Category Archives: Employment

Post-employment restrictions on scientists

The judge referred to this leading textbook in his judgment

The case of Invista Textiles (UK) Ltd & Anor v Botes & Ors [2019] EWHC 58 (Ch) (Birss J) has now been published. It is a good illustration of how difficult it is for an employer to impose post-termination restrictions on scientists.

General context

Disputes with ex-employees tend to take several, related forms. They include:

  • has the individual taken documents that belong to the employer;
  • has the individual used the employer’s trade secrets; and
  • has the individual become involved in a competing business, in breach of a non-compete clause in their contract of employment

Defences to such actions tend to include:

  • the information that the individual is using is part of their “general skill and knowledge” rather than their employer’s trade secrets
  • the non-compete clause is “in restraint of trade” and therefore unenforceable, e.g. because it is too widely drawn in terms of territory, field, or duration, and doesn’t focus on a legitimate interest of the employer (such as to protect the employer’s trade secrets)

Some of the leading cases in this field concern obvious wrongdoing with clear evidence, e.g. a salesman taking a list of customers with him when he leaves the company, or someone setting up a rival business in the same town in breach of a non-compete clause. In other words, many of the cases are about local businesses and sales activities.

When IP Draughts has drafted non-compete clauses for high-tech clients, it has sometimes been difficult to apply the case law to the facts of those clients’ employees. For example, in the case of a molecular scientist working for a biotech company, the company’s main competitors may be based in another continent. Case law about territorial restrictions of a few miles is of limited relevance. There has been very little English case law about scientific staff working for a technology-based, internationally-focussed company.

Background to this case

Invista is part of a large, international group that owns the Lycra trade mark. The first three defendants were scientists employed in Invista’s Sustainability Group (SG). The SG was researching the possibility of genetically engineering microorganisms for use in the production of polymers such as nylon, as an alternative to generating polymers from oil.

After the defendants left Invista, their employer discovered that they might have taken documents relating to their employment. Invista sought an interim injunction against them, which was compromised on terms that allowed Invista to conduct forensic searches of their laptops and other devices. Thousands of documents were discovered, many of which had been deleted (and emptied from the deleted box) from the computers but which could be recovered from the hard drives using a special program. There was no evidence that the defendants had sought to recover them. Some of the documents were on a memory stick that one of the defendants had used at a conference while employed by Invista. The memory stick was found in a barn at the defendant’s property; the defendant had forgotten that she had it. In some cases the documents were password-protected, and the evidence was that the password had been forgotten.

Retention of documents

Part of the case is about whether the defendants had wrongfully retained property belonging to Invista, after leaving its employment. Birss J found that a small number of documents had been wrongfully retained out of the thousands that were recovered from computers through forensic techniques.

The impression given by his judgment is that these were technical breaches rather than deliberate wrongdoing. Essentially, the judge found the defendants to be honest, despite the apparent “smoking gun” of Invista documents being found on various devices.

Misuse of confidential information

Birss J considered the obligations of confidentiality that were provided for in the contract of employment, as well as the general duties of confidentiality of an ex-employee towards their former employer.

He thought the wording of the written confidentiality obligations was far too wide to be enforceable against an ex-employee, as it was not limited to trade secrets. For example, he focused on clause 1.1.2 of the contract, which formed part of the definition of the employer’s confidential information and was drafted very broadly:

Business methods and processes, technical information and know how relating to the Employer’s business and which is not available to the public generally, including inventions, design, programs, techniques, data base systems, formulae and ideas.

Together with other clauses (e.g. clause 1.2 which required the employee not to use the employer’s confidential information after termination of the contract) this was too wide to be enforceable.

He also found that none of the information highlighted by the claimants was genuine trade secret-type information. Their best shot was some Powerpoint slides.

His conclusion:

Therefore I dismiss the case based on misuse of confidence either in contract or in equity altogether.

Non-compete clauses

The contract included various obligations not to work for a Competing Business or solicit staff, customers, etc, for a period of 3 months after termination of the employment. Some key definitions in this part of the contract included:

“Competing Business” means any entity or persons engaged in or about to become engaged in research, development, production, marketing or selling of a competing product(s).

“Competing Products” means product(s) process(es) or service(s) with which the employee has worked within five years preceding termination of such employment, or about which the employee has acquired the employer’s trade secret, technical or non-technical information.

Birss J considered that these definitions were very broad. In relation to the obligation not to work for a competitor, he considered:

All this clause achieves when applied to employees like the individual defendants is to prevent them from exercising the very same skills they were hired for in the first place for three months post-employment. That does not benefit Invista at all. I find that the clause, in its operation as it operates after the employment has ceased is an unreasonable restraint of trade. The period in the clause is just a relatively short period to try and make an unreasonable clause seem more reasonable. That is not a justification.

In relation to the non-solicitation part of the clause, he found that the first defendant had breached it by seeking to recruit the second and third defendants to her new business during the 3 month period.

So, he found a few technical breaches. But he decided not to order an enquiry as to damages:

Overall, I will not order an inquiry as to damages in relation to the proven breaches of contract. It would be entirely disproportionate. There is no justification for it. There is no evidence any of these activities cause any substantive or quantifiable loss to Invista. I am prepared to hear submissions about what sum by way of damages (if any) ought to be awarded for the proven breaches, including the failure to return documents in the Chen Library, at the hearing to deal with the consequences of this judgment but that is as far as it will go.


This case is interesting to IP Draughts because it sheds a light on the enforceability of non-compete clauses in the case of scientists working for a technology-based company. Much of the case law in this field concerns very different types of industry and employee role.

IP Draughts has tended to advise companies to limit their non-compete obligations to 6 months after termination. In this case, it seems the company’s lawyers took an even more cautious approach, going for 3 months, but the judge decided that even this was too long when the obligations were too broad in scope.
There are various other techniques for improving the enforceability of these clauses, including explicitly limiting their post-termination application to trade secrets. Not all of those techniques seem to have been used in the contract under discussion in this case.

IP Draughts doesn’t recall a case of this kind where the judge’s sympathies lay with the defendants. At one point, when discussing whether he believed the witnesses, he commented on the defendants of “being sued personally by a major multinational corporation which has deployed all the resources at its disposal to do so. The strain that that would place on anyone would be significant.”

In IP Draughts’ view this is a significant judgment on non-compete clauses for scientific staff. It will be interesting to see if it is appealed.


Tailor-made is best

IP Draughts understands that the UK Supreme Court heard a separate case about non-compete clauses earlier this week, and he looks forward to reading the judgments in due course, to see whether they give further guidance on this subject.

In light of these cases, including any appeal in the Invista case, high-tech (including life science) companies may wish to review the non-compete clauses in their contracts of employment, and obtain specialist advice on whether any revisions are appropriate.

UK companies that have US parents (as in this case) may wish to “push back” against using template wording provided by the parent company for use by all employees in the group, and instead draft tailor-made clauses in light of UK case law.


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Ownership of IP in academic inventions

An LLM student at Queen Mary, University of London, asked IP Draughts today whether he had posted an article on the 2008/9 case of University of Western Australia v Gray. The student’s lecturer, John Hull (who is also a teacher on the UCL course on IP Transactions that IP Draughts convenes) had set a question about the case as an assignment, and had apparently recommended that students look at this blog.

Unfortunately, the case predates the blog, so until now the answer was no. But IP Draughts likes to be helpful, and in the back of his mind he recalled writing an article on the case. Which he has now found. And posted on this blog, via the link below. The style of the article is a little different to those typically posted on this blog, but it was written a decade ago!

Academic employee owns his inventions

Some employers use golden handcuffs…

The case is partly about an ineffective university IP policy, and the large sum of money that the university lost as a consequence.

Happy reading!

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Predatory behaviour by lawyers – IP aspects

The Solicitors’ Regulation Authority (SRA) is the regulatory body for solicitors (the profession of most lawyers) in England and Wales. It has recently updated its guidance to solicitors on Balancing Duties in Litigation, in light of the recent controversies over extreme non-disclosure agreements (NDAs).

While the guidance is directed primarily to litigators rather than transactional lawyers, and across all sectors rather than being focussed on IP, it is striking that several examples from the guidance are of direct relevance to those of us who advise on IP matters including transactions. Three areas in particular are worth noting:

  1. Predatory IP litigation
  2. Drafting aggressive and unenforceable terms in NDAs
  3. Taking advantage of unrepresented individuals

As the executive summary to the guidance document makes clear:

…although solicitors must advance their clients’ cases, they are not ’hired guns’ whose only duty is to that client. They also owe duties to the courts, third parties and to the public interest.

This is a welcome change of emphasis from the SRA, which in the past has seemed to downplay these duties in favour of an overriding obsession with the interests of “consumers”.

This blog article doesn’t seek to summarise the overall content of the guidance, but instead highlights some points that jumped out as particularly relevant to IP practitioners.

Predatory litigation

One of the examples of predatory litigation cited by the SRA is the action brought by ACS:Law against downloaders of porn. Letters were sent out to multiple parties, in each case alleging copyright infringement and demanding several hundred pounds to settle the case. Though the law firm is not named in the guidance, it is clear who the SRA has in mind as the guidance refers to “blackmail” and includes a footnote linking to the transcript of a House of Lords debate where this firm’s activities were discussed by name.

The guidance includes the following paragraphs:

Predatory litigation generally involves solicitors bringing large numbers of claims with limited investigation of their individual merits or of the underlying legal background. The idea is usually that the cost in time and money of proceedings, or the threat of public embarrassment, will lead to opponents settling cases that might have no real merit.

For example, a law firm might send letters of claim to large numbers of individuals alleging, on limited evidence, that they have breached the intellectual property of their client. The requested settlement is usually significantly lower than the potential cost of fighting the claim, which encourages people to settle the claim before it goes to court and without first seeking their own legal advice.

IP Draughts was challenged about the SRA’s effectiveness in this area, when he gave oral evidence to a House of Lords bill committee in relation to what became the Intellectual Property (Unjustified Threats) Act 2017. His off-the-cuff, unprepared response was that there will always be outliers who break the rules, and it was better to deal with them in a regulated environment than an unregulated environment. He acknowledged that the SRA was like an oil tanker, taking a long time to change direction, but it did eventually take action against ACL:Law and its principal, striking them off the roll of solicitors.

Now the SRA has gone further and provided specific guidance to solicitors about this type of behaviour. Most IP lawyers that IP Draughts’ knows wouldn’t dream of behaving like ACS:Law but there are outliers in any profession, and the guidance is welcome.

Unenforceable terms in NDAs

The Harvey Weinstein case involving a UK member of staff was the subject of much press comment, and lawyers from the English law firms involved were hauled before a Parliamentary committee to explain their actions. Some of the details of that case were, to IP Draughts’ mind, extraordinary, including that a party was not allowed to retain a copy of an NDA that they had signed.

The SRA guidance on this subject includes the following statements:

The role of solicitors in drafting NDAs in relation to allegations of harassment has received public and political attention.4 This attention will continue. There are legitimate uses for these agreements, but solicitors must make sure that they do not draw up clauses that go beyond what is necessary to settle the claim. They must not threaten consequences that cannot legally be enforced. In particular, solicitors must not seek to prevent anyone from reporting offences or co-operating with a criminal investigation and other legal processes, including influencing the evidence they give. They must also not prevent someone who has signed an NDA from keeping a copy of the agreement.

There have also been allegations of employers threatening to give a hostile reference or otherwise to penalise a victim if they do not agree to sign an NDA.5 Other victims have reported being given the impression by the solicitor that they would be imprisoned if they did not comply with the NDA.6 People that have experienced some form of harassment might be vulnerable, in part because of the harassment itself. Solicitors need to consider this when communicating with them and when drafting an NDA.

The document cross-refers to a more specific guidance document on NDAs from the SRA.

Unrepresented individuals

When dealing with a party that is not legally represented, a solicitor should not “take advantage”. The only situation where IP Draughts comes across this on a fairly regular basis is where a university client is negotiating an IP transaction with an individual such as an academic who is forming a spin-out company to exploit IP. Sometimes, the academic does not take their own legal advice on the terms they are being asked to agree to, and IP Draughts recommends recording in writing, eg in an email to that person, that (a) the law firm is acting for the university alone (if that is the case), (b) neither the law firm nor the university is providing legal advice to that person in a personal capacity, and (c) they should consider obtaining their own legal advice.

The SRA’s advice in this area includes the following comments:

In advancing a client’s interests, solicitors must be careful not to take unfair advantage of the opponent or other third parties such as witnesses. Special care is needed where the opponent is unrepresented or vulnerable. Solicitors will need to consider this duty in all cases, but particularly when faced with a party showing a simple lack of legal knowledge or obvious procedural misunderstandings.

There can be a fine line between proper defence of the client’s interest and taking unfair advantage of others, usually highlighted by any form of deceit or misinformation.

Indicative behaviour 11.7 in the Code of Conduct highlights that taking unfair advantage of an unrepresented party’s lack of legal knowledge shows a failure to comply with duties to others. Special care should be taken when corresponding with lay or vulnerable opponents not to take advantage or use language that might intimidate them.8 Regulatory breaches can arise from any oppressive or domineering tactics, regardless of whether misleading information is included. These tactics include:

  • overbearing threats of claims or poor outcomes
  • legalistic letters to minors or others who might be vulnerable
  • threats of litigation where no legal claim arises
  • claims of highly exaggerated adverse consequences.

From memory, this is not the only guidance that the SRA gives on dealing with unrepresented parties, but the above is focussed on the specifics of litigation.


Some clients hire a large legal team

The bottom line is that an English solicitor is not supposed to go out “all guns blazing” in pursuit of their client’s interests, if this would result in a breach of the solicitor’s other professional duties. Care is needed, particularly with vulnerable or unrepresented individuals. Although the SRA’s guidance is primarily concerned with litigation, it may also affect those of us who draft IP agreements and are regulated by the SRA. IP Draughts expects that the other regulators of UK IP professionals, including the Bar Council and IPReg, would follow a similar line to the SRA.

Some clients will be disappointed with this approach, and see it as “pulling your punches”. They may prefer the US approach where attorneys are expected to represent their clients in a “zealous” manner.

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Filed under Confidentiality, Contract drafting, Employment, Intellectual Property, Legal practice

One-sided settlement agreements

UK readers can’t have helped noticing that non-disclosure agreements (NDAs) are again in the news. A Court of Appeal ruling has attracted attention. Despite a court order to the contrary, the identity of the person involved has apparently been disclosed in the House of Lords under Parliamentary privilege.

According to a report by the BBC this week, the UK Prime Minister, Theresa May, has commented on the issue:

Mrs May said non-disclosure agreements, or NDAs, should not silence whistle blowers. She added the government would take action to make sure employees knew their rights.

Some – as yet unspecified – legislation to regulate this issue is promised. During a time of legislative paralysis caused by Brexit, IP Draughts is sceptical about the government’s ability to deliver on such a promise.

But, giving the government the benefit of the doubt, what might any new law say? Perhaps that obligations of confidentiality in settlement agreements made by individuals are unenforceable? Or unenforceable where there is a significant imbalance of power between the parties? Would such a law promote or hinder the settlement of disputes?

UCL professor, Richard Moorhead, has provided thoughtful commentary on this issue, eg on his blog. Earlier this week, he was invited onto the Today radio programme and then onto BBC TV programmes to discuss the matter.

IP Draughts’ instinctive view is that, if confidentiality obligations in such circumstances were unenforceable, it would reduce the number of settlement agreements. But whether it would reduce the number significantly is unclear. Sometimes, confidentiality will be a key issue for one or both parties. On other occasions, the key issue may be resolving the dispute and avoiding the cost, time and additional problems associated with litigation, so that confidentiality is merely a “nice to have”.

Although he hasn’t advised on harrassment allegations or their resolution, IP Draughts occasionally advises on the settlement agreements that employers ask their employees to sign when dismissing them, typically in return for a payment that exceeds the contractual entitlement. In the UK, these agreements (formerly known as compromise agreements) can protect the employer against future claims by the (ex-)employee if they are drafted widely enough and comply with statutory requirements. One of those requirements is that the employee obtains legal advice and provides a certificate to this effect from the lawyer.

Although the circumstances of these settlement agreements are different from those that are in the news, there are some similarities: they are entered into between parties of unequal power, and in return for a payment the party with less power gives up a wide range of future rights. Typically they include confidentiality obligations. From an employer’s perspective, it is usually the preferred option to keep the deal secret.

Originally, these settlement agreements were drafted with a view to avoiding future, employment-related claims by the employee, such as for discrimination or unfair dismissal. They provide a limited ‘safe harbour’ or exception to the general rule that an employee cannot contract out of their statutory employment rights. The agreements were sometimes a little lengthy because they listed all the different types of theoretical claim that an employee could bring under UK employment legislation. But apart from these lists, the agreements were relatively straightforward.

More recently, IP Draughts has noticed a trend to throw much more into settlement agreements, to tie the employee up in legal knots. A draft settlement agreement that IP Draughts recently reviewed seemed to acknowledge this, when it said:

…if this Agreement is only effective for the purpose of precluding the Employee from presenting particular statutory complaint(s) to an Employment Tribunal, then the particular statutory complaints to which this Agreement pertains is/are the Employee’s complaints of unfair dismissal, wrongful dismissal or discrimination.

This was a small sub-set of the types of claim that, elsewhere in the agreement, were stated to be waived by the employee.

In addition, this particular agreement had some rather strong obligations on the employee, eg:

  • non-compete obligations on the employee
  • obligations not to make subject access requests under data protection legislation
  • obligations to cooperate with the employer in any future UK or overseas regulatory or legal proceedings to which the employer was party
  • full disclosure obligations (similar to an utmost good faith obligation) that were not reciprocated by the employer
  • obligations not to make disparaging statements about the employer

The wording of some of the obligations was extremely dense and difficult to follow. For example, a sub-clause on tax liabilities was part of a single, longer sentence. The tax part of the sentence ran to 348 words and included multiple qualifiers, ifs, buts and provisos.

These types of agreement tend to be drafted entirely to protect the employer, and detailed negotation of the terms is not usually expected. Something has gone wrong when they are are as complicated and one-sided as this one. Personally, IP Draughts wouldn’t sign such an agreement for the low thousands of ex gratia payment that are typically on offer, but perhaps he is talking with the luxury of being a well-paid professional. He finds it difficult to believe that the original intention of the legislation which brought in compromise (now settlement) agreements was to facilitate extreme agreements of this kind.

Some lawyers take the view that their role is to provide maximum benefit to their client and if that means maximum disbenefit to the other party, so be it. Some clients require their lawyers to act in this way. While this approach has its place, IP Draughts agrees with Richard Moorhead that when one is dealing with individuals, and when there is an imbalance of power, ethical considerations may require a tempering of the “win as much as you possibly can, and without caring about the other side” mentality.



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