Case Number
CA 6601/96
Date Decided
8-28-2000
Decision Type
Appellate
Document Type
Full Opinion
Abstract
Facts: Appellant No.1 developed independent computer word processing systems. Appellant no. 2 was the exclusive distributer of the systems in Israel, and also provided its customers in Israel with maintenance and repair services. The respondent had been an employed by the appellant as a computer technician, and had at the time of his employment, signed both an agreement not to compete with the appellant in anything related to the marketing and repair of Linear systems, as well as an “Agreement to Protect Confidentiality,” according to which he was obligated to maintain the absolute confidentiality of information that he may obtain in the framework of his employment.
The respondent was fired after twenty eight months of work, and started a business of computer systems services. He advertised his services in the newspaper as a repair and maintenance technician for computer systems, including Linear systems, he approached the customers of the appellant directly, using a customer list of the appellant’s. The newspaper advertisement led to a contract with The Armament Development Authority (RAFAEL-operated by respondent number two), according to which respondent would provide Linear services to RAFAEL. These services replaced the repair and maintenance services that had been given in the past to RAFAEL by the appellant.
Against the background of these events three suits were filed in the District Court. In one suit, in the framework of which a temporary injunction was issued prohibiting the respondent from dealing directly or indirectly in the sale or provision of service to Linear word processors for a period of eighteen months from the day the respondent was fired, which did not apply to the contract with RAFAEL, the appellant sued the respondent, for violation of his obligations to it, for doing damage to its property rights and its reputation, and for appropriating its trade secrets. In the second suit the appellants claimed that the respondent made use of the magnetic disks and diskettes which store backup programs, application programs and diagnostic programs that were developed by the appellant and disks that were prepared for use by them, thereby doing damage to their property rights, and violating their copyright. In this suit it was claimed that RAFAEL is assisting the respondent in his prohibited actions. The appellants demanded damages from the respondents, and from RAFAEL. RAFAEL filed a third-party notice. The third suit, directed by the appellant against RAFAEL, sought the return of hardware equipment and software lists that were lent by the appellant to RAFAEL and for payment of fair use. RAFAEL filed a countersuit in which it sought removal of a barrier that the appellant created in its workspaces. It also demanded equipment that it purchased and did not receive, and payment in the amount of NIS 7,022 for expenses it incurred as a result of violation of the agreement that the appellant had with RAFAEL. Consideration of all these suits was joined.
The District Court (Vice-President, Justice A. Goren), in its judgment, dismissed the appellants’ claims inasmuch as they related to violation of copyright or damage to reputation. It was also held that the respondent violated the agreement not to compete with the appellant’s business, and that the respondent made use of the customer list of the appellant within the eighteen month period, and that a contract with RAFAEL resulted from the violation of the agreement not to compete. It was also held that it was not proven that contracts with other customers resulted in agreements between those customers and the respondent, within the eighteen month period, and therefore it was not shown that agreement of the respondent in this matter was violated. The court also held that as a result of the agreement between the respondent and RAFAEL, RAFAEL ceased receiving Linear System maintenance services from the appellants. The court determined compensation for the appellants in the amount of $25,000. Additionally, the State of Israel (under whose aegis RAFAEL was operating) was ordered by the court to pay the appellant for the value of certain hardware and software items, which were given to RAFAEL by the appellants, and which remained in their possession. The appeal and the counter-appeal were directed against the judgment of the District Court.
Held: The Court allowed the respondent’s appeal voiding the award of damages to the appellant for the contract with RAFAEL. The court denied the appellants’ appeal and the appeal of respondent no. 2. The Court also denied the respondent’s appeal inasmuch as it related to software and hardware. The appellants were ordered to pay the respondent’s costs in the sum of NIS 15,000.
Keywords
Contracts -- Promise of Confidentiality, Copyright, Corporations, Criminal Law, Employment, Labor -- Collective Agreement
Recommended Citation
Barak, Aharon; Rivlin, Eliezer; and Or, Theodor, "AES Systems v. Sa'ar" (2000). Translated Opinions. 31.
https://larc.cardozo.yu.edu/iscp-opinions/31
