Leavers beware! Copyright theft leaves ex-employees in hot water

Case Note: Weiss Technik UK Ltd & Ors v Davies & Ors [2022] EWHC 2773 (Ch) (08 November 2022)

On 8 November 2022, Justice Bacon handed down her judgment on liability in the matter of Weiss Technik UK and Davies. The copyright theft case involved allegations of copyright infringement, database right infringement, breach of contract and others, by Mr Davies, Mr Jones, Mrs Whitfield and Mr Oram, all previously employed by Weiss Technik UK (Weiss), and SJJ System Services (SJJ). Interestingly, all the defendants (except SSJ) were ex-employees of Weiss and were accused of retaining confidential information on their departure from Weiss and subsequent employment with SJJ.

Weiss manufactures, sells and maintains environmental testing chambers (ETCs). SJJ was a private company, set up and ran by Mr Jones, prior to the end of his employment with Weiss, as a direct competitor in the maintenance of ETCs. Mr Youll, the managing director of Weiss, became concerned about Mr Jones and SJJ following concerns raised by another employee that Mr Jones had taken a copy of the ServiceLife database when he had left the company. Mr Youll was also shown emails of SJJ quoting for work which reproduced the same spelling mistakes as those on the ServiceLife database. Another employee, Mr Davies, raised Mr Youll’s suspicions after he noticed odd behaviour by Mr Davies prior to his departure from Weiss in July 2018.

Following a forensic examination of Mr Davies’ work laptop, Weiss discovered that in the period leading up to his departure he had downloaded Weiss proprietary software onto a USB, accessed Dropbox and sent Weiss’ documents to his personal email address. Weiss then obtained an evidence preservation order against SJJ, which revealed thousands of documents in SJJ’s possession, including “copies of the claimants’ core proprietary software packages, extracts from the Weiss ServiceLife database, and around 40,000 miscellaneous documents said to be Weiss confidential and/or copyright documents.”

A claim was then issued, in October 2018, against Mr Davis and SJJ, later expanding the list of defendants to include Mr Jones in December 2018 and Mrs Whitfield and Mr Oram in July 2020. Several issues were required to be determined at trial, including whether the defendants breached their duties of confidence (under contract or equity), whether Mr Jones / SJJ induced the breaches of confidence by Mr Davis, Mrs Whitfield and Oram, and whether the defendants breached the copyright and database rights of Weiss.

The evidence, by way of witness statements, cross examination and on the documents, showed that:

• Each employee had a valid employment contract requiring them to return confidential information to Weiss following the end of their employment;
• SJJ began activities in October 2015, prior to Mr Jones’ departure from Weiss;
• Several extracts from the ServiceLife database were sent by the defendants to either Mr Jones or were found stored on a Dropbox account owned by SJJ, determined by the judge to be for the purposes of allowing SJJ to compete with Weiss;
• Proprietary software was retained by the defendants, including code, service manuals, passwords and ancillary documents;
• Mr Jones continued to receive either ad hoc information from the other defendants or on his request after his departure from Weiss; and
• Each of the defendants had used their personal email addresses ostensibly to avoid detection, further adding to the argument that they knew what they were doing was in breach of their contractual obligations, or at the very least, something that they did not want Weiss to find out about.

Breach of Confidence

Following a review of the evidence, the judge determined that the individual defendants had breached their contractual obligations, thus showing a breach of confidence, and that SJJ had breached their equitable obligation of confidence. This was particularly in respect of the software that the claimant had proprietary ownership of and the associated passwords and instructions of those software, which the defendants had openly shared amongst themselves.

Mr Jones and SJJ were also found to have induced and/or procured the above breaches of confidence. In relation to Mr Jones, he had consistently and repeatedly requested confidential information from the other defendants, admitted by Mr Jones in cross examination. He was well aware of the terms of his employment contract and must have known or was recklessly indifferent to the other defendants’ obligations.

Database rights

Justice Bacon held that there was a protectable right in the database, given the claimant’s unchallenged evidence of investment by the service administrators employed in the business. Unsurprisingly, it was ruled therefore that each defendant had breached this right, on the basis of their admissions and the existence of extracts of the database on SJJ systems.

Conclusion

This judgment is a cautionary tale for both employers and employees.

For Weiss Technik, their proprietary software formed a significant part of their maintenance arm, so the protection of their intellectual property was paramount to ensure a competitive advantage.

For employees, there is a stark difference between copying proprietary software and extracting data from a business’ database, and exiting a business with your know how and experience.

Should you fear copyright theft – that your ex-employee has used your confidential information without your consent – or you are unsure whether your actions breach your contractual or equitable duties, Blake Morgan has the expertise to advise you. You can get in touch with our intellectual property experts.