Faccenda Chicken v Fowler [1987]
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Faccenda Chicken Ltd v Fowler and Others [1987] Ch 117 addressed the utilisation of confidential information acquired by an ex-employee during employment. The Court of Appeal ruled that while an ex-employee could use such information, they were not entitled to memorise or record it for use after termination of employment.
Faccenda Chicken employed Mr Fowler as a sales manager, and he suggested a system used by the company. After leaving the company's employment, Mr Fowler started a similar business, employing some of Faccenda's staff. The company sought an injunction to restrain Mr. Fowler from using confidential sales information.
The Court of Appeal dismissed the appeal, stating that the sales information did not qualify as a trade secret and, therefore, was not protected. The absence of an express term in the contract led the employer to rely on implied terms. The court emphasised that during employment, the employer could protect confidential information based on the implied duty of fidelity. However, after termination, this obligation was more restricted in scope.
To determine whether the implied obligation prevented disclosure after employment, several factors were considered:
In this case, the sales information, including customer names, addresses, routes, requirements, and prices, did not fall within the category of confidential information protectable after termination.
The case highlighted that while employers can prevent employees from disclosing confidential information during employment, this ability is more restricted after termination. Express provisions in the employment contract are crucial to safeguard confidential information post-employment. Any restrictions imposed must be reasonable and aimed at protecting genuine business interests, constituting a trade secret rather than general information. Employers are also cautioned against terminating employment in a way that would release employees from their obligations.
Faccenda Chicken employed Mr Fowler as a sales manager, and he suggested a system used by the company. After leaving the company's employment, Mr Fowler started a similar business, employing some of Faccenda's staff. The company sought an injunction to restrain Mr. Fowler from using confidential sales information.
The Court of Appeal dismissed the appeal, stating that the sales information did not qualify as a trade secret and, therefore, was not protected. The absence of an express term in the contract led the employer to rely on implied terms. The court emphasised that during employment, the employer could protect confidential information based on the implied duty of fidelity. However, after termination, this obligation was more restricted in scope.
To determine whether the implied obligation prevented disclosure after employment, several factors were considered:
- Nature of Employment: Would the employee be expected to realise the sensitive nature of the handled information?
- Nature of Information: Is the information of a sufficiently high degree of confidentiality to amount to a trade secret?
- Employer's Impression: Has the employer emphasised the confidentiality of the information?
- Isolation of Information: Can the confidential information be readily isolated from information the employee is entitled to disclose?
In this case, the sales information, including customer names, addresses, routes, requirements, and prices, did not fall within the category of confidential information protectable after termination.
The case highlighted that while employers can prevent employees from disclosing confidential information during employment, this ability is more restricted after termination. Express provisions in the employment contract are crucial to safeguard confidential information post-employment. Any restrictions imposed must be reasonable and aimed at protecting genuine business interests, constituting a trade secret rather than general information. Employers are also cautioned against terminating employment in a way that would release employees from their obligations.
