment, worked as a principal software engineer on a commissioned software agreement which they entered into in 1996 with a company called MacGregor Energy Services which is referred to in the summons as "MacGregor", with a place of business in the Grampian area. The pursuers further aver that central to the project to be implemented by them in terms of the software agreement was the use of a component library developed by the pursuers and given the name Nemesis. The defender had access to and was involved in developing and refining the intellectual property rights and technical know-how associated with Nemesis. Mr Clive who appeared for the pursuers, informed me that the Mims Source Code which is referred to in the second conclusion but not in any article of the Condescendence, was the first common application of the Nemesis software. In that connection I should say that Mr Clive at the Bar deleted the words "director, employee" and "or agent" from conclusion 1(a), and he also altered conclusion 2 to read as follows:

The pursuers ceased work on the software involved in the software agreement in or about September 1998 because of a financial dispute with MacGregor. Mr Anderson who appeared for the defender, informed me that the true reason was MacGregor's dissatisfaction with the Nemesis programme. Be that as it may, the pursuers and MacGregor agreed in light of the problem which had arisen between them, that the pursuers would finish the module on which they were then working. Thereafter, they would assist MacGregor to recruit an appropriate software engineer to whom they would provide the necessary training to enable that engineer to complete the remaining two modules. Once they had been completed, the pursuers would provide technical back-up services for which they would be paid.

On or about 18 February 1999 the pursuers became aware that the defender was engaged by MacGregor as a software engineer on a consultancy basis. Although the averments in Article 4 of the Condescendence become a little obscure at this point, the pursuers maintain that the defender is engaged as a consultant by MacGregor in the completion of the remaining two modules in the Nemesis programme. To do that the defender must necessarily make use of all the technical know-how associated with Nemesis which he acquired in the pursuers' employment. In applying that technical know-how the defender, the pursuers claim, has breached Clauses 4.2 and 4.8 of the Trust and Confident Agreement. The defender is, of course, just such a person whom the pursuers might have assisted MacGregor to recruit in terms of their agreement with MacGregor in or about September 1998. Indeed, had they done so, they would not even have had to train him. The fact is, of course, that MacGregor have themselves engaged the defender on a two year contract and the consequence of that is that the pursuers have lost the financial opportunity of providing further services to MacGregor. The pursuers estimate that the profit element of such services would have been about £5,000, and they further aver that it is likely that they would in ordinary course have obtained a post-completion maintenance contract from MacGregor generating a profit of £5,000. The use and potential disclosure by the defender of the pursuers' confidential information, it is averred, will "potentially result" in the pursuers losing their competitive edge to their financial detriment. That loss, however vaguely and unspecifically, is assessed at £30,000.

Interim interdict was granted in February 1999. As a consequence the defender has been unable to gain employment elsewhere and he has lost, thus far, about £5,000 in income. I was informed that he would find it difficult to find employment in his speciality in the Grampian area, and that to obtain such employment he would have to sell his house and move south.

The expression "confidential business information" in Clause 4.2 is defined earlier in Clause 1.3 as follows:

"Corporation information" is further defined in Clause 1.4, as is "marketing information" in Clause 1.6. "Technical Information" is defined in Clause 1.11 to mean:

Essentially, what the pursuers allege against the defender is that he has in his consultancy engagement with MacGregor used technical information, as that is defined, which he acquired in his employment with them that he did not already have, and which, also, was not readily ascertainable by persons not connected with the pursuers, either at all or without a significant expenditure of labour, skill or money. That, they say, was different from the intellectual property rights already acquired by MacGregor in terms of Clause 12.1 of the software agreement. It was clear from the ex parte statements made by counsel at the Bar in the course of the defender's motion for recall of the interim interdict previously granted, that there was a sharp difference of fact between the parties on this matter. Mr Anderson insisted that Nemesis and the Mims Source Code were written in "visual basic". They were written, he said, in the most common computer language, Mr Clive accepted that they were written in understandable language. But the design methods and the implementation of language concepts were special. Only the pursuers and the defender by virtue of his association with them, could do the work he was now doing. That issue of fact, it seemed to me, would ultimately have to be decided on expert evidence. At this stage in the proceedings it was far from clear to me how that issue should be decided.

In order to secure the protection of the law for their Agreement with the defender the pursuers do however have to aver and establish that the knowledge and information which the defender retained in his head when he left their employment, can properly be categorised as a trade secret or as material which, while not properly to be described as a trade secret, is in all the circumstances of such a highly confidential nature as to require the same protection as a trade secret. If the knowledge and information are not in that class, they may be treated as confidential while the employee is in employment. But he is free to use what he inevitably carries away in his head once he leaves his employment. (See Faccenda Chicken Limited v Fowler 1987 1 Ch. 117 per Neill, L.J., at pps 137-8; and Roger Bullivant Limited v Ellis 1987 I.R.L.R. 491 per Nourse, L.J., at pps 494-495). This is not a case in which it is alleged the defender retained documents or the like when he left the pursuers' employment. It appears to be accepted that in his work for MacGregor the defender was simply using his accumulated knowledge and expertise. Against that background I confess to being doubtful that what the defender has retained in his head can be classed as a trade secret or its equivalent. I appreciate Mr Clive's observations that the pleadings in the summons are not as full as they might be, simply because the action was raised in haste: but I do think there is force in Mr Anderson's criticism that the pursuers have not sufficiently spelt out the unique nature of the defender's knowledge. In my view the pursuers have made out only a weak prima facie case.

This, of course, has an immediate bearing upon a consideration of the balance of convenience. In Malden Timber Limited v McLeish 1992 S.L.T. 727 Lord Caplan said at page 732:

This, in my opinion, is a case in which the interlocutory decision is likely to settle the issues in the case. On 26 June 1999 the defender will be free to work for MacGregor. That date is less than three months away, and it is unlikely that my decision could be the subject of a reclaiming motion by then. Further, the pursuers, if they are well founded, may not be without a pecuniary remedy against the defender. I accept that the defender will not be able to obtain any other appropriate employment locally in that period. The balance of convenience therefore strongly favours the defender in my opinion.

Mr Anderson, I should add, criticised Clause 1.3 as being so wide as to be unreasonable and therefore unenforceable. That, he said, was because of the reference to "other information" (whether or not recorded on documentary form or computer disk or tapes) "to which the company attaches an equivalent level of confidentiality." Mr Clive agreed that that was objectionable since it meant that the company could determine what was confidential and what was not. He submitted that Clause 5.1 of the Agreement could be applied to sever the offending part of the clause which I have set out in quotation marks, without affecting the meaning and balance of the clause. I agree, and that part may be severed. (See Living Design (Home Improvements) Limited v Davidson 1994 S.L.T. 753 per Lord Coulsfield at p 755).

In the whole matter I will give effect to the defender's motion and I will recall the grant of interim interdict against the defender.