January 26, 2023
Three companies within the Weiss Technik group of companies issued proceedings for, inter alia, breach of confidence, copyright infringement, database right infringement and breach of contract against four former employees and the company SJJ System Services Ltd, which had been set up by one of those employees, Stephen Jones, when he left Weiss.
Weiss claimed that Mr Jones had established SJJ by taking large swathes of confidential Weiss information and software, which he had used to compete with Weiss. The other defendants had continued to provide Mr Jones and SJJ with confidential information from Weiss either at Mr Jones’ request or voluntarily before they left Weiss to work for SJJ. According to Weiss, they then continued to use Weiss’s confidential information after they had joined SJJ.
Following the departure of Mr Jones from Weiss, Weiss became aware that he had set up SJJ as a direct competitor to Weiss and was taking a significant number of Weiss’s service customers. Weiss instructed a forensic IT consultant to image the laptops and other electronic devices that had been used by another of the defendants, Mr Davies, before his departure. This revealed that Mr Davies had, in the months before he left Weiss, downloaded Weiss proprietary software onto a USB using his laptop, accessed the Weiss Dropbox via his laptop, and sent documents related to Weiss software to his personal email address.
Weiss initiated proceedings with an urgent without notice application for a search, computer imaging and evidence preservation order against Mr Davies and SJJ. The order was granted and served on Mr Davies and SJJ.
Following the imaging of Mr Davies’ and SJJ’s devices, many thousands of documents were found in SJJ’s possession which were responsive to initial searches under the agreed search protocol, including copies of Weiss’s 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.
The trial was directed to assess liability only, with a quantum trial to be held later if necessary.
Breach of confidence
Mrs Justice Bacon found that all four of the individual defendants had breached their contractual duties of confidentiality under the terms of their employment with Weiss by providing to Mr Jones/SJJ materials related to the Weiss software packages, and/or passwords to those software packages and/or using those passwords once employed by SJJ.
As for SJJ, the same facts established a clear breach of its equitable obligations of confidence in its use of Weiss software and passwords. There was no doubt, Bacon J said, that Mr Jones knew that both the software and the passwords for that software were confidential to Weiss and that SJJ was not entitled to use any of those materials.
The evidence also established that Mr Jones and another defendant had breached their contractual duties of confidentiality in taking and then using the ServiceLife database for the purposes of SJJ’s business, specifically with the purpose of diverting customers from Weiss to SJJ.
The evidence also showed that SJJ had breached its equitable obligations of confidence by storing and using extracts from the ServiceLife database.
As for the 40,000 documents, for the purposes of the trial Weiss referred to sample categories of documents. Bacon J found that breach of confidence on the part of SJJ had been proven in each category.
There was no dispute that three of Weiss’s copyright software packages were stored on the SJJ Dropbox, which was an infringement under s 17(2) CDPA, regardless of how it got there. Further, Bacon J found that Mr Jones and SJJ had infringed the copyright in that software by storing it on the SJJ Dropbox and by copying one of the packages in order to supply it to a third-party software developer. Mr Davies had also infringed Weiss’s copyright under s 17(2) by downloading two of Weiss’s software packages from the SJJ Dropbox when he joined SJJ.
Bacon J found that the relevant investment in the processing of the data within the Weiss ServiceLife database was investment in the collection, organisation and verification of that data. In Bacon J’s view, this was a substantial investment that was independent of the resources used to create the original data. Therefore, the database was subject to a protectable right under Regulation 13 of the Database Regulations 1997.
Mr Jones admitted that he had taken extracts (customer and supplier details) from the database with him when he left Weiss and that further extracts were stored on SJJ’s systems thereafter. This clearly amounted to “extraction” under Regulation 16 by Mr Jones/SJJ. Further, this extraction was substantial.
More than nominal loss and damage
Bacon J considered whether Weiss had suffered more than merely nominal loss and damage, finding that SJJ’s business was from the outset based on diverting customers from Weiss UK using Weiss’s customer information. Mr Jones had used extracts from the ServiceLife database to contact customers of Weiss UK, many of which then became SJJ customers and had used Weiss’s password information to conduct SJJ business. All of that established detriment to Weiss, irrespective of the precise quantum of loss and damage that could be established as having been caused by the defendants’ conduct. (Weiss Technik UK Ltd v Mr Christopher Davies  EWHC 2773 (Ch) (8 November 2022) — to read the judgment in full, click here).