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Firm stops former directors using its software with rival business

A computer programming company has been granted an injunction preventing some of its former directors from using its software in a rival business.

 

The court heard that the company, Allfiled UK, had developed technology for the storage of important or confidential personal data. Allfiled claimed that some of its directors who worked on the system had left to set up a new company developing and selling a similar product.

 

It claimed damages for breach of fiduciary duty and breach of contractual covenants, and applied for an interim injunction preventing the former directors from using its intellectual property, pending a full trial.

 

The former directors denied that they were using Allfiled’s confidential information or intellectual property. They also asserted that the covenants were too broad to be enforceable.

 

The court said it seemed clear that the basic business idea developed by Allfiled was the same as the one developed by the former directors for their new company, even if there were differences in their respective technologies.

 

The evidence suggested there was at least an arguable case that the work done in relation to the storage system, and the system itself, was Allfiled’s intellectual property. If that proved to be the case then the former directors would be breaching copyright and their fiduciary duty if they used the system or some of its technology.

 

The court granted Allfiled an interim injunction preventing the former directors from using its intellectual property on the proviso that there would soon be a trial to look at the issues in detail and make a final decision.

 

In the meantime, the new business would be allowed to continue developing its own storage system as long as it didn’t use any of the technology developed by Allfiled.

 

Please contact us if you would like more information about the issues raised in this article or any matter relating to protecting your business. We act for businesses in Wales and across the UK in commercial and intellectual property issues, and our dispute team regularly acts in injunction proceedings in dispute resolution cases. Contact us at 029 20 34 55 11 or at commercial@berrysmith.com or dispute@berrysmith.com for further details.