Firm gets injunction against former MD to protect its business

A cryptocurrency firm has successfully taken legal action to prevent its former managing director competing against it and from revealing confidential information. Mark Aspin Director and Head of Dispute Resolution reports.

The case involved Gemini Europe Ltd and Sawyer (2020).

Gemini was part of a group of companies dealing in cryptocurrencies. In November 2019, it had engaged Mr Sawyer as its managing director.

The contract included a non-compete clause preventing Sawyer, for nine months post-termination, from holding a position in any business in competition with Gemini where that would result in the disclosure of confidential information, including information on its finances, processes, development, customers and future plans.

In July 2020, Sawyer gave the specified three months’ notice of his intention to leave to become the global manager of a company dealing in the cryptocurrency Bitstamp.

He was placed on gardening leave and his employment with Gemini ended on 16th October 2020. On 19th October 2020, he began his employment with the Bitstamp company.

Gemini issued proceedings seeking to enforce the non-compete clause and was granted an initial interim injunction.

The High Court has now accepted Gemini’s application to extend that injunction.

It held that the claim was not frivolous or vexatious and that there was a serious issue to be decided eventually at full trial.

In the meantime, it was necessary to extend the injunction because the contract, containing the non-compete clause, was valid and enforceable.

An employer was entitled to protect confidential information and Sawyer had been a significant, pivotal employee exposed to information which would enable a competitor better to compete in the cryptocurrency market.

In all the circumstances, it was likely that Gemini would be able to establish at trial that there was a significant body of information requiring protection by the non-compete clause.

Damages would be an adequate remedy for Sawyer if the trial judge ruled in his favour. He and the Bitstamp company could not complain about the enforcement of a non-compete clause of which they had both been aware. The balance of convenience favoured the continuation of the interim injunction pending trial.

If you would like any further information about the issues raised in the article please contact Mark on 01228 516666 or click here to send him an email.