The creation of a company by a former employee […]

Cass. com, December 7, 2022, n°21-19.860

In its decision of December 7, 2022, the Court of Cassation recognizes that the creation of a competing company by a former employee who has kept his employer’s customer file constitutes an act of unfair competition, whether or not the file has been exploited.

1. The legal framework

The notion of unfair competition is a praetorian notion based on the articles governing extra-contractual liability (articles 1240 and 1241 of the Civil Code).

Article 1240 provides that “any act of man, which causes damage to another, obliges the person by whose fault it occurred to repair it”.

2. The facts

In this case, two former employees of a company set up a competing company and transferred the list of e-mails of their previous employer’s customers to their personal e-mail box.

Considering that they had unlawfully canvassed its clientele by means of letters, and this before the end of the employment contract of one of them, the former employer sued the company created by the former employees for unfair competition.

The Paris Court of Appeal rejected his request on the grounds that the competing activity in question did not actually start until after the end of their employment contracts, and that the latter did not include a non-competition clause. Furthermore, it considers that the transfer of the customer file cannot be considered as wrongful in the absence of proof of their exploitation by a wrongful means.

The former employer appealed to the Supreme Court.

The latter complains that the Court of Appeal rejected its claim, even though the competitor had sent a commercial offer, constituting an offer of a contract, to one of its customers before the effective end of the employment contract of one of the employees, and that, moreover, the mere misappropriation of a competitor’s customer file in order to canvass the market constitutes an unfair process, so that the exploitation of the file does not constitute a condition required to characterize unfair competition.

3. The opinion of the Court of Cassation

The Court of Cassation overturned the decision of the Court of Appeal.

On the one hand, it states that the fact that a company in the creation of which the employee of a competitor company has participated, starts its activity before the end of the employment contract between them constitutes an act of unfair competition.

Indeed, the Court consistently recognizes that an employee is bound by a non-compete obligation to his employer for as long as he is bound by his employment contract, on the basis of contractual loyalty alone (Cass. com., Oct. 16, 2019, No. 18-15418; Cass. com., June 1, 2022, No. 21-11921).

On the other hand, it holds that the mere fact that a company, in the creation of which the former employee of a competitor participated, holds confidential information relating to the activity of the latter and obtained by this employee during the performance of his employment contract, constitutes an act of unfair competition.