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15 August 2013 0 Comments
Posted in Employment, Opinion

Protecting Confidential Information

Author headshot image Posted by , Partner

A recent High Court decision on preventing former employees from competing will provide encouragement to employers who are concerned about protecting confidential information when employees leave. In Whitmar Publications v Gamage, three employees who had worked for the claimant, a publisher, for three years resigned to set up their own company in competition with Whitmar. The company, upon discovering the existence of this new company and having every reason to believe that they had started to do this before their resignation, applied for injunctive relief from the High Court to prevent them using the confidential information which they had obtained from the company whilst employed by it. This was an urgent application and consequently the court could only make a preliminary assessment on the weight of evidence available to it but it concluded nonetheless that there was a “strong case” that the employees had been taking more than just preparatory steps prior to their resignation, but had in fact taken active steps with a view to competing with their employer on leaving.

In granting the application for an injunction, the judge said, “One of the badges of competitions in cases such as this is the secrecy with which those who are competing go about their business”. One example of this was an e-mail from one of the defendants in which it was emphasised that all traces of their schemes should be destroyed – classic example of subversive behaviour. This case should be a timely lesson to employees who are thinking of squirrelling away their employer’s confidential information with a view to using it with their own business or a new employer, especially as being on the losing end of an application like this is expensive to put it mildly. The court concluded that the employer would have a very good chance of succeeding at trial and consequently injunctive relief was granted.

It appears that the courts are clamping down more readily on employees who are taking active steps to compete with their employer whilst remaining employed.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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