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Food & Drink update – November 2016

Lime cut in half Print publication

09/11/2016

“Springboard injunctions” and the misuse of confidential information

The High Court has given judgment in Kerry Ingredients v Bakkavor [1], a case concerning whether a food manufacturer that had received secret information on the manufacture of edible infused oils from a supplier, which was provided for safety and regulatory purposes only, could then use that information to develop its own range of edible infused oils.

The defendant did not sign a non-disclosure agreement and the Court had to decide, on the basis of the applicable case law, whether the information had been “imparted in circumstances importing an obligation of confidence”. The judge found that a reasonable person standing in the shoes of the defendant would have recognised that the information was imparted in circumstances importing an obligation of confidence and ordered an injunction to protect the information.

The judge also ruled that information could have the necessary quality of confidence where it is capable of being obtained by “reverse engineering” where to do would require a significant amount of work or “special labours”. In this particular case, a person seeking to replicate the claimant’s products, but without the confidential information that the claimant had provided, would not be able to reproduce the claimant’s methods without substantial work or “special labours”.

The breach of confidentiality in this case fell within the so-called “springboard” doctrine, where the misuse of confidential information provides a headstart – or “springboard” – for the defendant, as it did not have to spend time reverse engineering the process. A fair estimate of the length of that headstart was one year and this was reflected in the length of the injunction granted by the Court.

Food safety

The director of a company supplying school meals has been disqualified for four years from acting as a director after the company was found to have breached food hygiene regulations. This followed an Environmental Health inspection which found 12 breaches of food regulations, including the storage of raw meat on top of cooked meat; dirty equipment and utensils; and mouldy drinking cups. The adverse publicity which followed resulted in the company’s liquidation. We have written recently on the related topic of the impact of the new Sentencing Guidelines reflected in harsher sentences for health and safety – and food safety – offences.

If the worst does happen, Walker Morris’ dedicated Regulatory Investigations and Prosecutions team can help you.  Members of the team are available 24/7 to assist in handling a dawn raid and in the management of investigations conducted by the HSE, FSA or any UK regulator.  We also have extensive experience of defending civil and criminal prosecutions brought by the regulators.  Further information on our Regulatory Investigations and Prosecutions team is available on our website.

Meanwhile, the Food Standards Authority is preparing to introduce a “trusted” retailer scheme by which certain retailers will be given permission to police their own compliance with food safety regulations. Critics have been quick to refer to the still fairly recent “horsemeat” scandal  and argue that the scheme – essentially a cost-cutting measure – could have serious implications for food safety.

Groceries Code Adjudicator

The Government has launched a consultation on the performance of the Groceries Code Adjudicator. The consultation will run until 10 January 2017.  In launching the consultation, the Government noted that there had been a 8 per cent fall in Code-related issues reported by supermarket suppliers from 2015 and a 17 per cent decrease compared to 2014.  Alongside the statutory review, the Government is consulting on extending the remit of the GCA to include indirect suppliers to supermarkets.

For her part, the GCA , Christine Tacon, has published her annual newsletter in September. In it, she calls for suppliers to contact her to advise whether the processes retailers have in place to stop delays in payments is providing positive results.  She has also provided supplementary guidance on de-listing relating to the fresh produce sector, which will form the basis of the Adjudicator’s approach in any relevant arbitration or other regulatory activity.

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[1] [2016] EWHC 2448 (Ch)

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