Misuse of Confidential Information: Actual Use of Information Crucial to a Claim for Damages

The High Court recently considered a claim by an investment management company against two former employees for copying and retaining the company’s confidential information. The Claimant sought £15m in damages, representing what it considered to be the value of the confidential information, but was awarded a mere £2.

Whilst the Court found both employees liable for breaching their contractual and common law duties of confidence, crucially the employer had not brought the case based on its financial loss (or the employees’ financial gain) from actual use of the confidential information. Rather it had sought damages based on the use that could have been made. In reality, one of the employees was found not to have used the information at all and, whilst the other was found to have made some limited use of it, no claim for damages had been made based on that.

The case highlights the importance of establishing the loss suffered as a result of the wrongdoing, in addition to the wrongdoing itself, which should be based on the reality of the situation and not hypotheses. In this case, had the employer been able to point to use of the confidential information and the consequences, the Court could have sought to value the claim. As it was, the Court could only award the employer nominal damages to reflect the fact of the breach.

For further information about this case or disputes around misuse of confidential information contact Sarah Holland.

Case: Marathon Asset Management LLP and another v Seddon and another [2017] EWHC 300 (Comm)