An IT-consulting company (the "Company") claimed at the District Court that the Court should prohibit a former employee (the "Employee") from running a certain business with a conditional fine and also claimed (i) damages due to breach of the non-compete obligation that the Employee had entered into in connection with the signing of the employment contract, and (ii) damages due to breach of the Protection of Trade Secrets Act.
The Employee voluntarily terminated his employment after fewer than three years and immediately started a competing business through a wholly-owned limited company. The Employee contacted some of the Company's customers whereupon some of these customers left the Company to engage the Employee's newly established company.
The case was decided by the District Court and subsequently appealed to the Labour Court. The Labour Court found like the District Court that the claim for an injunction with a conditional fine was supported by the non-compete obligation. The scope of the non-compete obligation, which had been limited in time and to cover the customers of the Company only during a certain period plus two named cooperation partners, was not considered unreasonable in any part. This was partly because the Company had had a legitimate interest to prevent the Employee from actively depriving the Company of its existing customers. Furthermore, despite the Employee's denial, the Labour Court was of the opinion that by starting a competing business and depriving the Company of some of its existing customers the Employee had breached the non-compete obligation. Therefore, it did not matter whether the Employee had actively persuaded the customers to leave the Company or not. The Labour Court found that the actions of the Employee and the breach of the non-compete obligation had caused the Company loss. The conclusion of the Labour Court was that the size of the loss could not be determined and that the damages therefore should be estimated at a reasonable amount.
Furthermore, the Labour Court found that there was no doubt that the Employee had intentionally used the Company's trade secrets in violation of the Protection of Trade Secrets Act by sending his contact information to a large number of the Company's customers and by making offers containing information that the Employee had received during his employment with the Company. The Labour Court shared the judgment of the District Court that due to the circumstances there were good reasons to make an award of damages against the Employee for breach of the Protection of Trade Secrets Act. The Labour Court ordered the Employee to pay damages of a total amount of SEK 285,000, of which SEK 210,000 pecuniary damages corresponded to the value of six months' payment and SEK 75,000 for general damages. The District Court as well as by the Labour Court awarded the Company legal costs adjusted to half of the claimed amount. (Labour Court judgment 2010, number 25)
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