CYPRUS Trends and Developments Contributed by: Alexandros Gavrielides and Demetris Yiannakou, Scordis, Papapetrou & Co LLC
The development of the doctrine under English law – key principles In the landmark case QBE Management Services (UK) Ltd v Dymoke [2012] EWHC 80 (QB) , the English High Court reaffirmed the doctrine of springboard relief and laid down the following key principles. • Springboard relief is aimed at preventing a person from gaining an unfair head start derived from unlawful conduct, such as misuse of confidential information or breach of duty, by restraining them through an injunction. • The relief is not limited to misuse of confidential information. It extends to breaches of contractual and fiduciary duties, where the wrongful acts pro- vide a continuing unfair advantage that could result in future loss to the claimant. • Springboard relief is not designed to punish wrong- doing. Its sole purpose is to restore fair competi- tion and protect against future harm, rather than to serve as a sanction for past conduct. • Relief must be sought while the advantage still exists. If the unfair benefit has already expired, springboard relief will not be granted. • The remedy should go no further than necessary to restore the parties to the position they would have been in but for the misconduct. • Relief that is excessive, for example, placing the wrongdoer out of business, is not appropriate. • If financial compensation would sufficiently rem- edy the claimant’s loss, an injunction will not be granted. • The length and scope of the injunction must be guided by the continuing unfair advantage, not the severity of the wrongdoing. The court focuses on the practical impact of the former employee’s conduct on the former employer, rather than on the moral blameworthiness of that conduct. • The claimant must clearly identify the nature and duration of the unfair advantage. Vague, specula- tive, or short-term advantages will not suffice. What kind of conduct is capable of justifying the granting of a springboard injunction? A former employee cannot justifiably be restrained from using skills and know-how legitimately acquired in the course of their employment in order to set up a rival business or practice. Only unlawful conduct
Springboard Injunctions In Cyprus: Preventing Former Employees From Gaining An Unfair Competitive Advantage In an increasingly competitive commercial environ- ment, the protection of confidential information and trade secrets is critical for businesses and service providers. One of the most effective legal remedies developed by the Courts in order to prevent former employees from unfairly benefiting from prior unlawful conduct in order to gain an unfair competitive advan- tage over their former employers when attempting to set up a rival business or joining a competitor of their former employer, is the so-called “springboard injunc- tion”. Springboard injunctions are gaining prominence in the Cypriot courts as an effective tool to prevent unfair head-starts obtained through unlawful means. This article examines springboard injunctions, their development and the increasing willingness of the Cypriot courts to grant such injunctions in appropri- ate cases. What is a springboard injunction? A springboard injunction is an equitable rem- edy designed to prevent a party (typically a former employee or business partner) from gaining a head start in the market by exploiting or misusing confiden- tial information or by breaching fiduciary or contrac- tual duties. Although initially limited to cases involving the misuse of confidential information, springboard injunctions eventually found wider application. They became “available to prevent any future or further seri- ous economic loss to a previous employer caused by former staff members taking an unfair advantage of any serious breaches of their contract of employment, or, if they were acting in concert with others, of any breach by any of those others” ( UBS Wealth Manage- ment (UK) Ltd v Vestra Wealth LLP [2008] EWHC 1974 (QB) ). The aim of a springboard injunction, as repeatedly noted in the relevant case law, is not to punish the wrongdoer for past unlawful conduct but to eliminate or neutralise the unfair competitive advantage gained as a result of such conduct.
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