Are your trade secrets safe?

Confidential information is non-public privileged information pertaining to a company’s business. Such information can include, trade secrets, proprietary information, know-how, technical, business or financial information and personal information.

Are you worried that an employee will leave and take confidential information with them to benefit your competitor? Employees can be bound by confidentiality clauses in their employment contract, preventing them from disclosing the employer’s information to outside sources. In the absence of a confidentiality clause, there is an implied duty on employeesnot to disclose any confidential information during their employment. Employees cannot take personal information with them when they leave which belongs to their employer.

The Information Commissioner’s Office (ICO) has recently published a warning that employees who leave and take personal information will be committing a criminal offence. In a recent case a paralegal, who on leaving for a rival firm, took personal information of over 100 people was prosecuted under the Data Protection Act 1998 and fined. It was made clear by the ICO that although employees may believe that documents that they have produced or worked on in the course of their employment belong to them, if they contain personal information, taking them without permission is a criminal offence.

Employees who commit this offence can be fined up to £5,000 in the Magistrates Court or an unlimited amount in the Crown Court. However the ICO is currently calling for greater deterrents, including prison sentences.

It is advisable to make it a condition of employment that employees sign an express agreement regarding confidential information.

What happens when an employee leaves?

If your employee leaves they will still be bound by the implied duty not to disclose confidential information, but this only relates to information that is deemed to be a trade secret or highly confidential. Usually, it is not worth going to court to prove that the employee breached the implied term and again, it is therefore advisable to require all employees to enter into a non disclosure agreement binding them once their employment ends.

The damage that could be caused through leaking of confidential information is immeasurable. You risk losing clients, hard-earned profits and it could even damage  your company’s reputation.
If your employee does disclose confidential information you have the option to apply for an injunction to prevent this disclosure or further disclosure, and you can also seek damages for loss suffered.
Be preventative and insert an express term stopping employees and ex-employees from disclosing any information that you wish to keep secret!

Database rights

The information that is stored systematically on your computer is protected if you have spent a substantial amount of investment into obtaining, verifying and presenting the contents of that database. If an employee extracts or reutilises all or substantial parts of the database without your consent then they have infringed your rights.

In a recent case an employee infringed his employer’s database rights by downloading and using confidential customer information from the company’s databases to solicit the company’s customers during and after his employment.

Employers need to be aware of how important it is to have a data protection policy in force setting out the Data Protection Act requirements; therefore helping to ensure that it is complied with. Employers also need to ensure that their database rights are protected along with their confidential information. Include restrictions in employment contracts to protect information that you do not want falling into the hands of your competitor!

We have an excellent team of employment lawyers should the need arise, but protect yourself now with NDA's, employment agreements and contractors agreements.

For more information contact us…
020 7426 0382