"Sum of knowledge" can constitute trade secrets



Published 07 September 2021
News image

In a final and enforceable judgment of 12 March 2021 (LF-2020-92904), Frostating Court of Appeal found there to be unlawful use of trade secrets by a former employee using his knowledge acquired at the employer to develop a competing product. The judgment is important, and shows that former employees must be careful about utilising the knowledge and experience they acquire at an employer, even if the knowledge is only in that person's head. Lawyers Sigurd Holter Torp and Trond Sollund in Schjødt represented the employer.

By Sigurd Holter Torp

In this case, the employer was dominant in the world market with a so-called directional core drill, which means that the drill can be steered at the same time as core samples are retrieved from the rock it is drilled into. The employer had spent many years and significant costs developing the drill, which was mainly protected through secrecy rather than patenting. One employee had special responsibility for the development and improvement of the drill. For several years, he acquired total knowledge about the drill, including knowledge of what worked and what did not work. After 16 years, he left the company and started developing a competing drill. About 2-3 years later, he launched "his" product, which was a directional core drill that appeared almost identical to the original drill.

The employer sued the former employee and his company, based on an allegation that the new drill had been developed through unlawful exploitation of the employer's overall experience base over several years, which was submitted to constitute trade secrets. A basic line of defence by the employee was that the employer had to document and specify exactly which trade secret had been violated, at the same time as a detailed comparison of the two drills was carried out to establish differences.

The facts of the case stemmed from the period before the entry into force of the new Act on Trade Secrets, so the claim was based on the previous Marketing Control Act, Section 28. The claim did not succeed in the District Court, and the employer appealed the case to the Court of