Injunctions to prevent unlawful head starts:  Court of Appeal gives guidance on springboard injunctions

Employers are increasingly taking action to protect themselves from the activities of former employees acting in breach of restrictive covenants, misusing an employer's confidential information or unlawfully setting up a competing business.  

One method of protection available to employers is springboard relief which is a form of injunction used to negate any unfair competitive advantage or head start gained by the former employee's actions, over his former employer. 

In the recent case of Forse & Others v Secarma Ltd and others, the Court of Appeal has provided helpful guidance in relation to the ambit and scope of springboard injunctions. [2019] EWCA Civ 215 after the case name (Forse & Others v Secarma Ltd and others)

Facts

Secarma is a cyber-security company who alleged that a number of Defendants, former Secarma employees, acted in breach of their post termination restrictions by seeking to procure key employees of Secarma to join its new employer, Xcina, and build up a competing cyber-security business.

At first instance, Secarma successfully obtained an interim springboard injunction against the Defendants, a number of whom appealed.

Decision

On appeal, the Court focused on 2 main areas:

1. The purpose of a springboard injunction

The Court noted that:

"The object of an interim springboard injunction is to preserve the status quo, in the sense of freezing until trial, the relevant business activity of the defendant. On the assumption that damages would not be an adequate remedy, the interim injunction is necessary to hold the position between the parties so that further unfair competitive advantage cannot be obtained by the defendant between the application for the interim injunction and trial. That includes the ability to obtain work from new clients."

The Court accepted that springboard relief provides a Claimant with "all or part of the substantive relief which the claimant seeks", via the opportunity to remove the unfair competitive advantage obtained by the Defendant. Applying Lansing Linde v Kerr, the Court concluded that "it is appropriate on the application for the interim injunction, to take into account the relative strength of the claimant's case."

The Court found that in carrying out its new business activity, Xcina would be competing for the first time with Secarma in relation to existing, past and new clients and so applying the well-established principles of American Cyanamid, the judge was correct to grant a springboard injunction.

2. The scope and length of the springboard injunction

The Court relied on Roger v Bullivant confirming that:

"The injunction must be no greater in scope and for no greater period than is reasonable to remove the unfair competitive advantage secured by the defendant…. 

As for the length of the period necessary to remove the unfair advantage, it will always depend on the nature of the advantage and how it can reasonably be expected to be removed, bearing in mind that the object is not to punish the defendant but to correct the wrong to the Claimant."

The Court concluded that the injunction was too wide in its scope in two ways: 1) it prevented Xcina from carrying out particular outsourcing, which was Xcina's existing business and 2) it prevented 2 Defendants from undertaking an activity, despite them not being subject to any post termination restrictions. The appeal was dismissed, save for these two points. 

Practical advice 

Springboard injunctions can be an effective method of preventing former employees from unlawfully gaining a head start and unlawfully competing.  To successfully obtain one, well drafted post termination restrictions are crucial.  A party should also be confident of the merits of its case and ensure that the injunction applied for goes no wider than necessary to protect it from the Defendants' unlawful acts. 

For further information about post termination restrictions, or protecting against unlawful employee conduct and competition, please contact:  Charlotte Davis, Hannah Nelson or Nick Ashcroft.

Forse v Secarma [2019] EWCA Civ 215