Springboard injunctions are a specific type of injunction used against former employees that prevent them misusing confidential corporate information to gain a head start in a new business venture.
- What is a springboard injunction?
- Where can springboard injunctions be used?
- What criteria do you need to obtain a springboard injunction?
- Examples of failed springboard injunction applications
- How long do springboard injunctions last and what is their scope?
- Don’t ask too much
What is a springboard injunction?
Unlike some other types of injunction, there is no set definition for what constitutes a springboard injunction. The purpose of a springboard injunction is to prevent a former employee from using the information gained during the course of employment misusing this insider information to gain a competitive advantage that could “springboard” the success of their new business. Once the springboard injunction is granted, the former employee is placed under a “special disability” which prevents them from gaining an “unfair start” within the industry.
Where can springboard injunctions be used?
Roger Bullivant Ltd v Ellis (1987) ICR 464
The precedent-setting case was Roger Bullivant Ltd v Ellis (1987) ICR 464 (“Bullivant“) where the managing director of Bullivant, Mr Ellis, left the company to set up a rival competing business where he used his contacts established during the previous employment to begin building his business. The injunction was granted by the High Court which meant that Ellis was prohibited from entering into business/continuing business with the contacts from Bullivant pending the conclusion of the case.
“Restraining a defendant employee from entering into or fulfilling contracts with any persons whose names and addresses appeared on a card index removed by the employee from his employer and who had been contacted by the employee whilst the index or a copy of it was in his possession”Springboard injunction – Roger Bullivant Ltd v Ellis (1987) ICR 464
The case was then heard at the Court of Appeal where it was found that “having made deliberate and unlawful use of Bullivant’s property, he cannot complain if he finds that the eye of the law is unable to distinguish between those whom, had he so chosen, he could have contacted lawfully and those whom he could not”. He did however succeed in gaining a variation that permitted contracts that were in existence to be fulfilled. Also, the limit was set to align with the 12 month non-compete clause in Ellis’ contract at which point there would no longer be any reasonable advantage.
A key point from this case is that despite all the contacts being available in the public domain, the springboard injunction was still necessary as there was an advantage in knowing which clients to target as well as benefitting from past relationships.
UBS Wealth Management (UK) Ltd & Another v Vestra Wealth LLP & Others
In 2008 an interim springboard injunction was granted in UBS Wealth Management (UK) Ltd & Another v Vestra Wealth LLP & Others (“UBS“) where it was found that relief need not solely apply to data or information but to any action that could cause economic damage to the former employer. In quite an unusual case a total of 52 employees of UBS simultaneously told their employer they were departing to join former senior UBS employee David Scott in his new company Vestra Wealth which was then followed by a further 23 staff. Evidence was heard that staff secretly colluded to enable this mass move in violation of their contractual duties.
A springboard injunction was granted that prevented Vestra from conducting certain activities until the end of the trial. This included doing business with former UBS clients (except those whose contract had ended prior to court action) as well as attempting to lure any further UBS employees to Vestra. Following the injunction being granted, UBS and Vestra settled in advance of the full trial.
“In my judgment, springboard relief is not confined to cases where former employees threaten to abuse confidential information acquired during the currency of their employment. It is available to prevent any future or further serious economic loss to a previous employer caused by former staff members taking an unfair advantage, an ‘unfair start’, of any serious breaches of their contract of employment (or if they are acting in concert with others, of any breach by any of those others). That unfair advantage must still exist at the time that the injunction is sought, and it must be shown that it would continue unless restrained. I accept that injunctions are to protect against and to prevent future and further losses and must not be used merely to punish past breaches of contract. “Mr Justice Openshaw – UBS Wealth Management (UK) Ltd & Another v Vestra Wealth LLP & Others
Tullett Prebon PLC & Others v BGC Brokers LP & Others
In a similar case Tullett Prebon PLC & ors v BGC Brokers LP & ors where it was alleged that 90 of Tullett’s employees were either poached or attempted to be poached by BGC. The employees were offered highly lucrative salaries including incentives to make the transition to BGC as soon as they could. However, in further enforcement of previous cases, Tullett was successful with its claims of conspiracy. They were granted a springboard injunction that forced the former employees to take gardening leave and further post-termination restrictions as well as a restriction on BGC that prohibited them from recruiting any further Tullett employees for a period of one year.
“restraining a defendant company from inviting employees of the claimant to end their employment with the claimant lawfully and to join the defendant when permissible”Springboard injunction – Tullett Prebon PLC & ors v BGC Brokers LP & ors
Sectrack NV v Satamatics Ltd  EWHC 3003
In Sectrack NV v Satamatics Ltd  EWHC 3003 (“Sectrack“) it was established that the defendant’s conduct should not have a bearing on the judge’s decision on the springboard injunction and poor conduct can be dealt with by different means and the injunction should be strictly objective. Regardless, it was still found that relief was required where a former employee of Sectrack left and joined Satamatics who supplied Sectrack. The former employee used his knowledge of their customers to cut out Sectrack and supply them directly for which an interim injunction was granted and later extended up to the trial. Therefore the overriding principle is that there needs to be an unfair competitive advantage.
What criteria do you need to obtain a springboard injunction?
Springboard injunctions must meet the conditions that are standard for the granting of injunctions, however, there are additional criteria that the court must be satisfied with before this particular type of relief will be granted. These criteria have been established in past cases which have resulted in the following principles:
- There must be a misuse of confidential information, or past breaches of contract either by the defendant or by others with who he is acting in concert (see UBS)
- The defendants must have an unfair advantage as a result of the breaches of contract, the unfair advantage must still exist at the time the injunction is sought, and it must be shown it would continue unless restrained (see Sun Valley – see below)
- There must be a risk of future serious economic loss to the previous employer caused by the former employees’ unfair advantage (see UBS)
- The injunction is to protect against future losses, not to punish past breaches (see UBS)
- The injunction should not last beyond the period for which the advantage may reasonably be expected to continue (see Bullivant)
- The seriousness of the breach and the egregiousness of the defendant’s conduct cannot have any bearing on the period for which the injunction should be granted – what matters is the effect of the breach upon the claimant in the sense of the extent to which the defendant has gained as an illegitimate competitive advantage (see Sectrack)
Examples of failed springboard injunction applications
Sun Valley Foods Ltd v Vincent  FSR 825
In Sun Valley Foods Ltd v Vincent  FSR 825 (“Sun Valley“) a springboard injunction was rejected as it was established that by the time of the application there was no longer any competitive advantage from using a customer database even though it had been shown that previously this database been used unlawfully.
SG & R Valuation Service Co v Boudrais and Others  EWHC 1340 (QB)
In the case of SG & R Valuation Service Co v Boudrais and Others  EWHC 1340 (QB), the judge found that removing and having access to confidential information is insufficient and that actual use of this data is required to establish an unfair start. Mr Boudrais and Ms Smith were 2 employees who were effectively placed on gardening leave by SG & R after handing in their notice and behaving suspiciously. The employees claimed the employer did not have the right to do so and ‘resigned’ with immediate effect. SG & R then applied for an injunction on the basis that they intended to join a competitor and take confidential information with them. Despite the judge finding the defendants had committed wrongdoing, there was no longer the ability to have a head start as they had returned the confidential information as per the interim injunction so were not granted springboard relief.
“I am not persuaded that this is a case where the springboard jurisdiction should be exercised. The confidential information, as I indicated earlier, has been handed back or sterilised. There is no evidence that it has been used. In my view, it would be wrong to assume the misuse of information and to accept that the defendants have misled the court and lied on affidavit in the assurances they have given in this regard. The resignation of employees is lawful provided the notice period is served, and it is not unlawful to move to competitors. On the facts of this case, given the success of the claimant in forestalling matters, the springboard jurisdiction is not founded.”Mr Justice Cranston – SG & R Valuation Service Co v Boudrais and Others  EWHC 1340 (QB)
Vestergaard Frandsen A/S (now called MVF 3 ApS) v Bestnet Europe Limited  EWHC 1456 (Ch)
In the case of MVF 3 ApS (formerly Vestergaard Frandsen A/S ) v Bestnet Europe Limited  EWHC 1456 (Ch) damages were awarded however on the springboard area of the case the judge found that no advantage was gained from confidential information. Two former employees of Vestergaard Mr Larsen and Ms Sig had set up a competing business making mosquito nets using confidential information. There had indeed been a patent infringement based on breach of confidence which was upheld by the Court of Appeal and the Supreme Court, however, the market entry had been delayed due to having to wait for approval from the World Health Organisation. This delay meant that any “unfair start” was negated and therefore there was no springboard effect.
Utilitywise Plc v Northern Gas and Power Limited (2017) EWHC 2520 (QB)
Sometimes being too vague with the claim will result in the judge refusing to grant an order as shown in Utilitywise Plc v Northern Gas and Power Limited (2017) EWHC 2520 (QB). Utilitywise had sought a blanket interim springboard injunction against Northern Gas & Power to prevent them from poaching 75 staff and they claimed there was a breach of non-competition clauses by the former employees. This though was refused as not all employees had clauses in their contract. Whilst it was likely that they were indeed unlawfully poached, the blanket approach was viewed unfavourably and failing to include the employees in the injunction hearing did not offer them the opportunity to provide their point of view. Had Utilitywise sought injunctions against specific employees who did have the clauses in their contract, it is more likely they would have had success.
How long do springboard injunctions last and what is their scope?
The springboard injunction cannot be indefinite as the head start effect only has a limited timeframe. The law permits lawful competition, seeking only to protect the injured and not punish the guilty and so the injunction will not continue beyond the point where there is no longer any advantage. On this basis, springboard injunctions will normally be for a fixed period of time dependent on the circumstances of the case or up until the conclusion of the trial where the judge may wish to extend the restrictions (but not for an unlimited period).
In QBE Management Services (UK) Ltd v Dymoke & Others  IRLR 458 (HC) a group of high-level employees conspired to induce the resignation of multiple other employees whilst on gardening leave to all move to a newly established competitor. Also, they had used confidential information to enable a head start in their new business. The court granted a 12 month springboard injunction giving the following guidance by Mr Justice Haddon Cave:
- First, the appropriate measure for the length of a springboard injunction is the length of time that it would have taken the wrongdoer to achieve lawfully what he in fact achieved unlawfully, relative to the victim.
- Second, it must be emphasised that the exercise is a relative one and any advantage must be measured as such. Wrongful activities may have both a positive and negative effect, i.e. benefiting the wrongdoer whilst simultaneously harming the victim. Thus, for instance, the unlawful poaching of key staff is likely to advantage the wrongdoing party whilst disadvantaging the victim who has lost key staff and may have to recover lost market ground.
- Third, it is relevant to look at the period of time over which the unlawful activities have in fact taken place. The relationship of this period with the length of any springboard relief is, however, kinetic not linear.
- Fourth, there may be many different factors at play during the period of unlawful activity materially affecting the advantage gained which may, or may not, obtain in similar assumed circumstances of purely lawful activity. These factors might include, for instance, (i) the advantage of soliciting junior employees whilst still being employed and in positions of power, compared with the trying to recruit as an ex-employee, (ii) the advantage of stealth and secrecy, so that management are unaware and do not take defensive measures, and (iii) conversely, the advantage sometimes of being able to work speedily and not having to be covert.
- Fifth, the nature and length of the ‘springboard’ relief should be fair and just in all the circumstances.
Don’t ask for too much
Using the above issued guidance, when seeking a springboard injunction you should determine the period for which the head start would apply. Failing to do so may result in the springboard relief being rejected. One way of demonstrating this is to show how long it may have taken the defendant to lawfully gain equivalent confidential information through natural growth. The purpose of the injunction should be to prevent a head start and not to give an advantage to the claimant over the defendant.
As a tale of caution, potential claimants should heed the case of Universal Thermosensors Ltd v Hibben  1 WLR 840 where the claimant was ordered by the judge to pay £20,000 to the defendants under their cross-undertakings. Despite being granted the initial order against former employees using confidential information it was found at trial that the springboard injunction extended beyond what was necessary. This put the claimant in a more advantageous position over the defendant than it would otherwise have found itself in. A search order had been granted which had removed the confidential information and a more straightforward claim for damages would have been an adequate remedy.
Springboard injunctions are substantive relief and on that basis potential claimants should think very carefully before taking this approach. As with all injunctions, action should be swift without over-deliberation and this will be factored into any decision by the courts. When considering this type of relief the claimant should look at how difficult it would be to hire suitable replacements and the duration this is likely to take. This will give a good indication as to how long the duration of the springboard injunction should be.
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