Bestnet Executives Found Liable in Trade Secrets Theft

Bestnet Europe, a British mosquito net company, and its executives were found liable in proceedings in the English High Court for breach of confidence in having misused Vestergaard Frandsen’s trade secrets.

On 3 April 2009 Bestnet Europe, a British mosquito net company, and its executives were found liable in proceedings in the English High Court for breach of confidence in having misused Vestergaard Frandsen's trade secrets. Vestergaard Frandsen is a developer of leading products to prevent the spread of such diseases as malaria, diarrhoea and HIV.

Vestergaard Frandsen's trade secrets concern complex and highly effective technology, whereby insecticide is incorporated into bed nets to kill mosquitoes and the nets are designed to last for several years of active use.

Two former Vestergaard Frandsen employees, Torben Holm Larsen and Trine Sig, formed a rival company after they left Vestergaard Frandsen in 2004. The first company, Intection A/S, was formed in Denmark, but was injuncted by the Danish Courts and was later moved to the UK where Bestnet was established, together with Ole Skovmand.

Torben Holm Larsen and Ole Skovmand were found to have lied to the English High Court and to have forged vital documentary evidence. The UK Judge also found that Ole Skovmand had deliberately misled the Danish Courts in earlier proceedings in Denmark. Skovmand is accused of misusing Vestergaard Frandsen's scientific data to develop a competing net for Bestnet.

On 26 June 2009 the English High Court ordered an injunction against Bestnet's first generation product, but has not injuncted the current product. Whether or not the current generation product (Netprotect) should be injuncted has been referred to the Court of Appeal to decide. The Judge held that the current product is derived from the first generation product which has been injuncted and which was developed using Vestergaard Frandsen's trade secrets. In the event the current product is not injuncted by the Court of Appeal, Vestergaard Frandsen will seek royalties on future sales by Bestnet.

Commenting, Finn Kjaergaard, Chairman of Vestergaard Frandsen said:

"We are pleased that the Court took the misuse of our trade secrets seriously and found Bestnet and its executives guilty of their misappropriation and misuse. We invest millions of pounds in research and development of lifesaving technologies. Data theft must be prevented."

The High Court has also ordered that Bestnet publish a statement on its website with a link to the main judgment, that Bestnet and its executives have been found liable for breach of confidence in having misused Vestergaard Frandsen's trade secrets.

The High Court will rule, after a separate inquiry, on appropriate damages to compensate Vestergaard Frandsen for losses incurred as a result of the theft of its trade secrets by Bestnet. Vestergaard Frandsen may alternatively seek a payment from Bestnet of all the profits they have made from selling a product which was developed using the scientific data owned by Vestergaard Frandsen.

For the purposes of the damages claim, Bestnet was ordered to disclose to Vestergaard Frandsen all of its sales through June 2009, which Bestnet publicly claim to be 10 million nets sold worldwide since they launched the product in October 2005. Damages are likely to be millions of pounds and should the company be unable to meet its obligations, the two executives, Torben Holm Larsen and Trine Sig will be automatically liable for the damages (or account of profits) awarded by the Court. As mentioned above, Vestergaard Frandsen will also seek royalties on future sales by Bestnet.

Bestnet has also been ordered by the Court to pay Vestergaard Frandsen's legal costs which are in the region of £4.5 million. Bestnet must additionally pay £1.5 million to Vestergaard Frandsen as an interim payment, followed by the balance at a time to be determined by the Court. The nature of the Costs Order, is that costs should be paid to Vestergaard Frandsen on an indemnity basis, which is highly unusual and reflects the seriousness of the misconduct of the Bestnet Executives in the Judge's view.

Other actions continue against Ole Skovmand in France and against Bestnet and the Indian manufacturers, in India, where injunctions are in force against the manufacture and sales of the product.

ENDS

Notes to Editors

Legal action in other countries

Vestergaard Frandsen also brought legal action in the following countries:

Denmark - In November 2005, Vestergaard Frandsen obtained an injunction against Intection ApS prohibiting it from developing, manufacturing and trading insecticide treated nets. In March 2006 Vestergaard Frandsen obtained a judgment which decided that Intection ApS has violated Vestergaard Frandsen's copyright. In February 2007 a Danish Court decided that Torben Holm Larsen was in breach of contract concerning a non-compete clause in his employment agreement and that he should pay DKK 400,000 to Vestergaard Frandsen.

In the English High Court Judgment Mr Justice Arnold said Dr Ole Skovmand must have intended to mislead the Danish Court in his statement to the Danish Court that the final recipe of NetProtect incorporated a different insecticide to that used by Vestergaard Frandsen.

India - In May 2007 Vestergaard Frandsen obtained a preliminary injunction from the High Court in Delhi, prohibiting the defendants from manufacturing or marketing NetProtect until further orders. In October 2008 Vestergaard Frandsen also obtained a further preliminary injunction from the High Court in Delhi restraining the manufacture, offer for sale, sale, distribution, advertising, marketing, export and/or import of long lasting insecticidal mosquito nets using its confidential information including but not limited to such nets sold under the brand name IconLife.

France - In early 2007 Vestergaard Frandsen also commenced proceedings against Ole Skovmand and his company, IIC, in France and obtained a Search and Seizure Order against him. The Expert mission to analyse the documents taken, when the Order was executed, is currently on going in France.

For further information contact:
Richard Elsen
Byfield Consultancy
Tel: +44 207 616 1742 or +44 7886 757 307
[email protected]

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