EzyDVD P/L v Lahrs Investments Qld P/L & Ors

[2009] QCA 389

Queensland Court of Appeal

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Interrogate

Catchwords

1. Trade and Commerce
2. › Restraint of Trade
3. › Franchise agreements
4. › Post-termination restraint
5. › Protection of confidential information and intellectual property
6. › Whether restraint reasonable where contractual regime required return or destruction of confidential information
7. › Whether nature of information (rapidly changing, short-term applicability) rendered restraint unreasonable
1. Trade and Commerce
2. › Restraint of Trade
3. › Reasonableness
4. › Legitimate protectable interest
5. › Whether franchisor's interest in preventing misuse of confidential information necessarily justifies general restraint of trade
6. › Relevance of character of information and practical efficacy of contractual remedies
1. Trade and Commerce
2. › Restraint of Trade
3. › Confidential information
4. › Information retained in memory after return of records
5. › Whether restraint justified to protect against use of information retained in former franchisee's memory

Quick Take

A franchisor seeking to enforce a post-termination restraint of trade clause justified by protection of confidential information must demonstrate that the information is of such a character that it would likely be retained in the franchisee's memory and would confer a competitive advantage for the period of the restraint. Where the franchise agreement contains comprehensive provisions for return or destruction of confidential information, and the information is of short-term applicability (e.g., rapidly changing prices and product listings), a general restraint on competitive trade may be unreasonable. The existence of a protectable interest in confidential information does not of itself necessarily justify a general restraint without assessment of the character of the information and the practical efficacy of other contractual remedies.