In Intellimedia Limited Partnership v Jawad, 2026 ABKB 247 (Marion, J), the Alberta Court of King’s Bench ordered an interlocutory injunction to enforce a non-competition clause contained in a purchase agreement.
This case is important because of its depth of analysis of the law and the application of this interesting set of facts to the law of restrictive covenants and fiduciary obligations.
Facts
The following were some of the pertinent facts found by the Court of King’s Bench:
- Ahmad Jawad was a co-founder and CEO of Intellimedia Incorporated (IINC), an AB education software company
- Intellimedia Limited Partnership (“Intellimedia”) acquired IINC and Jawad was hired as CEO of Intellimedia under a purchase agreement (“APA”) and employment agreement. The purchase agreement contained non-competition and non-solicitation clauses which ran for 5 years post-termination of employment
- As part of the due diligence process before the purchase, Jawad was asked for information about IINC’s software. He provided a memo which contained a comment about the goal being to collect information about education indicators and become a leader in Education Analytics “with future focus on leveraging AI to predict student success rate and assist educators…”
- Days before the APA, Jawad created DOCEOAI Analytics Inc. (“DAI”) to “pursue opportunities” in AI technology. He did not inform Intellimedia (the buyer under the APA) about this intention
- Jawad worked for Intellimedia after the APA and left in summer 2024. During his employment at Intellimedia he took some steps to explore AI in education with DAI, including obtaining a grant, hiring some students, using Intellimedia’s bookkeeper, and working on DAI’s website. He did not inform Intellimedia about these activities
- In early 2024, Intellimedia’s COO gave a presentation indicating that Intellimedia was looking into using AI, and in March 2024, Intellimedia and DAI jointly organized and sponsored an educational conference about AI in education. This led to questions by Intellimedia about Jawad / DAI, with Jawad assuring Intellimedia that it was not competitive
- Jawad gave some presentations, while still at Intellimedia, indicating that he was planning to develop an AI education software at DAI. He did not disclose the details of this to Intellimedia
- Jawad left Intellimedia in summer 2024
- Jawad / DAI ultimately developed a software that uses AI. The Court found there was a strong prima facie case that it would be directly competitive with Intellimedia’s software once it launched [I don’t summarize the analysis in this case about what is “competitive”, but its interesting and worth looking at for keeners]
- Intellimedia sued Jawad and DAI and brought an interlocutory injunction application against them, to prevent Jawad / DAI from competing, and prevent them from launching their AI educational software
- Intellimedia was alleging that Jawad breached fiduciary duties and duties of confidence, his employment agreement and non-competes and non-solicit clauses contained in the APA
- Jawad conceded that he was a fiduciary of Intellimedia.
Analysis / Conclusion
Justice Marion noted that the non-competes and non-solicits were part of a sale transaction and there were sophisticated parties. He noted that this would normally result in the lower “serious issue to be tried” injunction standard, but not in this this particular case. He noted that the restrictions were focused on the future business of Intellimedia, post-transaction obligations, employment-derived fiduciary obligations and duty of confidence, which put the clauses in the nature of a “restraint of trade”. Accordingly, the higher threshold of “strong prima facie case” applied.
The Court went on to explain in detail some of the duties of fiduciary employees, including with respect to corporate business opportunities and solicitation of customers.
The Court assessed the claim of breach of fiduciary duty with allegations of being unfaithful, placing himself in a conflict of interest, gaining an unfair competitive advantage, etc. The Court found there was a strong prima facie case that a number of these duties had been breached:
- Jawad had represented to the buyer that a future focus of their software was levering AI. This was a potential corporate opportunity.
- If it was not a “ripe” opportunity for Intellimedia that’s because Jawad had not pursued it for them but had pursued it for DAI
The Court found, however, there was not a strong prima facie case that Jawad had breached his fiduciary non-solicitation duty:
- He attended and participated in some conferences, but this was insufficient
- He had some direct dealings with Intellimedia customers, but the evidence did not show whether that was as a result of solicitation or some other way
- By the time of the written decision it had been 20 months since Jawad left, which is likely longer than a reasonable common law fiduciary non-solicitation period.
The Court considered whether Jawad had breached his contractual or common law duties of confidence, noting the following rule:
[99] At common law, as noted above, a fiduciary cannot use a former employer’s proprietary or confidential information in a manner that is contrary to the former employer’s best interests […] A breach of confidence requires: (i) that the information conveyed was confidential; (ii) that it was communicated in confidence; and (iii) that it was misused by the party to whom it was communicated […]
The Court found that there was enough evidence for a “serious issue to be tried” standard on this issue, given that there was some apparent use of Intellimedia’s software in DAI research, but there was not enough evidence to satisfy the required threshold of “strong prima facie” case.
The Court found there was a strong prima facie case that the non-competition clause was breached, given the finding that DAI’s software was competitive with Intellimedia’s.
The Court then considered if the noon-compete was enforceable, first by considering if it was clear or ambiguous. The defendant had not argued it was ambiguous, and the Court found there was a strong prima facie case it was unambiguous.
The Court noted that for a non-compete arising as part of the sale of a business, it is presumed to be enforceable unless the employee can establish its scope is unreasonable. The Court found there was a strong prima facie case that the scope of this clause was reasonable, and even if it was slightly broad by geographically naming provinces outside Alberta, it would have been saved (in this case) by blue-pencil severance to strike out reference to other provinces.
The Court then considered the no-solicitation clause and found there was not a strong prima facie case that the clause was enforceable because:
- It applied to customers in the present tense, but without a way to limit them to ones Intellimedia had a connection with during Jawad’s employment. This created ambiguity because it would not be possible for Jawad to know when it was being breached where there is not a “reasonably known group of people”
- This flaw could not likely be saved by blue-pencil or notional severance, despite a savings clause
- Sub-clauses prohibited solicitation of “business relations” which was also ambiguous
The Court then considered whether there would be irreparable harm if the injunction were not granted. The defendants argued there was no evidence of irreparable harm because their app had not yet been launched. The Court seemed to accept that since the DAI app had not yet launched, the high standard of a quia timet injunction applied in this case, which requires “high probability that the harm will occur and an element of ‘imminent and real’ threat”.
The Court found that this high standard of irreparable harm was met in this case because:
- Where there is a clear breach of an enforceable restrictive covenant, irreparable harm is given less weight as a factor
- The APA stated that irreparable harm would result from breach, which was important (but not determinative)
- Imminent threat was established because the DAI app was planned to be launched in May 2026, and was likely to do some of what Intellimedia did better and faster
- DAI had already been canvassing K-12 educational institutions, the same niche market Intellimedia is in
The Court found that the balance of convenience favored Intellimedia, and noted that Intellimedia had given an undertaken as to any damages DAI might suffer as a result of the injunction if Intellimedia ends up being unsuccessful in the ultimate lawsuit.
In the result, the Court granted an injunction preventing Jawad / DAI from any activity competitive with Intellimedia’s app in the K-12 education sector, pending the outcome of the trail of the action.
My Take
The decision is really interesting. I must admit that I don’t remember seeing a quia timet injunction standard for irreparable harm analysis prior to this case. That is something worth remembering.
The overall conclusions and result reached were not surprising to me.
This case should serve as a reminder to fiduciaries everywhere to carefully consider whether to pursue opportunities after departure that they had been working on prior to departure. The consequences can be severe.
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