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The Danish Marketing Practices Act offered no safeguard

April 2010 - Employment. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

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The Danish Marketing Practices Act only offers limited protection against former employees’ competitive activities. This was shown by a ruling from the Danish Maritime and Commercial Court.

The best precaution against competition from former employees is a non-competition and/or non-solicitation clause. In this case, an employer was not offered sufficient protection by the Danish Marketing Practices Act when a former employee started up a competing business.  

The case concerned the question of whether a producer of air cleaning systems was entitled to damages from a former employee who was not subject to a non-competition or non-solicitation clause. The employer claimed that the employee had started up and carried out competitive activities during the notice period.  

Only legal preparatory activities
The Court noted that the employee had established a company together with a business partner with the intention of receiving subsidies in Sweden for the development of an air cleaning system for pig farms. Although these preparatory activities had been made before the employee resigned, the Court found that the activities were sufficiently distant and that they did not involve any attempt to carry out competitive activities, either.  

Accordingly, as the Court was not satisfied that the employee had failed to perform his duties for the company or that any business secrets or customer data had been exploited, the Court held that the employee was not in breach of the Danish Marketing Practices Act and therefore not liable to pay damages to the former employer.