Took the employer’s calculation program to a new business

Took the employer’s calculation program to a new business

Took the employer’s calculation program to a new business

Prefab Construction in Getinge (Prefab) works with different types of construction work.

R.N. was hired as project manager by Prefab in 2013 and works there for about five years before leaving the company to start his own business together with A.D.

R.N’s and A.D’s start-ups are called Concrete Solutions Nordic AB (CSN) and operate in competition with Prefabs.

After some time, it turns out that R.N., in violation of Prefab’s policy, brought copies of certain material from Prefab to CSN and continued to use it.

The material consists of a calculation program, a document on quality, environment and work environment, and a staff manual.

Prefab considers that the copying and use of the above material constitutes a violation of both the Copyright Act (URL) and the Trade Secrets Act (FHL) and therefore brings an action against R.N. and CSN in the District Court (TR) seeking damages of SEK 3,000,000.

TR concludes that the calculation program constitutes a trade secret that R.N. has attacked by copying and clearing it for A.D. and CSN.

It is also considered that all material constitutes copyrighted works and that R.N. and CSN have infringed Prefab’s copyright.

The court concludes that CSN must pay general damages of 400,000 to Prefab but that R.N. will not be liable for damages.

TR also announces penalty notices against R.N., CSN and A.D. from continuing with the intrusions and attacks carried out.

Prefab is not satisfied with the damages but is appealing the case to the Labour Court (AD) with the same claim for damages as in TR.

Labour Court

The first question being examined by the Labour Court (AD) is whether R.N. is liable to pay damages under the FHL.

In order to make that assessment, AD initially reviews the legal starting points that exist.

According to FHL, an employee who attacks a trade secret belonging to the employer may be obliged to reimburse the damage caused by the attack (Section 7).

In this context, the term ‘attack’ means that someone, without the holder’s consent, acquires, exploits or reveals the secret in question.

AD further states that a general principle of labour law is that workers should be free to use the knowledge acquired from one workplace to another.

Therefore, according to FHL, exceptional reasons are required for an employee to be able to be liable for damages after leaving a workplace.

AD considers that the spreadsheet program – but not the rest of the material – constitutes a trade secret.

The spreadsheet program is an Excel file that makes it possible to quickly and relatively safely calculate the costs of implementing projects, which in turn makes it possible to submit cost proposals to customers in a short time during procurements.

The Court’s interpretation is that the attack on the calculation programme has been likely to present a significant competitive hazard to Prefab, which is considered sufficient for exceptional reasons to be considered to be present.

Liability can therefore be imposed even though the attack was carried out after R.N. left Prefab.

Furthermore, AD considers that all material brought by R.N. with csn constitutes copyrighted works according to URL.

In addition to the attack on Prefab’s trade secret, R.N. and CSN have thus infringed Prefab’s copyright and are therefore to compensate for the damage caused.

Since R.N. has held a position of trust with Prefab and intentionally exploited what he has received in his employment, AD sees the conduct as so reprehensible that he should be charged with personal liability under FHL and URL, even though the documents were carried out on behalf of CSN.

Since CSN is guilty of much the same acts as R.N., they are also liable for damages.

The court then examines the amount of the damages.

TR only generally awarded damages, which differs from financial damages in that it is usually determined as a lump sum without detailed calculations being disclosed.

Financial damages can only be awarded corresponding to a concretely calculated economic damage.

The breakdown of the different types of damages is usually made when damages are to be calculated according to FHL but not URL, AD however considers that the calculation should be done in the same way under both laws.

That assessment is based, inter alia, on the same conduct, which often constitutes both an attack on trade secrets and infringements of copyright, and that both laws allow the same {1> <1}groundsfor damages even if {2>the <2}calculationshave been made differently.

The Court therefore states that there should continue to be no division between the different types of damages under FHL.

One effect of that position will be that it will not be possible in future to obtain an aid for damages without, as far as possible, presenting an investigation as a basis for calculating the amount of the damage.

The grounds for damages under both laws examined by the Court in the present case are: the loss of profits of the injured party, the unauthorised gain of the injured party and the interest of the rightholder in non-infringement.

Prefab claims that CSN won tenders for seven projects because they were able to use the calculation programme and that the profits for those projects were thus unauthorised and should be paid in damages.

The Court acknowledges that CSN benefited from the fact that the calculation programme simplifies the calculation of tenders in procurement.

However, the investigation shows that the company could have produced tenders even without access to the programme.

It is therefore not seen as showing that the calculation programme is the reason why CSN has won the tenders.

However, in view of the evidence contained in the case, AD considers that CSN would probably have developed its own versions of all material if it had not been copied from Prefab.

The Court therefore concludes that CSN made an unauthorised profit in that they did not have to spend time and money developing their own material.

Otherwise, the Court does not see it as showing that Prefab has made any financial loss as a result of the infringements.

It is therefore concluded that the damages should be based on CSN’s unauthorized gain and Prefab’s interest in ensuring that the company’s trade secrets are not infringed and that it is not infringed.

The court’s assessment is that R.N. will pay $10,000 and CSN $800,000.

In addition, the court announces a penalty notice against R.N., CSN and A.D. against the continued use of Prefab’s materials.

Since Prefab has claimed damages of SEK 3,000,000, they have won only a small part.

AD therefore considers that the parties have won or lost equally, which means that the costs must be offset.