CA overturns ban on in-house lawyer acting in case against former employer

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By Legal Futures

6 June 2012


Court of Appeal: disagreement over whether Bolkiah applies to in-house lawyers

The Court of Appeal has overturned an injunction that prevented an in-house lawyer from advising on litigation against her former employer.

The court held that there has to be a “real risk” that confidential information would be disclosed and that it had not been shown in this case.

But the judges acknowledged that the case raised difficult issues around lawyers moving jobs with confidential information which may have to be sorted out in another case.

Generics (UK) Ltd v Yeda Research & Development Co Ltd & Anor [2012] EWCA Civ 726 involved a patent attorney but it was agreed that the same rules would apply to her as would to an in-house solicitor. In the substantive case, Generics – which trades under the name Mylan – is seeking a declaration of non-infringement and revocation of Yeda’s patent on a pharmaceutical called Copaxone.

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The patent attorney worked for Mylan but had previously worked for one of the defendants, Teva. The defendants successfully applied to the High Court for an injunction to stop the patent attorney from being involved, even though they accepted that she was entirely honest.

Mr Justice Floyd said he should follow the guidelines laid down by the House of Lords in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 – which related to confidential information held by external advisers – and that it should be for the current employer to prove that there is no risk of confidential information being disclosed. He said that though the patent attorney may not think she had any relevant information, “one’s recollection can subsequently be shown to be wrong”.

The Court of Appeal judges all agreed that on the facts there was no real risk of information being disclosed – noting that in cases where there was, a barring order could be appropriate – but, obiter, disagreed over whether Bolkiah should apply to employed lawyers, or whether it should instead be for the former employer to prove the risk of disclosing confidential information, as in a normal employment relationship.

Sir Robin Jacob thought Bolkiah “applies every bit as much to a former employed litigator as it does to a former privately engaged litigator”, but Lord Justice Etherton disagreed. He listed “material differences” between an employed lawyer and one in private practice, including the fiduciary relationship a solicitor has with a client, which does not exist in an employment relationship, and the fact that an employer can restrict an employee’s activities after termination of the employment.

Lord Justice Ward came down on Etherton LJ’s side. He said his “instinct is to uphold the liberty to ply one’s trade freely and that leads me to prefer to judge any application by the former employer to bar an employed patent agent or solicitor from taking up or performing a new contract of service with a competitor on conventional employer/employee lines whilst at the same time recognising that protecting the administration of justice may justify the restraint of trade…

“The search for justice should not require a former employed solicitor or an assistant solicitor to prove a negative and show there is no risk that confidential information will fall into the possession of those with an adverse interest to his former employer/client as required by Bolkiah.”

Ward LJ agreed with Etherton LJ that there is a “thicket of confusion” around this topic “which, through no fault of counsel, was not fully developed in argument. If Sir Robin Jacob is right, the ramifications for the legal profession as a whole, from partners, assistants and even trainees, are important enough for us to reserve our fully considered judgments for another case and another day when full argument will guide through the thicket”.

 

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