24 January 2014:

Trade Secrets:

Most employment contracts cover the obligation to maintain confidentiality and to protect trade secrets, but what can employers do if they think that (ex) employees are in breach?

This was the question faced by ESL Fuels when ex-executive Stephen Fletcher set up a company to produce an innovative fuel product called ‘Prema 35’ with an uncanny resemblance to their own heating fuel called ‘Ultra 35.’

ESL promptly slapped in a High Court interim injunction application to prevent the production of Prema 35 because it was manufactured using ESL’s trade secrets.

Mr Fletcher argued that the injunction should not be granted because Prema 35 was already in production. The High Court were unimpressed by this argument, concluding that they should look at the ‘status quo’ beforehand, namely at the point when Mr Fletcher set up in competition. The interim injunction was granted.

This case demonstrates that a muscular approach when trade secrets are threatened can be effective. Employers should always first ensure that their employment contracts put them in the best position to deal with such issues if they arise.

See ESL Fuels Ltd v Fletcher. See our posting on post termination restrictions

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