Former employee temporarily restrained from marketing his invention
When Maple Leaf Foods in Brandon, Man., employed Andrew Butler, he was involved in the invention of a “spray chill system.” Maple Leaf owns and operates a pork abattoir at which it butchers hogs. It processes the hogs after slaughter and markets the products worldwide. By using the new technology there is less shrinkage of the carcass, more product to sell and a better quality of product.
Mr. Butler resigned from Maple Leaf in May 2001. Since then he incorporated a company, Industrial Energy Management Solutions Inc., and attempted to market a technology known as the “spray chill system.” He also filed an application to patent the technology or some variation of the technology that was developed while he was employed with Maple Leaf.
Maple Leaf brought an application seeking an interim injunction against Mr. Butler pending trial of its action against him. It sought to restrain Mr. Butler from using any confidential information acquired by him during the course of his employment, including information concerning the design and operation of the spray chill system.
Mr. Butler responded with an application for an injunction against Maple Leaf. He sought to restrain Maple Leaf from utilizing the spray chill system technology, process and operations.
Three issues are to be addressed in an application for an interim injunction. First, the applicant must establish that there is a serious issue to be tried. Second, the applicant must demonstrate that he will suffer irreparable harm if the injunction is refused. Third, the applicant must demonstrate that the balance of convenience favours the granting of the injunction.
In support of its application Maple Leaf argued that Mr. Butler was in breach of his employment contract, specifically provisions relating to use of proprietary information, post employment obligations, and inventions and intellectual property.
It also argued that Mr. Butler breached an implied term of his employment contract: that inventions made in the course of employment are the property of the employer and that Mr. Butler breached an obligation, owed by all employees, not to use trade secrets of their employers.
Mr. Butler argued that he had exclusive ownership and use of the technology in question. He argued that the technology he was attempting to market was different from the technology used by Maple Leaf.
The Court held that the first part of the test was met. There was a serious issue as to whether Mr. Butler’s acts in developing the technology constituted part of his employment duties and whether his acts since leaving constitute a breach of an express or implied term of his employment contract.
The Court found that there was some strength to Maple Leaf’s position that, although Mr. Butler conceived an idea on his private time, his job function did expand and the work that effectively designed and developed the technology was done by him pursuant to direction from his employer.
As for the second and third tests the Manitoba Court of Appeal had previously held that for negative covenants such as the ones requested in this case, there is a presumption that the person who has the benefit of the covenant will suffer irreparable harm and that the balance of convenience favours the granting of the injunction in his favour.
If Mr. Butler were permitted to sell the technology, he would likely be selling it to some persons who are in direct competition with Maple Leaf, thus affecting Maple Leaf’s advantage over its competitors. There is no way to measure the loss attributable to that loss of competitive advantage.
On the other hand the spray chill system is only one aspect of Mr. Butler’s business. If an injunction were granted against him, his business would continue. If he were ultimately successful at trial Maple Leaf would be able to compensate him in damages for any delay in selling the technology. Thus the balance of convenience favours granting the injunction.
The interim injunction was granted against Mr. Butler as sought by Maple Leaf. Mr. Butler’s application for an injunction against Maple Leaf was denied. The Court held that he failed to meet any of the criteria necessary to grant such an injunction.
For more information:
• Maple Leaf Foods Inc. v. Butler, 2002 MBQB 82.
Mr. Butler resigned from Maple Leaf in May 2001. Since then he incorporated a company, Industrial Energy Management Solutions Inc., and attempted to market a technology known as the “spray chill system.” He also filed an application to patent the technology or some variation of the technology that was developed while he was employed with Maple Leaf.
Maple Leaf brought an application seeking an interim injunction against Mr. Butler pending trial of its action against him. It sought to restrain Mr. Butler from using any confidential information acquired by him during the course of his employment, including information concerning the design and operation of the spray chill system.
Mr. Butler responded with an application for an injunction against Maple Leaf. He sought to restrain Maple Leaf from utilizing the spray chill system technology, process and operations.
Three issues are to be addressed in an application for an interim injunction. First, the applicant must establish that there is a serious issue to be tried. Second, the applicant must demonstrate that he will suffer irreparable harm if the injunction is refused. Third, the applicant must demonstrate that the balance of convenience favours the granting of the injunction.
In support of its application Maple Leaf argued that Mr. Butler was in breach of his employment contract, specifically provisions relating to use of proprietary information, post employment obligations, and inventions and intellectual property.
It also argued that Mr. Butler breached an implied term of his employment contract: that inventions made in the course of employment are the property of the employer and that Mr. Butler breached an obligation, owed by all employees, not to use trade secrets of their employers.
Mr. Butler argued that he had exclusive ownership and use of the technology in question. He argued that the technology he was attempting to market was different from the technology used by Maple Leaf.
The Court held that the first part of the test was met. There was a serious issue as to whether Mr. Butler’s acts in developing the technology constituted part of his employment duties and whether his acts since leaving constitute a breach of an express or implied term of his employment contract.
The Court found that there was some strength to Maple Leaf’s position that, although Mr. Butler conceived an idea on his private time, his job function did expand and the work that effectively designed and developed the technology was done by him pursuant to direction from his employer.
As for the second and third tests the Manitoba Court of Appeal had previously held that for negative covenants such as the ones requested in this case, there is a presumption that the person who has the benefit of the covenant will suffer irreparable harm and that the balance of convenience favours the granting of the injunction in his favour.
If Mr. Butler were permitted to sell the technology, he would likely be selling it to some persons who are in direct competition with Maple Leaf, thus affecting Maple Leaf’s advantage over its competitors. There is no way to measure the loss attributable to that loss of competitive advantage.
On the other hand the spray chill system is only one aspect of Mr. Butler’s business. If an injunction were granted against him, his business would continue. If he were ultimately successful at trial Maple Leaf would be able to compensate him in damages for any delay in selling the technology. Thus the balance of convenience favours granting the injunction.
The interim injunction was granted against Mr. Butler as sought by Maple Leaf. Mr. Butler’s application for an injunction against Maple Leaf was denied. The Court held that he failed to meet any of the criteria necessary to grant such an injunction.
For more information:
• Maple Leaf Foods Inc. v. Butler, 2002 MBQB 82.
