Who: Medical Innovations Limited and Eakins [and Others]
Where: High Court
When: 17 December 2014
Law stated as at: 8 January 2015
The Claimant company, Medical innovations Limited (“MI”) was granted summary judgment in relation to its claims against a former employee, Eakins, for breach of its database rights and for breach of an agreement entered into when Eakins ceased employment at MI.
Eakins was employed by MI for four years where he worked on the design and manufacture of endoscopy devices. Eakins left MI and on termination of his employment he signed an agreement with MI agreeing inter alia to keep MI’s information confidential and repay on demand the compensation payment received on his termination if he breached the agreement (the “Compensation Agreement”).
Eakins then worked with the other Defendants on business activities which competed with MI’s business. MI issued proceedings against the Defendants alleging breach of database rights, misuse of confidential information and for breach of the Compensation Agreement.
Eakins admitted that he had taken documents from MI and that he had continued to access its electronic databases after leaving its employment. The two databases accessed were: (i) the distributor database which consisted of the names and details of the actual or potential distributors of MI’s products and included comments about their likely attitude to MI’s products. The distributors in the database had been selected from a longer list and MI had corresponded with them to establish their attitude to its products; and (ii) the customer database which contained information about customers, such as contact and account details.
MI applied for summary judgment on its claims for infringement of database rights, breach of confidence and repayment of the money paid to Eakins under the Compensation Agreement.
Eakins argued that database rights did not subsist in the distributor database because the effort that had gone into it was not sufficiently substantial and because it contained data created rather than obtained by MI. In relation to the customer database, Eakins argued that MI did not own database rights in this since third party material had been used in the database.
(i) Infringement of database rights
The case was heard by Richard Meade QC, who held, firstly, that the fact that a trial would be required to hear other causes of action not subject to the summary judgment application was not a sufficient reason to withhold the grant of summary judgment.
In relation to the distributor database, he held that Eakins’ argument that no substantial work had gone into it was hopeless. He noted that it was clear that MI had entered into correspondence with potential distributors to find out their likely level of interest in the products. Work internal to MI might not amount to creation, but the database clearly went beyond that – it reflected research in the commercial world and so summary judgment was granted.
As to the customer database, the Judge held that, whilst it was evident that when Eakins was employed by MI substantial work had gone into the database, it was not a defence in itself to say that the database contained copyright material belonging to someone other than the database right owner. Therefore, the Judge held that MI had made out its claim for infringement of its right in the customer database and summary judgment was granted.
(ii) Breach of confidence
As to the breach of confidence claim, it was noted that whilst Eakins had clearly carried out a number of acts of taking and misusing confidential information, there was a significant dispute about the extent of these acts and their consequences. Further, it remained to be determined whether MI’s claim for breach of confidence was too broad. On the facts before him, the Judge was unable to grant any useful relief to reflect Eakins’ extensive breach of confidence; a declaration would be neither clear nor useful and an order relating to financial relief would be pointless as that would be considered on an inquiry into damages. Summary judgment was refused in relation to the allegations of breach of confidence.
(iii) Breach of contract
Finally, it was held that Eakins had clearly breached the terms of the Compromise Agreement and that there was no reason to delay MI’s entitlement to repayment under the agreement.
Why this matters:
This case highlights the effectiveness of employing a claim for database right infringement where information held in a database has been taken by a previous employee. In the case in question, the database right claim succeeded on a summary judgment basis where the breach of confidence claim failed. It further demonstrates the difficulty in identifying confidential information at an early stage of proceedings, which can prove a particular problem where the business in question is keen for a summary judgment award.