March 1, 2011

Judge rules in favour of Wetherby-based Goldenfry Foods in £5m trade secrets case against former senior employees

Wetherby gravy product manufacturer Goldenfry Foods has been awarded a High Court judgment in its favour against three former senior employees that misused trade secrets to prise away a £5m contract to supply own-brand gravy granules to a national supermarket chain.

The three-year legal battle resulted in a ruling which meant the former employees were facing a damages and costs claim in excess of £6m being awarded against them and the company they formed, Rotherham-based Frontier Foods.

However, technical director Malcolm Austin, customer service manager Paul Chapman and brands manager Rob Waddell will not be pursued individually and neither will Frontier Foods. Instead, Goldenfry has purchased the assets of Frontier Foods and ensured that Austin, Chapman and Waddell have agreed not to compete in the UK gravy products sector for a period of two years.

Goldenfry was advised from the outset by Matthew Howarth, head of commercial litigation at Yorkshire law firm Gordons, and the judgment was given following a trial that lasted two weeks. The court ruled that the defendants had misused trade secrets and that Malcolm Austin had deliberately taken commercial information.

Peter Turrill, managing director at Goldenfry, said: “We had no option but to litigate because what happened fundamentally undermined our business. The taking of the trade secrets threatened the livelihoods of people here that had worked extraordinarily hard to make Goldenfry into a market leading company.

“The evidence against the individuals was compelling with the judge saying they were ‘plainly prepared to lie’, that they were ‘unreliable’ and that Malcolm Austin had ‘wrongly retained documents’ after he left our business.

“We could not allow them to get away with it and are relieved that the litigation is over. We were also adamant that, despite what had happened, we did not want to pursue the individuals concerned so we chose instead to enforce a non-compete agreement and purchase the company’s assets.

“Thanks to the outstanding legal advice we received throughout the proceedings from Matthew Howarth and his team at Gordons we are finally able to draw a line under this matter. All of our efforts are now concentrated on continuing to develop and grow Goldenfry.”

Goldenfry Foods is a successful manufacturer of a wide range of packaged grocery products for all of the major UK retailers. The company’s products include gravies, sauces, cake mixes, stuffings and batters.

Matthew Howarth commented: “Many employers are concerned about senior employees leaving their business and taking trade secrets with them. Goldenfry was faced with those trade secrets being actively used against the company and it put Frontier Foods in a position to secure a £5m contract because of it.

“This case has brought these issues to the fore, but employers should take comfort in the fact that if they have relevant restrictive covenants in their contracts of employment they will be enforced. This was the right outcome for Goldenfry and one which should remind employers to ensure they have the covenants in place to protect their trade secrets and confidential information.”