13 And as Lord Denning said in Littlewoods Organisation Limited v Harris [1977] 1 WLR 1472, 1479, experience has shown that it is unsatisfactory simply to have a covenant against disclosing confidential information, because it is difficult to draw the line between information which is confidential and information which is not, and very difficult to prove a breach when the information is of such a character that an employee can carry it away in his or her head, so that the only practicable solution is to take a covenant from the employee by which he or she undertakes not to work for a trade rival. The permissibility of such restraints for that purpose is well established [Kone Elevators Pty Limited v McNay (1997) ATPR ¶41-564, 43,834; Woolworths Limited v Olson, [38], [67]; Lindner v Murdock's Garage, 650 (Fullagar J); Portal Software Pty Ltd v Bodsworth [2005] NSWSC 1179, [83]]. Cactus relies on Mr Peters' alleged possession of its confidential information to support not only the covenant in clause 7 against disclosure of confidential information, but also the covenant in clause 9 against soliciting customers.
14 A plaintiff who seeks to restrain a former employee from using confidential information must be able to identify with specificity, and not merely in global terms, the relevant information [Saltman Engineering Co Limited v Campbell Engineering Co (1948) 65 RPC 203, 215; Corrs Pavey Whiting and Byrne v Collector of Customs (Vic) (1987) 14 FCR 434, 443 (Gummow J); Rosewood Advertising Pty Limited v Hannah Marketing Pty Limited [2000] NSWSC 1034, [8]]. Although those cases were concerned with the circumstances in which, even in the absence of a contract, equity imposes an obligation of confidence, the requirement for specificity is no less where a contractual obligation is sought to be enforced. One reason for this is that an injunction in general terms restraining a former employee from using the employer's "confidential information", would inappropriately leave, to an application for contempt, determination of whether particular information was or was not confidential.
15 Although the allegedly confidential information had at first been particularised in rather more extensive terms, ultimately Mr Sirtes, who appeared for Cactus, particularised the allegedly confidential information as follows [as amended in the course of his address]:
1. Any of the Plaintiff's internal cost and pricing rates for any of its products.
2. The optimal operating speeds of printing equipment used by the Plaintiff.
3. Any functions and details of the production scheduling software of the Plaintiff.
4. Any of the Plaintiff's pricing costs and rates with the businesses known as Matrix Digital, Brite Solutions Pty Ltd, Print Centre, Selbys, Country Outdoor, Elco Coating, Rice Graphics Industries, Portable Creations, and Complete Banner Supplies.
16 Susanne Joy Jamieson, who is and has since about 2001 been MMT's New South Wales Sales Manager, gave evidence in the defendant's case. Like Mr Peters, she is employed by MMT under a contract that includes a confidentiality provision. In cross-examination, she said that she would regard information pertaining to MMT's printing process, the types of machines MMT uses, MMT's pricing structure, its client lists, its marketing strategies, and its clients' opinions of MMT and why they deal with MMT, as covered by the confidentiality provision which binds her. Coming as it does from a person in an equivalent position to that formerly held by Mr Peters at Cactus, this is significant evidence of what such an employee would perceive as being confidential, and it was a realistic assessment: which much of the information she identified might fall short of "trade secret" status, it is information of the type which an employer is nonetheless entitled to protect by covenant [Wright v Gasweld]. Mr Peters gave a similar if less comprehensive catalogue of information of MMT's which he would regard himself as not at liberty to divulge.
17 Ultimately, Mr Gye, rightly, did not dispute that Cactus' internal costs and pricing rates for any of its products were confidential. Nor, again rightly, did he dispute that Cactus' pricing costs and rates with the nine businesses specified in particular 4 above (being customers for which Mr Peters had specific responsibility) were confidential.
18 As to the optimal operating speeds of Cactus' printing equipment, the minimum and maximum operating speeds are in the public domain. The circumstance that higher quality prints are obtained at lower speeds is but commonsense. But Cactus' industry experience over the years will have enabled it and its staff to gain knowledge of the particular speeds and settings within that range at which particular products might best or most economically be printed, and that knowledge might well afford those who possess it a commercial advantage - a conclusion which is reinforced by Ms Jamieson's evidence that she would regard information pertaining to MMT's printing processes as confidential to her employer. Accordingly, it is at least "know-how" of the quality that can be protected by a confidentiality covenant.
19 As to the functions and details of the production scheduling software used by Cactus, the system was "tailor-made" for Cactus. Although there is no suggestion that Mr Peters is in possession of or could replicate the software, as a user he must have known the functions it performs. It is clear that Cactus attaches importance to the functions performed by its production scheduling software, apparently because of economies and efficiencies that it enables Cactus to achieve. Knowledge of its functions may assist a competitor to design, or have designed, a system which achieves similar economies and efficiencies by performing the same functions. Reduced to its simplest form, a competitor, informed that Cactus' system performed certain functions, which achieved economies and efficiencies that the competitor did not, might be able to eliminate or reduce the commercial advantage the system gave Cactus, by specifying to a programme writer the functions it desired to replicate. Accordingly, the functions and details of the production scheduling software used by Cactus are at least "know-how" of the quality that can be protected by a confidentiality covenant.
20 Moreover, Mr Peters was clearly aware of the basis on which Cactus was prepared to quote for jobs, and the terms on which it dealt with its customers. He accepted that he was aware that there were cases in which Cactus had not won jobs because it was not prepared to undercut competitive quotes. At least when he left Cactus, he was necessarily aware of the approach that Cactus would take to winning a particular job, what were its pricing parameters, and how low it might be prepared to quote to win a job. In short, Mr Peters would have been aware of Cactus' "bottom line", namely the minimum profit acceptable to it having regard to the cost of production. Such information would be invaluable to a competitor seeking to make inroads into the market share enjoyed by Cactus, and would obviously be jealously guarded by Cactus. Access to it would plainly give a competitor a significant advantage, so long as it remained current.
21 In the course of Mr Peters' employment by MMT, in which his duty is to win custom, such knowledge would give him, so long as it remains current, a significant advantage in winning work from Cactus. Even if he were entirely well intentioned, there is an ever-present risk that he would unavoidably use such information for the benefit of MMT and to the detriment of Cactus. That would be particularly, although not exclusively, so in respect of existing customers of Cactus, and more particularly those existing customers who had been serviced by Mr Peters. This is evidenced by the approaches he has already made, since joining MMT, to EyeCorp and to Time and Place.