Kerry Underwood

DATA, RIVAL BUSINESS AND GOOD FAITH

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In Health & Care Management Ltd v The Physiotherapy Network Ltd [2018] EWHC 869 (QB)

the High Court considered the relationship between an express clause of good faith and a confidentiality clause which restricted disclosure only in the context of a referral agreement.

The referral agreement stated that Health & Care Management Ltd “anticipates making circa 700 referrals per month to TPN” and that it “shall act in good faith towards TPN at all times”.

The court found that Health & Care Management Ltd had breached the good faith clause in that it had set up a rival business and had obtained and used The Physiotherapy Network’s database, consisting of a list of clinics and its leading professionals, the number of referrals made, and the pricing structures.

It actively diverted referrals away from The Physiotherapy Network and misled that company about the rival business’ target market and failed to tell the truth about using The Physiotherapy Network’s database when confronted.

The judge stated that the act of covertly using the database to set up a rival business was probably sufficient of itself to be a breach of the good faith clause.

The Physiotherapy Network also argued that Health & Care Management Ltd’s use of the database to set up the rival business was itself a breach of the confidentiality clause, but the judge rejected that contention as the confidentiality clause only restricted the disclosure of confidential information, and did not restrict its use.

The Physiotherapy Network’s claim in passing off also failed but the court held that Physiotherapy Network’s database was protected under the Database Directive 1996/9/EC and that Health & Care Management Ltd had infringed the Directive by extracting a substantial part of the database on several occasions.

The court also held that the wording of the referral clause, specifically the use of “anticipates” and “circa” did not create a contractual obligation on Health & Care Management Ltd to make any particular number of referrals, or indeed any referrals at all.

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Written by kerryunderwood

May 18, 2018 at 8:22 am

Posted in Uncategorized

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