MR JUSTIN FENWICK QC:
- The Claimant is a wholly owned subsidiary of PennWell Corporation, which describes itself as a business to business media company based in the USA which provides print and online publications, conferences and exhibitions, research, online exchanges and information products to strategic global markets. The parent company describes itself as a world leader in the development of conferences and exhibitions, managing and producing events worldwide across a large spectrum of industries including power generation.
- PennWell UK's business is run from two offices, of which the one relevant to this litigation is in Essex. This office principally manages PennWell's conferences and exhibitions and is responsible for 11 events which are held worldwide in the power, petroleum, fire engineering and related industries.
- This action arose in October 2006 because the Claimant was concerned that the First, Second and Third Defendants were involved in setting up the Fourth Defendant, the Energy Business Group Limited, to compete with the Claimant and that they had unlawfully removed and were using confidential information of the Claimant for the purposes of that competing business. By the time that the matter came to trial, the claims against the First, Second and Fourth Defendants had been compromised, but it is necessary to set out some of the background facts and the history of the litigation in considering the claims which remain against the Third Defendant.
- The First Defendant was employed by the Claimant in February 1997 and by the time he left the company on 1 September 2006, he had been group publisher and general manager for over 5 years and was responsible for the whole of the UK business. He was the most senior PennWell employee in the United Kingdom.
- The Second Defendant joined PennWell in November 1997 and left on 18 August 2006. He was primarily responsible for the selling of advertising.
- The Third Defendant, Junior Isles, joined PennWell in September 1997 and left on 8 September 2006. The Claimant described his role as publisher of Power Engineering International and editorial director for the Claimant's global power events, with responsibility for the overall conference and educational content of those events, and for an advisory board of industry experts responsible for the strategic positioning of the Claimant's global power conferences. Mr Isles asserted that his role was narrower, being limited to acting as publisher and editorial director of Power Engineering International and conference chairman for Power-Gen Europe and Power-Gen Asia. For the purposes of my Judgment, it is sufficient to state that I find that he had an important role as publisher and conference chairman for international conferences for the power industry.
- The contracts of employment of both the First and Second Defendants contained restrictions on competition during and for the first 2 years after the end of their employment. However, although it was initially pleaded that Mr Isles was bound by the same covenant, the Claimant accepted before the matter came to trial that in his case the relevant clause of his contract had been varied by agreement with an authorised representative of the Claimant, Mr Kent Hudson, so that he was not bound by that clause at any time material to this action.
- At some point during 2005, Mr Ornstien and Mr Isles decided, following earlier discussions, that they would set up a business together and together set up the Fourth Defendant company.
- Mr Isles told me that his intention was that the Energy Business Group would be different from any business of the Claimant in that it would focus on "energy" rather than "power". He described the difference as follows:-
"At this point I should perhaps clarify the important difference between "energy" and "power" in this industry. "Power" refers to what happens to fuel after it arrives at a power station. How it is converted to electricity and then its despatch to the electricity grid would also be covered. When we speak of "energy" we are taking into account issues before the fuel arrives at a power station. The emphasis is also put on the fuel source: markets for that fuel, i.e. its availability and pricing. I believed that if more attention was paid to say the long term pricing of coal where it was more likely to come from and its quality, we would be able to spot and maybe predict trends in the power market. I wanted TEBG to be a forum for discussing these issues. It did not cross my mind that this would "compete" with PennWell or harm their business in any way."
- However, the website launched by the Fourth Defendant stated that it was "a new media organisation created to provide comprehensive and timely information on the global power and energy markets" and that it intended to promote a series of "conferences for the power and energy industries".
- Although I accept that the focus of the Energy Business Group may have been intended to be narrower than that of the Claimant, I am satisfied that it was intended from the outset to compete with a significant element of the Claimant's business.
- That finding is reinforced by the contents of a Business Plan which had been prepared at least in a draft form by the end of December 2005. In my judgment, this Business Plan provides an important insight into the Defendants' intentions. Mr Ornstien and Mr Isles were to be active directors and were to invest approximately £30,000 each. The company was to be formed:-
"to provide a comprehensive marketing service to the Energy sector. The services provided … will include media … conferences, seminars, exhibitions, consultancy and sales and marketing". The range of services will be provided for all personnel and businesses involved in the Energy sector, that includes power generation, transmission and distribution, fuel supply, renewables and oil and gas. Both technical and strategic issues will be covered."
- The Business Plan went on to state that the aim was to launch the company on 1 September 2006 with a newsletter published monthly from that date and with events planned in Thailand in February 2007, Indonesia in May 2007, the Middle East in September 2007 and India in November 2007.
- The Energy Business Journal was intended to be launched in September 2006 as a monthly newsletter with 1,000 free copies being mailed out on a monthly basis rotating the circulation to different recipients each month.
- It is also important to note that there was a detailed time line containing events to be carried out from October 2005 through to the end of March 2007, including meeting with proposed partners in Hong Kong, Middle East and elsewhere in November 2005, and an entry curiously described as "clean databases"; in December 2005 determining the initial 1,000 recipients of the journal and the "top 100 advertisers and exhibitors to prospect" and thereafter a series of planned contacts with suppliers, partners and negotiations with vendors for events, leading up to the official launch in September.
- In opening it was said that Mr Isles only gave a cursory look at the Business Plan and did not approve all the steps set out in it. Generally it was said that he was not much involved in the Business Plan and in particular he was not aware that Mr Ornstien and Mr Noyau were acting unlawfully or taking PennWell's documents. In his oral evidence before me, Mr Isles sought to distance himself from this Business Plan. He said of the Business Plan that it was not his plan but Mr Ornstien's plan, that he was busy but Mr Ornstien tends to rattle off documents. He told me that he was only having very little input into the setting up of the business, and it was not his concern to identify the recipients of the journal, that he did not know what the words "clean database" meant, and that he did not discuss or know where the lists referred to in the Business Plan would come from. When challenged he said "I know you can purchase them [lists]. We did not discuss them. I am told that you can get lists for a couple of hundred pounds per thousand or something like that". However, it is clear from material found on forensic examination of the computer used by Mr Ornstien, in particular, that Mr Isles was actively involved in considering the structure and message of the Energy Business Group. For example, by an e-mail dated 16 January 2006 to Mr Ornstien, he made some changes to a general presentation, adding some comments to the bottom of several slides. One of his comments read "this visual looks too much like a PennWell visual".
- It is clear that during the latter part of 2005 and 2006, Mr Isles was planning to leave his secure job with PennWell to set up the Energy Business Group and despite his evidence that he had little involvement in what was being done by Mr Ornstien, I am satisfied that the proposals were sufficiently important for his future that he as a director, investor and future employee of the Energy Business Group, in fact paid at least sufficient attention to the proposals made by Mr Ornstien to be aware that they involved competition with PennWell and the assembly of a database of names of contacts, suppliers and advisers and exhibitors, and that he was also aware that during the first eight months of 2006, it was planned to carry out a number of activities by way of preparation and the promotion of the business to contacts to enable a launch in September 2006 with a monthly newsletter to 1,000 recipients that month.
- The Business Plan also referred to planned meetings with a Mr Fragassa in Italy, investors in the Middle East and Hong Kong, and site visits in Thailand and Indonesia. The Claimant alleges that a number of these visits were carried out at a time when Mr Ornstien (and Mr Isles in the case of a visit to Rome in November 2005 and the Middle East in the same month) should have been occupied on the Claimant's business. It is also alleged that the Claimant was wrongly charged for the expenses of those trips which were used at least partly for the Fourth Defendant's purposes. Those allegations are hotly denied by Mr Isles.
- The bank account of the Fourth Defendant showed little activity other than the investment of funds by shareholders, before the company was launched in September 2006, but it is clear from the documentation put before me that there was a substantial amount of preparatory activity carried out in anticipation of that launch.
- At some point in 2006, Mr Noyau decided to join forces with the First and Second Defendants and he resigned on 21 July 2006, four days after Mr Ornstien, with his last day of employment being 18 August 2006. Mr Ornstein resigned on 17 July 2006 and his last day of employment was 1 September 2006. Mr Isles resigned on 19 July 2006 but agreed to stay on until after the Power-Gen Asia conference which was scheduled for 5 to 7 September 2006 as he was the conference director and helped to plan that event. His last day of employment was 8 September 2006.
- After all the Defendants had left their employment with the Claimant, it emerged that at least Mr Ornstien and Mr Noyau had during their employment and contrary to the terms of their employment contract, removed substantial quantities of confidential information comprising lists of potential customers, suppliers and advertisers, which they were not entitled to do.
- In addition, Mr Ornstien attended the Power-Gen Asia event chaired by Mr Isles on 7 September 2006 during which he approached and solicited various customers of the Claimant. I find that Mr Isles must have been aware that he was attending the conference for the purpose of competing with PennWell but he made no effort to prevent this or communicate it to the Claimant so that they could take such action as they considered appropriate.
- In late August 2006 PennWell examined Mr Ornstien's laptop computer and discovered that on 24 March 2006 Mr Ornstien had accessed the Claimant's London server and copied 18 of the Claimant's files onto a CD. These included large numbers of e-mail addresses for international power industry members, conference and exhibition event attendees at previous conferences, international conference speakers and prospects for the Power-Gen Europe 2006 conference, as well as a number of other lists. A letter before action was sent by hand to all four Defendants on 4 October 2006 and these proceedings were launched with an interim injunction hearing on 10 October 2006. For the purposes of this trial it is only necessary to set out what occurred in respect of Mr Isles, since the claims against the other Defendants have been compromised.
- When giving in his notice on 20 July 2006, he described his future plans as follows:-
"On a personal level, I have always dreamed of perhaps one day working as a freelancer, perhaps trying to combine it with a music career, song writing, etc. It was something I was on the verge of doing before being lured to PennWell. I think I should also try to spend more time with my daughter as she moves towards that pivotal age of 14. I have no regrets about having worked here. … but now is the time to move on and at least have a go at shaping my life as I would ideally want it. And this is not something I can do while in full time employment, in a role as important as my current one."
- By the response to the letter before action, which was served on behalf of all Defendants including Mr Isles, it was said of the Energy Business Group that it was purchased "with a view to possible trading one day" and an assurance was given "that the company remained dormant and non-trading and very little further thought was given to it until much later when they had decided to leave".
- In relation to the Claim to the Claimant's property, it was asserted in respect of Mr Isles as follows:-
"He can confirm that to the best of his knowledge he has no property belonging to PennWell and undertakes that if he finds that he has after a careful search, he will return it within 14 days and make no use of it. This is the first time such a request has been made of him and he will comply within a reasonable time. He does not of course count his own journalistic contacts as property of PennWell, for the reasons given above."
Those reasons were that as a journalist of many years' standing "he would expect to deal with all his contacts again after he left PennWell" which was the reason that he required the restrictions in the standard contract of employment to be relaxed.
- The injunction ordered on 10 October 2006 by Mr Justice Owen required Mr Isles by 13 October to return all the Claimant's property including any information in paper form or stored on any computer or electronic format or storage device.
- As ordered, Mr Isles made an affidavit on 13 October 2006 confirming that he had returned all items including electronic storage devices containing information or data belonging to the Claimant and he confirmed that he would not delete any material from any computer, disk, e-mail account or other electronic storage format or storage device until the hearing of the Claimant's application on 17 October 2006. His affidavit continued as follows:-
"I should explain that I had purchased a personal laptop computer. Since the Claimant asked for my work computer to be returned before I left on my final PennWell assignment, I asked the Claimant's personnel to set up a new personal computer so I could continue working at the end of August 2006. As a result, a large volume of information was transferred by the Claimant to my personal computer. I can confirm that I have not used the vast majority of the information that was transferred. I have contacts in both an electronic and card form which I have acquired over the past 17 years which is normal journalist procedure and do not regard these as the Claimant's property."
- A further order was made by Mr Justice Gibbs on 17 October 2006 which, so far as Mr Isles was concerned, required Mr Isles to permit an independent computer forensic expert to take an image of all the computers and other storage devices identified in the Third Defendant's affidavit of 13 October 2006 and to delete that information and data. Until that had been done, Mr Isles was not to delete any material from any computer, disk, e-mail account or other electronic format or storage device identified in his affidavit. He was also required by 20 October to provide a response by sworn affidavit to the following:-
"The first three Defendants to confirm that the Claimant's confidential information is stored on only the three computers and one Blackberry referred to in the affidavit. The first three Defendants to confirm that they have not transferred the Claimant's confidential information to their private or home computers (including laptops and Blackberrys)."
- On 26 October 2006, Dale Langley, on behalf of Mr Isles, said this about his list of contacts:-
"These are not sales contacts which Mr Isles has appropriated from PennWell, they are personal contacts built up by him as a journalist over a long period of time, and which he has always maintained his entitlement to retain. The contacts are not, and never have become, PennWell property. Further, nor does PennWell have any legitimate protectable interest in them. The suggestion that PennWell should be entitled to a list of Mr Isles' contacts which have never been associated with PennWell is, frankly, preposterous."
- On 23 October 2006, Mr Isles swore an affidavit confirming that the Claimant's confidential information was only stored on the three computers and Blackberry referred to in the various affidavits sworn by the Defendants and further confirmed that "I have not transferred the Claimant's confidential information to any other private or home computer (to include laptops and Blackberrys)".
- By 10 November 2006, matters had moved on and Dale Langley, on behalf of Mr Isles, offered the following:-
"With regard to Junior Isles he is prepared to give and disclose to your clients a copy of his full list of journalistic contacts; we will have to agree a reasonable time scale for this, but in principle it is agreed. I suggest we discuss the mechanics of this on Monday. This will ensure that there is no information in his possession which has not been returned to PennWell. In fact it is more than likely that your clients will already have them on his old PennWell computer which was returned before he left. However, we should make it absolutely clear that Junior Isles will retain his own list of his personal journalistic contacts built up over 17 years for his use as a freelance journalist in future. He is prepared to undertake that these will not be shown to the First or Second Defendants or indeed passed to any third party competitor."
- By letter dated 27 November 2006, Mayer Brown Rowe & Maw on behalf of the Claimant offered an important concession to Mr Isles whilst maintaining that the list of names belonged to the Claimant. They stated as follows:-
"If your client is able to identify, to our client's reasonable satisfaction, contacts on the list of names which pre-date his employment with PennWell, then our client would be willing to allow him to retain the names and contact information for those clients."
- On 28 November 2006, Mr Isles, through Dale Langley, stated that the contact list was "not created by Mr Isles whilst he was an employee of PennWell". It was a list which had been created during the last 17 years of his career "and therefore was created several years before our client commenced work with PennWell … our client meets people whose details he inserts in his contact list frequently and this includes people he meets personally. He has no means of knowing who he met and whose details he inserted on his list whilst employed by PennWell. He therefore cannot tell your clients this."
- There was a further order of the court on 29 November 2006 for Mr Isles to make available his computer for the taking of a forensic image and deletion of the Claimant's information including the list of names and related information disclosed on 21 November pursuant to an order of 14 November.
- That imaging and deletion process was commenced on Friday, 8 December, but gave rise, after analysis, to concern on the part of the Claimant that the file was created on 18 November 2006, and on 15 December 2006 they asked the following questions:-
"(a) On what computer was this file created, identifying the make, operating system and location of the same; (b) using what software was this file created; (c) from what computer was this file saved to the floppy disk which was supplied to us, identifying the make, operating system and location of the same; (d) if the computers identified in reply to questions (a) and (b) are not the same, how was the file communicated from one computer to the other?"
- By this time Mr Isles had instructed his current solicitors, Messrs David Price, who responded on 19 December to this part of the question as follows:-
"(a) The JuniorContacts.xls file (the file) was created on our client's Apple Mac laptop which has been inspected by Datasec. This is the only computer our client owns and it is currently at his home address. (b) The file was created using Microsoft Excel software. (c) The file was saved from our client's laptop (above) on to the 1.44" floppy disk which he passed to Dale Langley. (d) The computers referred to above are the same machine."
- On 18 December 2006, the Claimant filed a witness statement of Robert Brown exhibiting a report by which he concluded, in summary, that his opinion was that the spreadsheet contained on the floppy disk disclosed on 21 November was created as a result of the exporting of contact information held in Microsoft Outlook on 18 November 2006 and that the copying of this file to the floppy disk did not take place using the Mac Book Pro laptop computer used by Mr Isles.
- On 20 December 2006 by e-mail, Mr Isles' solicitors provided a further explanation, of which the material parts are as follows:-
"1. As we stated previously, our client is not aware of any other computer which has held the list, apart from (1) his Apple Mac which you have had inspected and files deleted, and (2) Dale Langley's computer which received the CD rom or e-mail of the list subsequently transferred to yourselves … 5. Indeed the list was originally an Outlook file, on our client's old computer at PennWell. It was backed up to the Excel spreadsheet whilst he was still at PennWell. Our client misunderstood your question in the sense in which you were using "created". Had you asked when and by what method the file was originally created our client would have provided this information. The Excel file was transferred from our client's PennWell computer to his Apple Mac. Accordingly, in this sense the specific file to which you refer was indeed "created" on his Apple Mac when transfer took place."
- The Claimant's solicitors followed this up on 21 December 2006 by noting that the spreadsheet disclosed on 21 November was not present on Mr Isles' Apple Mac laptop on 31 October when the forensic image was taken pursuant to the Court's order. They therefore asked how it was possible for Mr Isles to e-mail a copy of the spreadsheet from his Apple Mac computer on around 20 November when the spreadsheet in question was not present on his Apple Mac laptop at that time.
- On 22 December 2006, Mr Isles through his solicitors provided another explanation as follows:-
"Our client believes the spreadsheet was on the computer but is, of course, working from memory since his files have been deleted. If the imaging is accurate and shows that the file was not on the computer, then our client believes that the only other place that the spreadsheet could have been was on a memory stick which contained other personal documents. Our client had a memory stick attached the computer when the document was e-mailed. In any event, this memory stick became corrupted at the end of November and was disposed of."
- In a further e-mail of 29 December in answer to further questions, he asserted that the memory stick was used with various PennWell computers and possibly third party computers but that the contact list would not have been retained on any such third party computer. It was said that he had found the memory stick to be corrupted by some unknown means in the last week or two of November and it was disposed of by throwing it in the rubbish. That version was confirmed in a second affidavit sworn by him on 4 January 2007 pursuant to an order made by Mr Justice Underhill by consent on 20 December 2006.
- In his first witness statement for trial signed on 6 March 2007, Mr Isles gave the following explanation of the contact list:-
"41. I now deal in greater detail with the file JuniorContacts.xls, which is
the file of my contacts that PennWell has obtained from me and which they claim to be theirs. I will set out the history of this file and why I say it cannot possibly be regarded as PennWell's property.
42. As detailed above, I joined the magazine Modern Power Systems
(MPS) in 1989. I began building my contacts from around that time also. In those days, before I made more use of computers, I kept my contacts at my office, in index card form. From time to time from the early 1990's, I started to backup my hard copy contacts to computer (using either a Lotus 123 or Excel spreadsheet). I also started entering contacts directly into this spreadsheet file on my home computer. When I left MPS, I took my business cards and continued transferring this data into my electronic file at home.
43. The number and quality of contacts I brought to PennWell was
extensive – 8 years' worth. It is safe to say that I would have dealt with most of the entities in my contacts list (whether the individual or company) when I was at MPS. I exhibit to this statement a marked up copy of the file JuniorContacts.xls indicating the various contacts or companies who I definitely knew prior to joining PennWell. Suffice to say that in a list of 1650 names I cannot point to every single one of them from memory. I have done the best I can for present purposes, although I continue to go through the unmarked contacts in order to categorise those.
44. When I joined PennWell we had no IT support (or any other support
for that matter). We rented the office premises and set it up from scratch. I opened a personal email account (I believe it was a Compuserve account – something like email@example.com) since I was unable to access a PennWell e-mail account that had been set up for me by the Tulsa (Oklahoma) office. The personal e-mail account served as both a personal and work email address. I therefore started to store some contacts purely in the email account's address book. This situation continued for some time. Even after PennWell's IT department were able set me up on the PennWell email system, I kept the original email address for some time in order to catch emails after the changeover. Then, from time to time, I would try to 'marry' my spreadsheet file containing my previous contacts with the contacts contained on my personal email account (usually by 'copying and pasting' the contacts into the spreadsheet file). This is one of the main reasons why JuniorContacts.xls has ended up containing both private and business contacts. Over time I continued to transfer contacts I brought from MPS to my PennWell and home computers. I changed computers at PennWell a number of times (for example, at some point I went from having a desktop computer to a laptop). As I changed computers, I got into the habit of transferring my contacts as a spreadsheet from computer to computer via portable storage media such as floppy disks, CDs and memory sticks. This was the quickest way to transfer a large number of contacts from one computer to another. It was also useful to keep my contacts on a portable storage device so that I would have them with me while travelling. It is important to note that my job at PennWell involved regular travel, especially to conferences. In the days prior to my having a laptop computer it was essential for me to have an easy means of accessing my contacts.
45. Importantly, these contacts were never stored on any central company
"database", whether with PennWell or with Wilmington, the publishers of MPS and my employees before PennWell. As explained above, the reality was that my contacts were so personal that they would not have been very useful to anyone else anyway. For example, in many instances my contact would be merely an email address which only I would probably recognise.
46. The above explains why I called the file in the Claimant's possession
"JuniorContacts.xls". As it happens, over the years there would have been various incarnations of this file, saved under different names, such as "Contacts", "Snipes Contacts" (a reference to my nickname) or "My Contacts". I did not call these files "PennWell Contacts" or even "Work Contacts". They were mine, and a mixture of personal and work contacts. As above, they continued to be developed as mine at PennWell, and I believe that they were clearly mine when I left PennWell.
47. I have worked for several publishers over the years and have never
known a journalist to keep his contacts on any central database. I have never used any database at any publishing company to find editorial contacts and do not believe that the publishing companies ever have such databases or lists for their journalists. As above, any journalist joining a company is expected either to have such contacts already or to develop them. I exhibit (at JI16) a number of recent advertisements for journalism or editorial positions in which it is emphasised that the applicant must come with a contacts book.
48. It is important to distinguish between my contacts (which, insofar as
they are professional contacts, are journalistic contacts) and the contacts that might be developed by a sales or marketing team. Often sales or marketing lists contain details of the previous times a sales person spoke to the client, what advertising the client might have been sold or what they might have been interested in purchasing. JuniorContacts.xls is quite different. It is and always was a pure list of solely contact details for individuals or corporate entities I have dealt with before in relation to an editorial or conference. Sometimes I would just have the email address of an individual, and no other details. I would usually know what use to make of the contact fro memory.
49. My contact list is therefore of little or no use to anyone but me since I
would be the only one who could recall the nature of our previous dealings and how that person might be useful in future. This is particularly true in such a specialist field. I find it quite inconceivable tat any successor in my position at PennWell could have made substantial use of my contact list.
50. I also believe that virtually all the contacts in JuniorContacts.xls are
editorial contacts (as opposed to 'commercial' contacts who might be sold advertising or might book a seat at a conference) because they would only have been in contact with me (or me with them) for an issue related to a piece of editorial or a conference. I have never dealt with sales."
- In his second witness statement dated 23 March 2007, he describes the contact list as his information and "my list of contacts which enabled me to get in touch with people". He then set out an analysis which he had carried out of the 1,650 names as follows:-
"23. Having now had the opportunity to consider the electronic file
JuniorContacts.xls in detail, I have been able to go through the list of contacts and as far as possible, categorise the various contacts as either having been made 'pre-PennWell' or made during the course of my employment with PennWell. I have done this because this is the best way to demonstrate that various entries on the Contact List pre-date my employment with PennWell. Inevitably, with a list of names compiled over 17 years, there are also a significant number of 'don't knows' on the list. It is also impossible in every case to remember a person's full name and exactly how long I have known them. Some I am able to do without doubt and some of these people have given testimonials as such. I have always maintained that I knew and dealt with most of the entities pre-PennWell – whether the person, the company or the person in a particular role at a company.
24. The analysis I have carried out also demonstrates that there are numerous
contacts on the List who are 'private' in nature – i.e. personal rather than work contacts. This further demonstrates the highly personal nature of the file, rather than it being a Penn Well document of general benefit to the company and its employees in general.
25. I exhibit at JI12 to this statement a chart and statistics regarding the various
categories of contact included in JuniorContacts.xls. The various categories I have used can be described as follows:-
a. "Pre PennWell (Individual)" ("pp")
These are individuals who I have known since prior to my time with PennWell
and who have been in my Contact List since that time. I have identified 288 such individuals.
b. "Pre PennWell (Company)" ("ppc")
These are contacts where I have know the company since prior to my time
with PennWell, but not necessarily the individual in the given role. I might have know for example the communications officer of a given corporate entity for 15 years, but that individual has changed. I would still regard my contact with that company as having originated Pre PennWell. I have identified 19 such contacts.
c. "Private" ("pv")
These are individuals who I know outside work, such as my brother! There
are 204 such entries on the Contact List and this is a key indicator that the file is personal to me and not a PennWell document at all.
d. "After PennWell" ("ap")
These are contacts I have made since leaving PennWel. Since I only had the
Contact List for such a short time before these proceedings were instigated, there are only 5 such contacts.
e. "PennWell" ("p")
These are contacts who I recall meeting in my time at PennWell. There are
only 335 such contacts. I certainly do not accept that I have to give up these contacts to PennWell. That there are so few in any event demonstrates that this document pre-dates my time at PennWell.
f. "Unknown" ("?")
As I have mentioned previously, given the number of contacts and the many
years I have been in the industry, I do not recall the history behind everyone I have met. There are 399 such contacts on the Contact List.
I have further categorised those contacts at a – d above as "non-PennWell" contacts. When the document is looked at in this way, it can be seen that 56% of the contacts are "Non PennWell", with only 20% made whilst at PennWell."
- During the course of his evidence at trial, a further different picture of the origin and nature of the JuniorContacts file emerged. In summary:-
(a) in examination in chief he told me that he first started creating a contact list on a spreadsheet in his previous employment and updated it when he was at PennWell. When e-mail became more popular he added e-mail addresses to the spreadsheet;
(b) at some time thereafter he exported from Outlook the e-mail addresses that he had on his PennWell Outlook system into his existing spreadsheet and after cutting and pasting the entries, he imported the result back into Outlook;
(c) he said he would store the spreadsheet in various places but when he left PennWell he was 95% sure that there was one version;
(d) when cross-examined, he stated that he accepted that he first started to create the spreadsheet in the mid 1990s on a personal computer at home;
(e) when he separated from his wife in about 2003, she kept their home computer and thereafter he kept the file on his Macintosh laptop provided by PennWell;
(f) he said he thought he started using Outlook in 1998/1999 and at some stage later merged the Outlook information with information on his own spreadsheet of contacts;
(g) he asserted that he continued to maintain the spreadsheet until it became what is now JuniorContacts.xls;
(h) he said that he would add new contacts either to the spreadsheet on Excel or to the Address Book and he would do an export and compare from time to time, of which the last one would have been a week or two before he left;
(i) towards the end of his cross-examination on this topic, he accepted that the list was maintained on an Outlook file and that the column headings on the spreadsheet are from Outlook, and that he exported the file from the personal computer laptop provided by PennWell prior to leaving his employment.
- Because of the settlement of the claims against the First, Second and Fourth Defendants, and the abandonment of claims against Mr Isles arising out of the covenant against competition in the standard form of employment contract, the issues are much narrower than set out in the pleadings. The parties helpfully provided me with their own summary of the issues but I am satisfied that the relevant issues can be summarised as follows:-
(a) was Mr Isles in breach of the terms of his employment in setting up the Fourth Defendant and in the acts carried out with his knowledge, approval or participation before he left the Claimant's employment;
(b) was Mr Isles in breach of his fiduciary or other obligations to the Claimant in failing to report the relevant acts of the First and Second Defendants and/or in failing to draw to the Claimant's attention the fact that Mr Ornstien was attending the Power-Gen conference on 7 September 2006 to promote a competing business of which he and Mr Ornstien were shareholders and directors;
(c) what is the status of the JuniorContacts list? In particular, is it confidential information belonging to the Claimant which the Claimant is entitled to retain to the exclusion of Mr Isles;
(d) does Mr Isles' status as a journalist affect his right to the JuniorContacts list;
(e) to what extent if at all are the Copyright Designs & Patents Act 1988 or the Copyright and Rights in Database Regulations 1997 relevant in determining the rights of the parties to use of the contact list?
- In the light of the evidence, I have reached the following clear conclusions of fact:-
(a) I am satisfied that Mr Isles was aware at least in outline of the work being carried out to set up the Fourth Defendant in competition with the Claimant during the period from October 2005 to the end of August 2006 and that he played an active role in the planning and preparation of the launch of that company;
(b) I am satisfied that he must have been aware that Mr Ornstien and Mr Noyau were or were likely to be making use of the Claimant's confidential information to prepare the various lists and carry out the soliciting of business which was contained in the plan to be carried out prior to 1 September 2006. I do not consider it realistic to suppose that the preparation of 1,000 recipients of the monthly publication, or the targeting of other individuals envisaged in the time line in the Business Plan, could have been carried out whilst they were working at PennWell without the question arising of whether such information could be obtained from PennWell sources. I am satisfied that Mr Isles must have been aware that that was likely and in the absence of any evidence that he discussed with Mr Ornstien and made clear his view that there should be no use of confidential PennWell information, I am satisfied there is an irresistible inference that he knew that Mr Ornstien would be making use of PennWell's confidential information for these purposes;
(c) however, I am not satisfied that he had any idea that Mr Ornstien would be downloading the very large quantities of confidential information which the Claimant subsequently found to have occurred. Having heard Mr Isles give evidence, I am satisfied that if he had been aware of this he would have protested strenuously against such a blatant abuse of Mr Ornstien's position and breach of his obligations to PennWell;
(d) I am satisfied that Mr Isles was aware that on certain visits abroad, Mr Ornstien was taking the opportunity to promote the planned business of the Fourth Defendant. However, I am not satisfied that Mr Ornstien or Mr Isles were misusing their expense accounts or promoting their own business at a time when they should have been promoting that of the Claimant. In particular, I am not satisfied that there are any valid criticisms of Mr Isles' or Mr Ornstien's conduct on such visits;
(e) I find that Mr Isles was aware that Mr Ornstien was attending the Power-Gen conference on 7 September with a view to competing with the Claimant and that despite that knowledge, he permitted Mr Ornstien to attend and took no steps either to prevent it or to alert the Claimant to the risk of competition;
(f) so far as concerns the list JuniorContacts.xls, I am satisfied that it came into existence in the following way:-
i it derived originally from a list brought by Mr Isles from his previous employment;
ii at some point in his employment with the Claimant, he transferred those contact details onto the Outlook e-mail address system provided to him by the Claimant;
iii thereafter, he maintained a single list of contacts for all those that he needed to contact for the purpose of the business of the Claimant, together with personal contacts of his own, his previous contacts and his family and friends, on the same Outlook address list;
iv although he may from time to time have taken a copy or printed a list of those contacts for perusal, he did not retain them in any form except on PennWell's Outlook system backed up to the PennWell server;
v that before leaving PennWell, he downloaded the entire address list, comprising his previous contacts and all the contacts that he used in the course of PennWell's business, to a pen drive mass storage device which he took with him for future use;
vi that the copy of his address list which was left on his computer when he departed was deleted by the Claimant as part of its clean up of redundant computer equipment, with no copy being kept for the Claimant's own purposes;
vii that it was only after the list was returned by Mr Isles in the circumstances that I have described, that it came to be provided to Mr Nigel Blackaby who took on part of Mr Isles' role and became used by him in the circumstances described in his witness statement.
- The principal issue now between the parties relates to the rights over the information in the JuniorContacts.xls spreadsheet, but it is necessary to deal shortly with the other claims against Mr Isles. These are of limited significance since it is accepted that as a result of, as the Claimant puts it, its prompt action, no damage has in fact been suffered as a result of the breaches alleged against the Defendants. The Claimant maintains those claims essentially for the purpose of justifying its actions in obtaining an injunction against their undertaking in damages, because of the costs implications and to provide background to an analysis of Mr Isles' conduct over his contacts list.
- Because Mr Isles' contract of employment did not contain any restrictions on competition after the termination of his employment or, expressly, during his employment, it is necessary to consider the other express and implied terms of his contract.
- The following terms of Mr Isles' employment contract are relevant:-
(a) clause 4.4(iii) – "not during your employment, without PennWell's written consent have any other job or be interested in any other business";
(b) clause 16: confidentiality – "… not, during or after the termination of your employment, to discuss with anyone or otherwise disclose, other than in the proper course of your employment, any information of a confidential nature relating to PennWell or any of its affiliated companies, including, without limitation, PennWell Publishing Company, PennWell Publishing New York Inc … or its or their business or trade secrets";
(c) clause 21: company property – "all documents, manuals, hardware and software provided for your use by the company remain the property of the company and must be returned when your employment ceases. Similarly, any documents you receive from the company's clients in connection with your work, must be returned before you leave."
- It is common ground that for 11 months prior to his departure, Mr Isles was director and company secretary of the Fourth Defendant and that he had a substantial financial interest in that company. The issue that I have to determine is whether Mr Isles' involvement in the activities of the Fourth Defendant during any significant part of that period can be regarded as the running of another business, or whether what occurred were simply acts preparatory to the setting up and launch of that business which do not fall within the covenant set out above.
- I was referred to the helpful analysis of the distinction between preparatory acts and competitive activity by the Court of Appeal in the case of Helmet Integrated Systems Ltd v. Tunnard ( EWCA Civ 1735 as reported at 2007 IRLR p.126).
- In the present case, because of the absence of any restriction in clause 22 of his contract of employment, Mr Isles was free to compete with PennWell after his departure. For that purpose, I accept that he was entitled to carry out preparatory steps, such as identifying business partners, setting up a company and locating suitable premises and equipment, including where necessary actually acquiring them before the date of his departure.
- I also accept that Mr Isles did not himself have any significant direct involvement in the preparatory activities, with most of those being carried out by Mr Ornstien.
- However, the mere fact that the Fourth Defendant did not trade prior to 1 September, in the sense that it did not issue invoices or publish periodicals or arrange a conference, is not determinative. It is relevant to note that in Helmet the Judge in first instance stressed the following findings:-
(a) there was no allegation of breach of confidence or misuse of confidential information;
(b) it was not alleged [he] was in breach of any restrictive covenant. There was no such covenant;
(c) no other employee was involved;
(d) the Defendant carried out his activities entirely in his own time without any use of the employer's property;
(e) there was no commercial agreement or arrangement made before he left and no actual competition;
(f) he was neither a director nor an employee of similar rank, he was a middle ranking senior salesman.
- Although Mr Isles was not subject to a restrictive covenant, I am satisfied that the steps taken by Mr Ornstien on behalf of the Fourth Defendant went well beyond the kind of preparatory activity which the Court accepted as reasonable within Helmet. I am satisfied that the position is closer to that found by the Judge and affirmed by the Court of Appeal in the case of Lancashire Fires Ltd v. S A Lyons & Co Ltd ( IRLR 113).
- In those circumstances, I have to consider whether Mr Isles' involvement as a director and shareholder, his awareness of the Business Plan and his, as I have found, limited awareness of what Mr Ornstien was doing, coupled with his own limited involvement, amount to a breach of the express term that he would not be interested in any other business.
- I find that the actions of Mr Ornstien in pursuance of the Business Plan, although it is clear that many parts of the Business Plan were not in fact accomplished, amounted to the carrying on of a business and not merely acts preparatory to the launch of a business. In those circumstances, I find that the Fourth Defendant did constitute a "business" within the meaning of the express term of Mr Isles' contract and as a result, through his shareholding and directorship, I find that he had an interest in that business. This is consistent with Mr Isles' legal responsibility for the acts done on behalf of the company of which he was a director.
- It is common ground that Mr Isles was under an implied duty of good faith and fidelity on the principles set out in Robb v. Green  1 QB 315.
- However, because I am not satisfied that Mr Isles had sufficient awareness of Mr Ornstien's restrictions in his employment contract or of his breaches of duty to the Claimant in removing and misusing confidential information, and because I am satisfied on the evidence that Mr Isles himself did very little, I am not persuaded that Mr Isles was in fact in breach of his duty of good faith and fidelity, except in respect of his knowledge and assent to some limited use of the Claimant's confidential information by Mr Ornstien, and the attendance of Mr Ornstien at the Power-Gen conference on 7 September which I now turn to consider.
- The Claimant further relies on Sybron Corporation v. Rochem Ltd  CH 112 for their assertion that Mr Isles was under a duty to report the misdeeds of Mr Ornstien and Mr Noyau in competing and in removing confidential information of the Claimant. In that case the Court of Appeal decided that although an employee was not generally under a duty to disclose his own past misconduct, the position may be different where a senior employee is aware of misconduct by other employees, particularly where it is continuing.
- The Claimant's case is that Mr Isles' position was sufficiently senior for him to fall within the rule in Sybron and to be under an obligation to disclose the misdeeds of Mr Ornstien and Mr Noyau.
- In that case Lord Justice Stevenson said at page 126H as follows:-
"It follows from Swaine v. West (Butchers) Ltd ( 3 All ER 261) which is consistent with Bell v. Lever Brothers Ltd ( AC 161) and is binding upon us, that there is no general duty to report a fellow servant's misconduct or breach of contract; whether there is such a duty depends on the contract and on the terms of employment of the particular servant. He may be so placed in the hierarchy as to have a duty to report either the misconduct of his superior, as in Swaine v. West (Butchers) Ltd, …. or the misconduct of his inferiors as in this case."
- I have considered carefully the evidence as to Mr Isles' role in the company and although I am satisfied that he occupied a senior position, I am not satisfied that he was in a position where he was under an obligation to report the misconduct of Mr Ornstien who was in effect the senior UK member of staff. So far as Mr Noyau is concerned, there is not sufficient evidence before me of separate misconduct on the part of Noyau being known to Mr Isles for me to be satisfied that there arose a duty to report his misconduct in circumstances where I cannot be satisfied that Mr Isles was aware of the restrictions on competition placed on Mr Noyau or Mr Ornstien.
- However, I consider that the position is different in relation to the Power-Gen conference on 7 September attended by Mr Ornstien. By that time, Mr Ornstien had left the company and was, to Mr Isles' knowledge, engaged in promoting a rival business, of which the Claimant was ignorant. As conference chairman, Mr Isles had a responsibility either to prevent Mr Ornstien from attending or canvassing at the conference, or to draw the matter to the attention of his superiors. He was in a position of clear conflict of interest because his interest in Mr Ornstien making use of the conference to promote the Fourth Defendant was in direct conflict with the Claimant's aims in running that conference. Even if Mr Isles was not aware of any specific restriction on competition in Mr Ornstien's contract of employment, it must have been clear to him that Mr Ornstien would have been seeking to make use of his contacts with the business and his privileged position as attending the conference, and that any prudent conference organiser would wish to be alert to and take reasonable steps to control any such competitive canvassing.
- Finally, the Claimant asserts that because of the seniority of his position, Mr Isles owed a fiduciary duty to act in good faith and in the best interest of the Claimant not to place himself in a position where there was a conflict between his personal interest and his duties to the Claimant. It is said that the setting up of the Fourth Defendant and the steps taken to launch that business including using publicity material very similar to that of PennWell and the obtaining of PennWell client lists, was a breach of that fiduciary duty because of the conflict between his personal interests as an investor in the Fourth Defendant and his duties to the Claimant.
- Although the Claimant urged that Mr Isles was in breach of a fiduciary duty, I am not satisfied that there was any aspect of Mr Isles' conduct which put him in the position of a fiduciary. Had I reached the conclusion that Mr Isles had been involved in the active solicitation of business for the Fourth Defendant by preference to the Claimant, during the time that he was an employee, in relation to those matters of which he had direct control, namely the publication of which he was editor and the conferences of which he was chairman, it would have been necessary to consider this issue rather more fully. However, on my findings, this issue does not arise.
- At the heart of this case is the question of whether the information on the JuniorContacts.xls list:-
(a) belongs to PennWell to the exclusion of Mr Isles;
(b) belongs to Mr Isles to the exclusion of PennWell (although Mr Isles does not seek to prevent PennWell from now using the list in common with him);
(c) is jointly owned and can be used by both.
- The position taken by the Claimant through the evidence of Marybeth Dewitt is straightforward. They assert that the information was prepared and maintained on PennWell's computers during Mr Isles' employment with PennWell and for the purposes of that employment and it is therefore confidential information which is the property of the Claimant. It is said that that position remains the same even though parts of the information may originate from a spreadsheet originally legitimately in the possession of Mr Isles, although their overall position is that if Mr Isles can show that any part of the information pre-dated his employment, he should be entitled to that part of the list.
- The case for Mr Isles was essentially that this was his personal contact list which he, in common with other journalists and editors, kept of the contacts that he had built up over his career. As such, it was his personal information rather than that of the Claimant and he was entitled to retain it.
- Mr Isles also submitted that to deprive him of this list would be a breach of his rights under Article 10 of the European Convention on Human Rights. It is said that that would seriously diminish the quality of his journalistic output and disclose to the Claimant confidential sources for his journalism.
- I deal first with the position under Article 10. This provides as follows:-
"Freedom of expression
1. Everyone has the right of freedom of expression. This right should include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This Article shall not prevent States from requiring the licensing of broadcasting television or cinema enterprises.
2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed in law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevent of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary."
- Mr Isles also relied on section 12(4) of the Human Rights Act 1998. The relevant parts of the section provide:-
"12. Freedom of expression
(1) This section applies if a court is considering whether the grant any relief which, if granted, might affect the exercise of the Convention right to freedom of expression. ……
(4) The court must have particular regard to the importance of the Convention right to freedom of expression and, where the proceedings relate to material which the respondent claims, or which appears to the court, to be journalistic, literary or artistic material (or to conduct connected with such material), to – (b) any relevant privacy code."
- Finally, Mr Isles refers to clause 14 of the Press Complaints Commission Code of Practice which refers expressly to sources as follows:-
"14. Confidential sources
Journalists have a moral obligation to protect confidential sources of information."
- Mr Duodu, on behalf of Mr Isles, correctly emphasised the Court's recognition of the important role played by the media in society and the need for the prevention of unwarranted interference as reflected in cases such as Goodwin v. United Kingdom  22 EHRR 123 and the importance of the protection afforded to journalistic sources embodied in, for instance, section 10 of the Contempt of Court Act 1981. Mr Duodu also relied on Campbell v. MGN for the proposition that the Court should carry out a "balancing exercise" where Article 10 rights are in conflict with other rights such as proprietary or confidentiality rights.
- In practice, I do not consider that on the facts of this case, the Article 10 rights are significantly engaged, for reasons which will become clear later in this Judgment. It is sufficient at this stage to state my conclusions shortly.
- Firstly, I do not consider that the protection of confidential sources of information is threatened. There is no evidence to suggest that the identity or contact details of anybody on the list is in itself something which cannot be disclosed, nor is there any suggestion that the list would enable a link to be made between any person on that list and any unattributable information contained in any material published by Mr Isles. Further, and perhaps more importantly, to the extent that Mr Isles published this material in the course of his employment with PennWell, PennWell will be subject to the same duties of confidentiality as Mr Isles and will need to exercise the same care in any relevant situation over the disclosure of any material identifying a confidential source.
- Finally, and in any event, since Mr Isles has expressly confirmed that he does not seek to restrain PennWell from retaining a copy of the list, this part of his argument inevitably fails.
- I accept that Article 10 would be relevant if this court were to act in a way which would prevent Mr Isles from holding opinions, receiving and imparting information and ideas without interference. Had the Claimant sought to restrict Mr Isles from contacting his journalistic sources and contacts, it would have been necessary to consider carefully the balance between their rights to the information, if any, and Mr Isles' rights under the ECHR. However, the Claimant does not seek to restrict him from exercising his rights nor from using any information as to contacts which he may have independently of a list belonging to PennWell. I consider the limited impact of Article 10 in respect of this later in this Judgment.
- If, as a result of this action, Mr Isles is in practical terms hampered in his journalistic activities, it will be because the only place on which he stored those contacts was in circumstances where the rights in it are vested in the Claimant.
- I turn next to the ownership of the information contained in the JuniorContacts.xls list. In this respect, both parties put their case relatively high. In paragraph 22 of his Defence and Counterclaim, Mr Isles accepted that the JuniorContacts.xls list and information on it was confidential and of substantial value both to the Claimant and to himself and the Fourth Defendant. By his Counterclaim he described the list as "a list of journalistic sources and industry contacts … which he has built up over the last 17 years and which is integral to his work as a journalist and expert within the energy industry … as a result [he] has been hampered in his ability to work in his field of expertise in the industry to which he is accustomed". Further, it will be noted from the material I have referred to earlier in this Judgment that he consistently referred to it as his information assembled over 17 years. In paragraph 8 of his first witness statement he said that he had always been careful to keep a secure record of his contacts and to maintain them as personal contacts. He said that prior to leaving PennWell he had never shared them or allowed them to become incorporated into any central company database. In his second witness statement he stated that it was he who chose to save it to the internal hard drive of his work computer for his own convenience and not to the PennWell network where it could be accessed by other employees. He went on to say:-
"If anything, I maintained control over the list and was confident that it was stored securely and would not be accessed by any other person."
- In paragraph 19 onwards of the second witness statement of Ms Dewitt, she referred to PennWell's policy of maintaining the secrecy of its confidential and proprietary lists and databases because these were "the most valuable assets of PennWell's worldwide publications and conference and exhibition business". At paragraph 208 she stated that:-
"When PennWell hires new editors or other employees, it does not expect and actually restricts new employees bringing databases of customer or commercial information from their previous employers. PennWell would not knowingly use databases taken from other companies as PennWell recognises that it has no legal right to use such information".
She went on to say that:-
"The Contact List is commercially valuable because it is much more than a list of journalistic contacts to assist Mr Isles in writing his own articles. …. The Contact List would enable him to retain and work with industry experts so he could publish magazines and plan conferences and exhibitions that would compete directly with PennWell. In this respect, the value of a contact list to a publisher and event organiser such as Mr Isles is functionally equivalent to the value of a customer list or ACT! database to a sales person such as Mr Noyau."
- Mr Nigel Blackaby, who took over some of the duties of Mr Isles on his departure, gave evidence for the Claimant and commented on the contact list as follows:-
"I have examined the Contact List and believe that it is more than just a list of Mr Isles' contacts as a journalist. I do not recognise all the names on the Contact List, but a substantial proportion of the Contact List relates to persons who have spoken at PennWell's global power events, served on various PennWell event committees, or are otherwise related to PennWell's events. As such, the Contact List has commercial value to PennWell even though most of the persons on the list would not have responsibility for purchasing advertising or booth space at an event."
- He described the list as having been provided to him in connection with his duties as Acting Editor after Mr Isles resigned. However, it is clear to me on the evidence that in fact the material provided to him was not retained by PennWell but a copy of the list as disclosed by Mr Isles pursuant to an order of this Court.
- For the reasons set out earlier in this Judgment, I do not accept that this list was a list separately maintained by Mr Isles as a list of his journalistic contacts. It seems that he may have had such a list which he brought with him to PennWell. However, it is clear to me that it was not a list which was maintained separately as his own personal list of journalistic contacts, updated on a spreadsheet and kept separate. Such a list would have been similar to a private address book or the kind of address book of contacts which, on the evidence, is typically maintained by some journalists.
- On the evidence, I am satisfied that what Mr Isles did some time after he joined PennWell was to add personal contact details of some of his existing contacts to the Outlook e-mail system maintained by his employer. I am satisfied, on the evidence, that that was maintained as a typical e-mail address list with additional contact information, that it was backed up on PennWell's servers on a regular basis and accessed by Mr Isles by logging on to PennWell's e-mail system. Indeed it was this back-up which enabled Mr Isles, as I find, to restore the list on his new Palm when the original one containing a copy of the list was stolen.
- I also find, on the evidence before me, that Mr Isles maintained a single list which contained all those with whom he was in contact for the purposes of PennWell's business, whether these could be described as journalistic contacts or business contacts in his capacity as a PennWell editor and conference chairman. This is no different from the kind of e-mail address book maintained by many executives on their employer's e-mail system.
- I am also satisfied that Mr Isles downloaded the entire address list, without any form of filtering, onto a memory stick in Excel spreadsheet format, shortly before he left PennWell on 8 September 2006. I find that the list which was eventually disclosed by him with the title "JuniorContacts.xls" was in fact an Outlook spreadsheet version of the e-mail address list maintained by him on PennWell's e-mail system on PennWell's server.
- I do not accept Mr Isles' evidence that he used the list in spreadsheet format in the normal course of events. He accepted in evidence that the headings to the columns are derived from Outlook and it is clear to me that as a spreadsheet, it was extremely inconvenient in the number of columns and the positioning of those columns where one would have to scroll across the sheet with considerable frequency in order to obtain information to contact an individually named person.
- On the other hand, I do not think that it can properly be said that this was a confidential list deliberately maintained by the Claimant and intended to be preserved by it as important confidential information. On the facts of this case, it is clear that PennWell had not addressed its mind to the importance of or best use of e-mail contact information maintained by its executives. It was for that reason that information which, on Mr Blackaby's evidence I accept, was of considerable value to him as Mr Isles' replacement, was not preserved on Mr Isles' departure but wiped from his computers as part of a routine clearance.
- The irony of this case is that this list would as a matter of fact, have been entirely lost to the Claimant had Mr Isles not taken a copy with him on his departure.
- I also find that PennWell had a standard system maintained on an Apple Mac, of various editorial and other contacts which was added to by all members of the department, although on Mr Isles' evidence he was not particularly aware of this list nor did he add to it.
- In these circumstances, I do not consider that the list currently at issue is properly described as a personal list maintained by a journalist apart from his work systems and for his own use.
- Instead, I have to decide what is the legal position in relation to e-mail address lists maintained by employees which is a situation which must occur in relation to many thousands of employees who have individual responsibilities and who develop and maintain a list of useful contacts for the purposes of their role.
- Before deciding the legal status of this list on my findings and, in the alternative if I am wrong as to it being an e-mail address list, the conclusions that I would have reached had I found that it was a separately maintained list of contacts, it is necessary to consider the law in relation to confidential client lists and similar in a little detail.
- It is clear from the decision in the Court of Appeal in Faccenda Chicken Ltd v. Fowler ( 1 CH 117) that an employee cannot be restrained from using information obtained during his employment after that employment has come to an end unless it falls within the category of specific trade secrets. That applies even where the employee has gained knowledge of a large range of useful commercial information such as names of customers and how to contact them. Thus, although an employee will be restrained from using that information during his employment, he is not restricted from using it afterwards unless it falls into the restricted category. The Court of Appeal concluded that in order to assess whether particular information is protected it is necessary to consider all the circumstances of the case and they set out the following as matters to which attention must be paid:-
"(a) The nature of the employment. Thus employment in a capacity where "confidential" material is habitually handled may impose a high obligation of confidentiality because the employee can be expected to realise its sensitive nature to a greater extent than if you were employed in the capacity where such material reaches him only occasionally or incidentally.
(b) The nature of the information itself. In our judgment the information will only be protected if it can properly be classed as a trade secret or as material which, while not properly to be described as a trade secret, is in all the circumstances of such a highly confidential nature as to require the same protection as a trade secret eo nomine. The restrictive covenant cases demonstrate that a covenant will not be upheld on the basis of the status of the information which might be disclosed by the former employee if he is not restrained, unless it can be regarded as a trade secret or the equivalent of a trade secret."
- It is plain in this case that individual addresses and contact details were not in themselves sufficiently confidential to amount to a trade secret. Many of them would fall into the first category identified by the Court in Faccenda Chicken, namely material easily available in the public domain, although certain items, such as direct telephone numbers and private e-mail addresses, would not fall into that category.
- Therefore, I do not consider that, if Mr Isles had obtained details of these contacts during the course of his employment and selectively identified contacts that he might want to use in future, he could have been prevented from using that information after the end of his employment.
- In the circumstances, I do not consider that the use of individual contact names by Mr Isles would be a breach of clause 16 of his contract.
- Of far greater difficulty is whether it falls within the definition of company property under clause 21 of his contract.
- If what had happened on Mr Isles' departure was that he had taken a copy of the list of contacts maintained in the PennWell offices, such as the one on an Apple Mac which I have referred to earlier in this Judgment, or such as the list maintained on some form of card index at his previous employers, then I would have concluded that that fell within the definition of documents, manuals, hardware and software provided for his use by the company.
- However, the list with which we are concerned in this case was not a list of contacts which had been provided to Mr Isles but one which he had prepared himself from material brought with him at the outset of his employment and other contacts which he had developed during the course of and for the purposes of his employment.
- The taking of copies of a list of customers or other contacts by an employee and its subsequent use has long been held to be a breach of an employee's duty of fidelity (see Robb v. Green  QB 315) and that remains the position today (Bullivant v. Ellis  ICR 464).
- Therefore, had this database list been provided to Mr Isles, as it subsequently was to Mr Blackaby, there would be no doubt that to take and use a copy of it would be a breach of the express terms of Mr Isles' contract as to confidentiality and the return of the employer's property. If the list was compiled by Mr Isles himself, but as part of his duties, in my judgment there would be no significant difference. A list which most employees cannot lawfully take, cannot be available to be copied by one employee simply because it is his duty to compile that list. Indeed, the duty to maintain its confidentiality is probably greater in the case of the employee whose task it is to compile that list.
- At a late stage of this litigation, the Claimant sought to rely on the argument that this was a copyright database, under the Copyright Designs & Patents Act 1988 ("CDPA") or under the sui generis property right created by the Copyright and Rights in Database Regulations 1997.
- This argument, which I find had not been clearly signalled or pleaded, gave rise to the need for supplemental written submissions after the close of oral argument. I am grateful to both parties for the very detailed and full submissions which they have provided to me.
- I can, however, state my conclusions on this topic relatively shortly:-
(a) where a database is made by an employee in the course of his employment, his employer is be regarded as the maker of the database subject to any agreement to the contrary (Regulation 14(2));
(b) otherwise, the maker of the database is defined by Regulation 14(1) which provides that "the person who takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining verification or presentation shall be regarded as the maker of, and having made, the database";
(c) thus, if the database was assembled by Mr Isles privately and for his own purposes, he would be treated as the maker of that database under Regulation 14(1) but if it can be said that the database was made in the course of this employment, then ownership will be that of the employer;
(d) for a relevant property right in a database to exist, there must be a substantial investment in obtaining, verifying or presenting the contents of the database under Regulation 13;
(e) if a database constitutes the author's own intellectual creation by reason of the selection or arrangement of its contents, then it may be treated as an original work under Section 3A(2) of the Copyright Designs and Patents Act 1988;
(f) it is not necessary, in the light of my other findings, for me to reach a conclusion as to whether the database either in its form on the Outlook system or in the form of the JuniorContacts.xls spreadsheet was an original work within the meaning of the Copyright Designs and Patents Act 1988, but it is right to indicate that I was far from persuaded that the exercise of assembling a list of contacts addresses would be sufficient to qualify.
- In relation to the Regulations, the answer will in my judgment turn on whether the database was one prepared by Mr Isles in the course of his employment, or one prepared by him outside his employment for his own long term purposes as a journalist, although in part using contacts developed in the course of his employment. In the former case, I would hold that the ownership of the database resided in the Claimant and in the latter in Mr Isles.
- There are three subsidiary questions which I have to consider. The first is whether the fact that the database was derived in part from material brought by Mr Isles from his previous employment affects the conclusion. In my judgment, it does not. If the database was maintained as a separate spreadsheet by Mr Isles, it would reinforce the conclusion that any ownership of the database rested in him. If, however, the database was created in the course of his employment, the fact that some of the material was derived from information which he had already, does not in itself change the nature of the new database. In this context, it is clear on my findings that data from Mr Isles' previous list on a spreadsheet was added to the Claimant's Outlook system. As such, the Outlook system was not a development of the original database, but a new database to which old data was added.
- Secondly, in his supplemental submissions Mr Duodu seeks to draw a distinction between the Excel spreadsheet which was finally delivered up by Mr Isles and the original Outlook database from which, on my findings, it was derived. The fact that the copy may be in Excel format and thus different in terms of presentation and usability does not in my judgment make it anything other than a copy of the original data. There is no evidence that any change or re-design of the data or the way that it was presented was carried out by Mr Isles in such a way as to create a new database.
- Finally, Mr Duodu argues in the alternative that the database is a work of joint ownership. Again, this will turn on whether the database was created in the course of Mr Isles' employment, or partly in the course of his employment and partly for his own purposes. In my judgment, on the facts that I have found, the Outlook database was created and maintained for the purposes of the Claimant's business, although it may have been intended to be used in part for Mr Isles' own journalistic purposes.
- In the event, I do not consider that the analysis of the database regulations changes the position under the general law. The real question for me is whether the database containing the relevant information was the property of the Claimant or of Mr Isles, or whether there was some implied agreement either that although it was created in the course of Mr Isles' employment he would be entitled to use it thereafter, or that there would be some form of sharing of information.
- Had I reached the conclusion that this list had been maintained by Mr Isles separately, in the form of an electronic version of a personal address list, to which he had selectively added contacts which he regarded as journalistic and to be maintained by him for his career purposes, rather than for the purposes of his employment, I would have reached the conclusion that, in ordinary circumstances, Mr Isles was entitled as a journalist to develop and maintain such a list. I would have reached that conclusion because, in my judgment, there is a distinction to be made between on the one hand executives who are provided with and/or maintain and develop contact information for the purpose of doing their job properly, where the removal of that information would be detrimental to their employer and most obviously useable for the purposes of competition, with the position of a journalist who, on the evidence before me which I accept, needs to build up a collection of contacts which he can use when he needs information for his articles. I would also accept that a person in the position of Mr Isles who, by all accounts, is a highly capable and well respected journalist, editor and conference chairman, for the purpose of assembling expert boards for conferences, would be material which he could legitimately seek to develop as part of the body of experience which makes him attractive to employers.
- In reaching such a conclusion, I would distinguish his position from that of the salesman who has a list of sales contacts of that business, and I take account of the fact that the protection from use of that material for reasonable periods can be obtained by the inclusion of suitable non-competition clauses in employment contracts, which was not the case with Mr Isles.
- In reaching my conclusion I have considered various letters and representations, included without objection in the bundle before me which in my view point up the importance of journalists being allowed to maintain and add to a list of contacts which is independent of any list maintained by their employer and which they are entitled to preserve and use on leaving their employment. One Janet Wood who describes herself as currently news editor of Utility Week magazine and who has had significant previous experience, stated that "neither as a journalist or editor have I known of an occasion when a journalist moving jobs has been required to surrender his contacts to his employer. I do not think it is either practical or useful: they are personal relationships that may have been built up over many years."
- Mr James Lucky wrote on 8 December 2006 as follows:-
"One of the most important assets a journalist can have – regardless of industry or topic covered and be it national, regional or trade press - is a good contacts book. On the few occasions I have moved between journals (as I did when I left IPG for a while to join Energy Markets), I have always kept my contacts records and taken them with me to the new place of work. Quite simply, covering a technical field such as electricity supply I would be lost without them. Many of these contacts are not just people you have met in recent times but important business relationships built up over many years. Contacts for a salesman are a different matter. For a journalist they are your source of information enabling you to write about the industry you cover."
- John Toner who describes himself as a freelance organiser for the National Union of Journalists, has written a letter of support as follows:-
"It is important to draw a distinction between confidential information about a company's business and the personal contacts that a journalist acquires over the course of his/her career. The former is clearly the property of the company, and should not be disclosed to third parties. The latter, however, is the property of the journalist. A journalist is often employed or engaged by a company on the strength of his/her contacts. It is those contacts, cultivated over many years, that make some journalists more sought after than others. When Mr Isles was headhunted by PennWell, his contacts list would be one of the reasons they were so attracted to employing him. In other words, his existing contacts list, compiled when in the employ of others, was something from which PennWell hoped to benefit. …. It is common practice within the industry that a journalist will take his contacts list from one engagement to another."
- However, the position is in my view rather different in the case of e-mail address books maintained on the employer's computer. In this case, although I was provided during the trial with a copy of an e-mail policy of PennWell, I am not satisfied that that restriction was ever brought to the attention of Mr Isles or incorporated in his employment contract. I was provided with a copy of an e-mail sent by Mr Freddie Lauritzen, who gave evidence before me, on 16 May 2006 which stated as follows:-
"Compliance and monitoring – violations of these policies may result in disciplinary action up to and possibly including termination. All employees should be aware that e-mail, communications, information access, and network usage at PennWell is not considered private. PennWell may monitor, audit, access, or interrupt all communications, access to the computer network, and employee activites utilising PennWell provided resources without prior notice to users."
- Whilst I am satisfied that that e-mail will have come to the attention of Mr Isles, I am not satisfied that the two documents described as "Network Access and Usage Policy" and "E-mail Policy" were either attached to that e-mail or otherwise brought to Mr Isles' attention. Mr Lauritzen fairly conceded that he could not be satisfied whether any and if so which attachments were sent with that e-mail.
- The relevant section of the e-mail policy provides as follows:-
"Employees may only use the e-mail system for business use. Access to the e-mail system is granted to employees to facilitate communication with co-workers and customers. Employees may not use PennWell provided e-mail systems to send or redistribute any messages or files that are not directly related to their job responsibilities. Routinely receiving personal e-mail via the PennWell e-mail system causes significant increase in disk usage, tape back-up usage, and network usage. Employees are expected to use PennWell's e-mail system for all business purposes, unless an exception has been granted, in writing, by the Chief Information Officer."
- In my judgment, had that e-mail policy been effectively communicated to Mr Isles, it would have made clear to him that the e-mail system provided to him was to be used only for business purposes and, therefore, that in adding to or maintaining contact details on that system, he was doing so exclusively for the employer's benefit and not for his own.
- However, in the absence of effective communication of such a policy, I have to consider the difficult issue of the status of such address lists on e-mail systems provided by employers for their employees when no express limitation has been imposed.
- This raises the difficult issue of the status of such address lists on e-mail systems provided by employers for their employees.
- On one view, these lists plainly consist of confidential information of the employer. They include details of the individuals with whom the employee is expected to and will have made contact during his employment for his employer's purposes. They are backed up, generally, on a system maintained or at least paid for by the employer.
- On the other hand, in the new electronic age, electronic address books, whether on mobile telephones, communicators or e-mail systems, are inevitably used by individuals, whether employees or executives, for the convenient storage of those that they wish to contact. In the absence of a declared e-mail policy, it may well be that such employees will use such systems, including on mobile telephones provided for their use, for retaining the records of all sorts of contacts, from personal friends and family, through friendships that they have developed in work and journalistic contacts of the kind I have referred to above, through to the normal business contacts of their employer.
- It may well be the case that many employees do not think of the implications of using their mobile telephones or computers to record their own personal contacts and simply use them for convenience. In the case of mobile telephones, modern technology permits the transfer of contact details either one by one or as a block from one telephone or SIM card to another telephone or SIM card. Thus employees may routinely take copies of those contacts at the end of their employment before handing over the telephone to their employer. Similarly, they may well choose to use their employer's e-mail system or even be required not to use a personal e-mail system such as hotmail on their work computers, so that the only means of communicating during working hours by e-mail is by using their employer's computer.
- I am satisfied that where an address list is contained on Outlook or some similar program which is part of the employer's e-mail system and backed up by the employer or by arrangement made with the employer, the database or list of information (depending whether one is applying the Database Regulations or the general law) will belong to the employer. I do not consider that the position will change where the database is accessed not from the employer's computer but from the employee's home computer by "dialling up" or otherwise "logging on" to the employer's e-mail system by some form of remote access.
- In all those circumstances, I find that such lists will be the property of the employer and may not be copied or removed in their entirety by employees for use outside their employment or after their employment comes to an end.
- Because this is not likely to be appreciated by many employees, it is in my judgment highly desirable that employers should devise and publish an e-mail policy of the kind which in this case was devised by PennWell but on my findings not adequately communicated to Mr Isles.
- In the absence of such a laid down policy, I next have to consider the status of contact details which have been put on to an employer's system by an employee for their own use outside their employment, in ignorance of the fact that they would thereby become part of the Claimant's property. No problem arises, of course, where such details are duplicated elsewhere by the employee because that information is plainly theirs.
- In my judgment it is reasonable to imply in the absence of any laid down guidance a term that an employee will at the end of their employment be entitled to take copies of their own personal information and, where the information is person and confidential to them, such as details of their doctor, banker or legal adviser, to remove them from the employer's system.
- Most forms of e-mail system will permit the creation of compartmentalised address books, so that ordinarily an employee will be able to put their own personal contact details of friends, relations, and the like into a personal address book. In those circumstances, in the absence of clear evidence of an e-mail policy, I would be inclined to the view that ownership of that part of the database resided with the employee. It would then only be if that part improperly contained information confidential to the employer which was being removed for the purpose of competition, that the employer could challenge its removal.
- I accept that Mr Isles was in a position where he failed to appreciate that by maintaining his contact list exclusively on PennWell's system, he was thereby keeping it in a form in which it was the property of PennWell. I am satisfied that had he addressed his mind to the position, he would have kept his earlier contacts separate and although he might have added some of them to his work e-mail for convenience, he would not have abandoned his own separate address book spreadsheet system.
- I am also satisfied that he would have been entitled, from time to time, to add selected contacts which he had updated or gained during his employment and which were of general use to him in a journalistic context, to that private address book.
- Such an approach is entirely consistent with the conclusions that I have reached as to the desirability of a journalist being entitled to develop personal contacts.
- I have also reached the conclusion that had Mr Isles wished to do so immediately before leaving his employment, he would have been entitled to remove his private family contacts from the PennWell system and to have extracted information about key journalistic contacts which could properly be described as his personal sources as well as copying any information which he had put on to the system from his own previous resources. I do not consider that he would have been entitled to remove any of the items apart from purely private ones from the PennWell system.
- I also consider it likely that had he asked PennWell if he could remove his personal contacts and take details of one or two of his best contacts, he would have been permitted to do so.
- It follows therefore that in my judgment, the submissions made by Mr Duodu both as to the general rights of a journalist to develop contacts and to the rights which Mr Isles would have had if he had continued to maintain the JuniorContacts.xls spreadsheet separately, are well founded.
- However, on the evidence, this is not what happened in this case. I am satisfied that the list of contacts which Mr Isles downloaded from the Claimant's Outlook system and converted into the JuniorContacts.xls spreadsheet, comprised the totality of the individuals and organisations with which he had sufficiently regular contact during the course of his employment with PennWell for it to be worthwhile keeping a record of their contact details. Such a list might in another age be maintained by his secretary and would undoubtedly have been the property of PennWell.
- If the evidence had suggested that Mr Isles had selectively copied those that he regarded as proper journalistic sources or long term contacts, on to a spreadsheet, then I would have reached the conclusion that he was entitled to retain those as journalistic contacts for the reasons set out earlier in this Judgment. However, I do not accept that the entire list or even a majority of it, fell into that category. In my judgment, this was a list of all the contacts that one would expect an editor and conference chairman holding his position in PennWell, to require for the purposes of PennWell's business. Although some of them would be relevant to him in his future career, there was no such process of selection. This is an inevitable finding given that he exported his entire Outlook address book.
- For it to have been otherwise, Mr Isles would have had to maintain on his Outlook system not those contacts which were useful for the purposes of PennWell's business but only those which were of long term value to him. It is in my judgment clear that no responsible person in Mr Isles' employment would have acted in such a way because to do so would have hampered his ability to carry out his work properly.
- I am satisfied that Mr Isles removed the entire contents of his address book not for the purpose of maintaining key journalistic contacts and sources in the way supported by the many individuals of distinction who have written in to support his case, but in order to have the widest possible list of contacts of PennWell who would be useful for the purposes of the Fourth Defendant.
- My conclusion is reinforced by the contents of an e-mail sent by Mr Isles on 21 September 2006 to a large number of those on his contact list in which he drew attention to his new role as editorial director of the Energy Business Group and, in essence, sought to maintain contact with them. In that e-mail he wrote as follows:-
"There were a number of changes at PennWell, many of which have been ongoing, which didn't always align with my vision. This prompted a decision I would have made at some point anyway. However, after leaving I met up with a couple of colleagues who had recently left PennWell and decided to set up a company called the Energy Business Group. I will be producing a monthly subscription only newspaper focusing on power and energy, and smaller conference led events focused on specific markets. In fact the first one will be held in Belgrade April 17-19 called Energy Business South East Europe."
- That statement of how he came to become involved in Energy Business Group was, of course, not true as he accepted in evidence.
- For all these reasons, I conclude that the ownership in this database has at all material times been with PennWell, since it was created in the Outlook system of PennWell and that Mr Isles is not entitled either to exclusive or shared use of it.
- It follows that, in principle, the Claimant is entitled to retain the database as delivered up and to a permanent injunction preventing use of it, but not of individual parts of its content which may be known to Mr Isles by other means.
- However, that leaves over the question of whether, pursuant to the implied terms which I have identified above in relation to an e-mail address system where the Claimant has not made clear its e-mail policy, Mr Isles is entitled to some relief in respect of certain parts of the database.
- I have reached the conclusion that the concession offered by the Claimant in respect of those contacts made by Mr Isles before his employment at PennWell began, and included in the database, was correctly made and that Mr Isles should be permitted to retain details of those individuals.
- In his second witness statement for trial, at paragraph 25 in Exhibit JI12, Mr Isles sets out a chart and statistics in which he attempts to identify the various category of contact included in the list. This is an exercise carried out very much at the eleventh hour, and one which he had previously indicated through solicitors was not practicable. However, it is the only evidence that I have as to which of the contacts, which I have found were incorporated into the database, in fact pre-dated his employment. In category A he identified 288 individuals who he had known prior to his time with PennWell and who had been in his contact list since that time. In category C were 204 entries whom he knew outside work including his brother. In Category D were 5 contacts who he had added to the spreadsheet after he had left PennWell.
- I am satisfied that in the circumstance of this case, and despite the way in which Mr Isles in my judgment prevaricated about the existence, nature and origin of the list, it would be reasonable for Mr Isles not to be deprived of those contacts.
- The veracity and accuracy of the categorisation has been challenged by the Claimant but there was an opportunity to cross-examine Mr Isles on the list and in any event, I am satisfied that Mr Isles is in general a person of integrity who can be relied upon to do his best to be truthful in identifying the relevant categorisation and the way in which the list has been split up in my judgment is indicative of a careful and considered attempt to provide accurate answers. In those circumstances, I see no reason not to permit Mr Isles to retain that contact information.
- So far as the other categories are concerned, these are either category F where Mr Isles is unable to identify the history of those individuals, or cases where he accepts that he either first came into contact with them during his time at PennWell or where he first came into the relevant individual during that period, even if he had previously been aware of their company.
- The number of contacts in these categories reinforces my conclusion that this was not a list of journalistic contacts but the wholesale exportation of PennWell's list. I have no doubt that included within these categories, are at least a few individuals whom Mr Isles would, had he maintained a separate spreadsheet of his journalistic contacts, have included on that list. Had Mr Isles raised the matter properly with his employers prior to leaving PennWell, I think it likely that he would have been permitted, or would otherwise have been found entitled, to take details of such selected individuals. However, by his conduct, he has acted in a way in which there is reason for the Claimant to apprehend that if given the entire list, he would not use it selectively, and in any event, there is no convenient means, without an extensive enquiry, of establishing which of these contacts could reasonably be regarded as journalistic contacts that Mr Isles is entitled to collect together as a journalist and which do not fall in that category. I have therefore concluded that there are no grounds on which, even carrying out a balancing exercise of such rights as he may have pursuant to Article 10 or any implied term of his contract, he should be entitled to a copy of these parts of the list.
- I therefore conclude that Mr Isles was in breach of the express terms of his employment contract and that the Claimant is entitled to retain the JuniorContacts.xls list, subject to the limited relief I have identified.
- I should add that in my judgment, this is a case in which, although parts of the claim have fallen away and others have not been pursued, the Claimant was entitled both to launch these proceedings against Mr Isles as a director and shareholder in the Fourth Defendant and in respect of his personal role, and in which they were entitled to pursue adequate answers in relation to the JuniorContacts.xls list, in respect of which I find that the answers given by Mr Isles at all times prior to trial were inadequate and partially inaccurate.
- I will hear Counsel as to the form of any Order.