MARKHAM – Equipment supplier and network services company Cygnal Technologies today announced that it has been granted an interlocutory injunction prohibiting former Cygnal employee and director James Taylor and his new company from unfairly competing with Cygnal.
Cygnal, while on its buying spree a few years ago, acquired Mr. Taylor’s business, Integrated Cable Systems (ICS), for approximately $17 million in August, 2000.
As a condition of the sale agreement, Taylor remained an employee of the company until his resignation effective March, 2004, and sat on the company’s board of directors from 2000 until September 27, 2004.
However, just five months after leaving, Taylor launched a new company, Activo (www.activo.ca), which competes in some areas with Cygnal.
In his July 21, decision, Justice McMahon of the Ontario Superior Court of Justice made the following findings:
* As a director and high-level employee of Cygnal, Mr. Taylor owed fiduciary obligations to the company;
* By keeping in his possession documents that contained sensitive information about Cygnal and its customers, and by competing directly with the company starting only five months after resigning from its board, Taylor competed in an unfair manner; and,
* A reasonable period of non-competition in the circumstances is 12 months.
Justice McMahon granted an injunction restraining the unfair competition, to remain in force until September 27, 2005, which will be 12 months after Mr. Taylor’s departure from the Company’s Board.
"We are pleased that the court has effectively halted the unfair competitive practices of a former employee," said Gerald Hurlow, Cygnal’s chairman and CEO. "We will continue to forcefully protect our legal rights in any similar situations that may arise."
