Damages for Infringement of Database Rights: Intercity Telecom Ltd v Solanki

Jane Lambert

The first claimant. Intercity Telecom Limited ("Intercity"), is one of the largest independent communications service providers in UK. The second, Modern Operations Limited ("Modern"). employs sales executives who work within Intercity's sales division. Between 2000 and 2014 Modern employed the defendant, Sanjay Solanki ("Mr Solanki"). He joined the company as a sales executive and  rose eventually to the post of National Account Manager where he had a portfolio of clients who brought Intercity some £3 million of business every year.

In the last few weeks of his employment Mr Solanki downloaded from his employer's computers a large number of records of its customers, including their telecommunications requirements and expenditure on telecommunications systems and services, on to memory sticks which he took away. He used that information to approach several of Intercity's customers and tried to win their business for its competitors. He approached some of those companies while still on his employer's payroll and others in the 12 months after he had left the company when he was subject to restrictive covenants not to compete with his former employer. He continued to do these things even though he had given undertakings to the court not to do so. He made false statements as to what he had done under oath.

Giving judgment in Intercity Telecom Ltd and another v Solanki [2015] EWHC B3 (Mercantile) (27 Feb 2015) said at paragraph [18]:
"In my judgment, there has been deliberate and calculated spoliation and manipulation of critical evidence in this case by the Defendant both before and during the time it has been before the court. The electronic evidence that has been recovered by the Claimant is of a damning nature to the Defendant's case, as the Defendant well knew and is wholly supportive of the Claimants case. His sworn statements in his Defence and affidavits have been demonstrated to be untrue. I draw adverse inferences against the Defendant in terms of his credibility and of his case and in instances where documents are missing. I find him to be untruthful, unreliable and evasive. The documents speak for themselves as a contemporaneous log of the Defendant's illegal activities."
The claimants sued Mr Solanki for damages for breach of contract and database rights, delivery up of confidential information and injunctive relief.  Interestingly and notwithstanding CPR 63.13 and paragraph 16.1 (8) and (11) which allocates claims for database right infringement and breach of confidence to the Chancery Division, Intellectual Property Enterprise Court ("IPEC") or the Birmingham hearing centre of the County Court they brought this action in the Birmingham Mercantile Court which is part of the Queen's Bench Division. Had this action been brought or transferred to IPEC Mr Solanki's costs would have been limited to those in CPR 45.31 (1) but he made no application for transfer. Indeed, he took no part in the case after the claimants' applications for interim injunctions against him.

The proceedings before Judge Simon Brown were the trial of the action which had been listed for 5 days.  Only the claimants turned up and they led oral and written evidence against Mr Solanki.  In accordance with Queen's Bench practice the judge determined liability and assessed damaged and costs at a single sitting.  Counsel for the claimants had listed the following issues for the judge's determination which His Honour adopted at paragraph [20]:
"a. Issue 1: Was Mr Solanki constructively dismissed so as to release him from his obligations under his contract of employment? Mr Solanki has claimed that Modern Operations breached the implied term of trust and confidence and that he accepted that breach by submitting his resignation.
b. Issue 2: Did Mr Solanki breach the terms of his contract of employment–clauses 9, 10 and/or 11?
c. Issue 3: Did Mr Solanki breach a duty of confidence to the Claimants?
d. Issue 4: Did Mr Solanki breach the Claimants' database rights?
e. Issue 5: What are the appropriate remedies?"
The learned judge found for the claimants on all the issues. Relying on the principle in Armory v Delamirie [1722] EWHC KB J94(1722) 1 Strange 5O5; 93 ER 664, KB where Chief Justice Pratt directed the jury
"that unless the defendant did produce the jewel, and shew it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages"
His Honour assessed damages at £290,009. He reached that figure on the basis that Mr Solanki had enticed away 8 accounts and that the damages that he assessed represented the lost profits on their business. In awarding damages the judge did not consider separately the claims for breach of contract, breach of confidence or infringement of database rights. He simply considered the claimants' global loss and awarded damages under all three causes of action in respect of that loss. The judge also made declarations that the defendant had infringed the claimants' database rights, granted perpetual injunctions against further infringements and breaches of confidence as set out in his contract of employment and awarded costs on the indemnity basis which he assessed at £68,959.25.

Database right is a property right that subsists in a database under reg. 13 of The Copyright and Rights in Databases Regulations 1997 "if there has been a substantial investment in obtaining, verifying or presenting the contents of the database."  It is infringed by extracting or re-utilizing  all or a substantial part of the contents of the database without the owner's consent.  The Regulations implement in the UK Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases ("the Database directive") OJ L 77, 27.3.1996, p. 20–28. I have found the regulations a very useful adjunct to the common law remedies for breach of contract and possibly breach of covenant in departing employees' cases, especially since the definition of a database in reg 6 is
"a collection of independent works, data or other materials which—
(a) are arranged in a systematic or methodical way, and
(b) are individually accessible by electronic or other means"
which is broad enough to cover a card index or directory. Over the years I have obtained several interim injunctions to restrain database right infringement in employment cases.

Problems of the kind that occurred in this case are not uncommon and should anyone have one it is imperative to move quickly. As this judgment shows it is still possible to obtain interim injunctive relief without coming to London though I would suggest issuing in the Chancery Division rather than the Mercantile Court in order to comply with CPR 63.13. Having said that it probably does not make much difference in the long run as in many district registries the same judge sits on both Chancery and Mercantile cases. Should anyone want to discuss this case he or she should contact me on 020 7404 5252 during office hours or use my contact form.


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