Dyson court 'clean up' - secret injunction as Tesla learns electric car plans

In a curious turn of events, a Court of Appeal court judgment (Dyson Technology Ltd v Pellerey [2016] EWCA Civ 87 (12 February 2016)) was released which reveals Dyson secured an injunction to stop an employee from joining rival Tesla back in 2015.

The injunction was granted to stop the employee from joining Tesla after: 

1. the employee informed Tesla of Dyson's secret plans to develop an electric car; and
2. the employee failed to notify Dyson that he had been approached by a recruiter for the role at Tesla.

Why are we only hearing about this case now?

Court papers have only recently been released because Dyson had been working on the plans to develop an electric car in secret. Dyson was able to persuade the court to conduct the hearing in private and keep the record of the case from the public domain until its plan for the electric car was made public.

So what happened?

Tesla first learnt of Dyson's plans in 2015 when Dyson employee Pierre Pellerey, was approached by a recruitment agency on Tesla's behalf. Mr Pellerey's employment contract included a relatively unusual clause that required him to notify Dyson if he was approached by a rival for a competing role.

However, Pellerey did not notify Dyson of this approach. In the interim Sir James Dyson notified a select handful of colleagues of his highly confidential plans for Dyson to develop an electric car. One of those people was Pellerey.

After learning of these plans, Pellerey provisionally agreed to move to Tesla, subject to him obtaining a US Visa. Unknown to Tesla, Pellerey was in possession of valuable secret knowledge concerning Dyson's plans to develop an electric car. Tesla learned of Dyson's plans when Pellerey informed Tesla's in-house counsel of Dyson's secret plans by email. Dyson's plans were so secret at this time that the team had to work in a secure area, to which no other personnel had access and no other Dyson personnel were aware of the plans.

When Dyson learned of Pellerey's move, it sought an injunction to prevent him from beginning his employment with Tesla. In order to prevent his move, Dyson relied on a term in his employment contract which stated Mr Pellerey must inform them if he had been approached by a potential employer. Pellerey failed to adhere to this term and also breached confidentiality provisions in telling Tesla of Dyson's plans.

Dyson was ultimately successful in obtaining an injunction and preventing Pellerey from joining Tesla for a period of nine months.

What does this mean driving forwards?

It's tempting to think this opens the door for all employers to insert a clause requiring employees to notify them if they are approached by a rival (and ultimately trying to prevent an employee from joining a rival if they fail to disclose such an approach).

However, the court was very clear that it would not ordinarily be appropriate to prevent an employee joining a rival simply because an employee breaches such a clause. The reason this case was different was because Pellerey only learnt of Dyson's plans for electric cars following his failure to disclose his approach by Tesla.

Nevertheless, the case demonstrates that an employer may be able to stop or delay an employee from joining a rival if an employee breaches a term of its employment contract and discovers confidential information as a result. Given the phenomenal speed at which the automotive industry is developing technology at present, this may not be the last time a manufacturer needs to revert to the court to protect its confidential information.

Dyson Technology Ltd v Pellerey [2016] EWCA Civ 87 (12 February 2016)