Continuing benefit required to obtain springboard injunction

A springboard injunction is an order granted by the Court which prevents, for example, a former employee from gaining a head start by using his/her former employer’s confidential information or trade secrets in his/her new competing business.

A recent case has established what is required in order for a company to obtain springboard relief against a former employee. The court has held in Aquinas Education Ltd v Miller & Others that a springboard relief will not be granted where the Claimant failed to demonstrate that the Defendants were continuing to benefit from a head start.

Background

The Claimant was Aquinas Education Ltd (“AEL”) an educational recruitment agency which specialised in placing teachers in schools. The Defendants consisted of (1) Mr Miller and (2) Mr Pembleton who were employees of AEL, (3) Mr Gatter who was the cousin of Mr Pembleton, and (4) Link3 Recruitment Ltd a competing business incorporated in August 2017 by the first three Defendants.

The employees’ employment contracts contained express confidentiality clauses but no post-termination restrictive covenants.

After setting up Link3 Recruitment Ltd the employees copied information held by AEL regarding teachers and schools and proceeded to use this information from around 19 September 2017 by approaching teachers on AEL’s records and offering to place them with schools on behalf of Link3 Recruitment Ltd. In December 2018, the employees gave their notice to terminate their employment with AEL. AEL discovered the employees had taken steps to copy and use their confidential information and commenced proceedings.

On 12 January 2018, interim relief was granted to the AEL which included a springboard injunction that prevented the Defendants from (1) doing business with any of the teachers or schools that they had come into contact with as a result of their employment with AEL and (2) using certain confidential information until trial/further order.

The matter came before the High Court on 26 February 2018 which had to decide whether and on what terms to grant a continued springboard injunction

Submissions

AEL sought a 9 to 12 month springboard injunction on the basis that it would typically take 9 to 12 months for a start-up business like Link3 Recruitment Ltd to achieve its first placement of a teacher in a school.

The Defendants submitted that (i) no head start at all had been demonstrated; (ii) even if a head start had been achieved it was impossible to say what period of injunction was appropriate; and (iii) in any event any head start was less than the 6 week period that had elapsed since the first springboard injunction was ordered as interim relief.

Judgment

The Judge considered that when deciding whether to exercise its discretion to grant a springboard injunction on an interim application the Court should consider the likely outcome at trial on the balance of probabilities. The Judge held that in this case it was more likely than not that AEL would prove at trial that the information obtained by the employees would be caught by the relevant terms of their employment contracts, however, the Judge considered that to grant an injunction to deprive the Defendants of an advantage built up from their unlawful act, such an advantage must still be being enjoyed.

The Judge noted that AEL’s submission that it would typically take 9 to 12 months for a start-up business like Link3 Recruitment Ltd to achieve its first placement of a teacher in a school was based solely on the managing director’s belief that it would take this long. The Judge held that this submission could not therefore assist him and could not be given any weight when assessing the period of advantage enjoyed by the Defendants as:

(1) It was opinion evidence from a source which was not independent;

(2) It was a bare expression of opinion as little detail was given of the experience on which it was based and no examples or factual material was cited in support; and

(3) Any assessment of time lag before a teacher is placed in a school must depend on the expertise and knowledge of those whom the business employs.

Taking into account that the current interim order barred the Defendants from using the confidential information obtained from AEL for 6 weeks, the Judge held that an unfair advantage, in terms of timing, was obtained by the Defendants, but it was modest. The Judge assessed the advantage as being in the region of 6 weeks and held that any head start that the Defendants had illegitimately obtained had now gone and declined to make any continuing order for springboard relief.

Conclusion

This case is a useful reminder of the need for specific evidence in support of an application for springboard relief. If you are seeking springboard relief it is best to justify the period of estimated head start using examples and factual material and where possible, independent evidence.